Good day, and welcome to the Artisan Partners 3rd Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please send a conference specialist for pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note, this event is being recorded. Now I'd like to turn the conference over to Brendan Hughes. Please go ahead.

Welcome to the Artisan Partners Asset Management Business Update and Earnings Call. Today's call will include remarks from Jason Gottlieb, CEO, and CJ Daly, CFO. Following these remarks, we will open the line for questions. Our latest results and investor presentation are available on the Investor Relations section of our website. Before we begin today, I would like to remind you that comments made during today's call, including responses to questions, may include forward-looking statements. These are subject to known and unknown risks and uncertainties, including but not limited to the factors set forth in our earnings release and detailed in our SEC filings. These risks and uncertainties may cause actual results to differ materially from those disclosed in the statement, and we assume no obligation to update or revise any of these statements following the presentation. In addition, some of our remarks today will include references to non-GAAP financial measures. You can find reconciliation of these measures to the most comparable GAAP measures in the earnings release and supplemental materials, which can be found on our Investor Relations website. Also, please note that nothing on this call constitutes an offer or solicitation to purchase or sell an interest in any artisan investment product or a recommendation for any investment services. I will now turn it over to Jason.

Thank you, Brennan. And thank you for joining the call today. Our purpose is to generate and compound wealth for our clients over the long term. We do so by maintaining an ideal home for investment talent, providing a unique combination of autonomy, degrees of freedom, resources, and support. Our goal is to be one of the world's preeminent multi-asset class investment platforms. Over our history, we have steadily expanded our capabilities across equities credit and alternatives while doing so we have maintained our focus on investment and business results and delivered for our clients and shareholders turning to slide three investment performance remains strong across our platform with over 70% of our AUM outperforming their benchmarks for periods over three years all 12 artists and strategies with track records over 10 years have outperformed their benchmarks since inception these 12 strategies have compounded capital at average annual rates of return from nearly 6% to over 13% net of fees. They have outperformed their benchmarks by an average of 243 basis points annually. On a shorter-term basis, several strategies have generated exceptional results, highlighting the breadth and diversity of our platform. In equities, the sustainable emerging markets, non-US growth, global value, and franchise strategies have all generated year-to-date returns of more than 20%, with outperformance ranging from 425 to 934 basis points net of fees. In credit, the emerging market's local opportunity strategy has generated a year-to-date return of over 19%, 373 basis points above its benchmark. In alternatives, both credit opportunities and global unconstrained have generated absolute returns in excess of 8 percent, and Antero Peak has generated year-to-date returns of almost 21 percent. Across the broader platform, trailing one-year performance has been weighed down by underperformance in several of our largest equity strategies, including international value and global opportunities, both of which have very strong long-term track records. Turning to slide four, strong markets and investment performance drove our assets under management to $181.3 billion, and an all-time high at quarter end. Firm-wide net outflows this year and in the third quarter are primarily a result of outflows from a handful of equity strategies that continue to experience rebalancing in up markets and, to a lesser extent, client terminations. Those outflows mask a lot of very positive business development initiatives across the platform. Year-to-date, we have net inflows in 14 of our 26 investment strategies. Both Select Equity and International Explorer strategies funded large new mandates in the third quarter. Each strategy is now approaching $1 billion in AUM five years from launch in 2020. We have continued our multi-year success in growing our credit business with $1.8 billion in year-to-date net inflows. The third quarter represents the 13th consecutive quarter of positive credit flows. In alternatives, we have raised $336 million this year for Global Unconstrained Strategy, and we continue to build the pipeline for the Credit Opportunity Strategy. Lastly, we have been executing a focused campaign to raise assets across our emerging markets strategies. Each of sustainable emerging markets, developing world, emerging markets local opportunities, and emerging markets debt opportunities has net inflows for the year, and demand continues to grow across these EM strategies. These positive areas validate our strategy and give us the conviction we are growing the platform in line with long-term demand from both institutional and intermediate wealth clients. Ultimately, though, we need to sell more and lose less, and we continue to develop and reorient our distribution function in order to do so. We have highlights our methodical approach to expanding our platform with new talent and investment capabilities. These efforts take shape internally through dialogue with existing investment teams to identify new areas for growth. Recent outcomes include the Global Special Situation Strategy within the International Value Group, Custom Credit Solutions with the Credit Team, and the Franchise Strategy we launched earlier this year with the Growth Team. We also maintain a regular dialogue with external talent interested in joining the Artisan platform to to build differentiated and enduring investment franchises recent external engagement has focused on real estate private credit and secondaries we believe these capabilities would be a natural extension for our platform and are at the intersection of differentiated talent large investment opportunity sets and long-term commercial demand we are currently working on a number of internal and external opportunities and are excited to execute on some of these to further evolve and expand our multi-asset class platform. I will now turn it over to CJ to review our recent

financial results. Jason, our complete gap and adjusted results are presented in our earnings release. We are pleased with our financial results for the conditions and lower fixed expenses led to margin expansion of 450 basis points compared to the second quarter and up 8% compared to the prior year third. Clearly from the absence of compared to the same quarter last year, adjusted operating costs for compensation expense due to increased revenues. 2% adjusted net income per and up 11% compared to consistent with operating in year-to-date compared to the first year-to-date adjusted operating expenses increased 5% for higher incentive compensation on elevated revenues and the impact of the addition of the January 2025 calculating our non-operating income and interest income. Although valuation changes on our seed investments and exclude these valuation changes, and during slide nine, our balance sheet remains strong with $300 million of cash and $40 million of firm seed investments and emerging strategies and vehicles to support future growth. As strategies reach scale and our seed investments are redeemed, any redemption amounts realized are included in the cash available for corporate purposes, seed investments, or as an addition to our year-end special dividend replacement debt on August 15th to proceeds from the new debt will retire the 16th of 2025. In addition, our $100 million revolving credit facility remains unused. Consistent with our dividend policy, a quarterly dividend of $0.88 per share with a 21% increase over the price. Looking ahead, we anticipate a price will not be reinvested. The opportunity to run of our AUM has last year's fourth quarter included approximately $17 million in 2020. Such fees will remain subject to market and performance conditions through the end of the year. That concludes my prepared remarks.

Thank you. We will now begin the question and answer session. To ask a question, you may press star or the one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If any time your question has been addressed and you would like to withdraw it, please press star or the two. We ask that in consideration for the others, you limit yourself to one question and a follow-up. At this time, we will pause momentarily to assemble the roster. And the first question comes from John Dunn with Evercore. Hi, thank you. First question was

just on this idea that there's growing demand for non-U.S. strategies. Maybe could you just give a flavor of, you know, regionally where the demand is and what strategy demands are? Like, is it finally emerging markets or developed

markets. Just a little more flavor on that. Yes. Hi, it's Jason. I can provide a little bit more flavor. I'd categorize it in three specific areas. The first one is in global mandates, and we're seeing that in both global value and to a lesser extent in global opportunities where we have large institutional clients across both European and U.S. markets that are interested in global, just gaining access through a slightly more asset-allocated opportunity. The second is both in the intermediate wealth and in the institutional bucket for direct international equity exposure. We've seen a pretty meaningful uptick in the number of inquiries coming, specifically in areas like our global equity franchise run by Mark Yaki. We're seeing, you know, really good interest there, largely because not only the asset allocation mismatch that I think we're seeing across asset allocations, but Mark has produced just phenomenal and outstanding results. You know, for the year, I believe he's up about 900 basis points through Q3 in his international strategy. But if you look over the longer term, the numbers are quite compelling on both a benchmark relative as well as on a peer relative basis. And we're also, you know, seeing a lot of interest from the emerging market side, both in credit as well as in equity. So our developing world team and our sustainable emerging markets team both had positive flows for the quarter and for the year. And, you know, there's just general broad renewed interest. Again, this is across both intermediated wealth and institutional, where probably no less than 18 months ago, everybody was talking about the death of emerging markets. There was cuts to asset allocations, and now we're just seeing that being revitalized. And you combine that with the fact that a couple of our large peers and competitors have made substantial portfolio management changes. So there's just a lot of money in motion. There's a lot of activity, and we think we've got two world-class franchises that are able to capitalize that. We're seeing the green shoots in terms of both flows, but importantly, their performance remains, you know, quite strong in both of those areas.

Gotcha. And then maybe just on the M&A front, you know, you mentioned the three areas you've been looking at recently. Could you maybe size kind of like how much you'd be able to allocate to something like that from, you know, a team lift out? if it may be something more substantial, how much could you perhaps, you know, put to work? And then just your philosophy on the consideration, would you do a stock deal or might you consider

putting on some leverage to do that? Thank you. Yeah, we're certainly very active in those three areas. And, you know, I'd highlight the slide, I believe it's slide five in the material, where you can see we've taken about 400 meetings over the last five years. Our investment strategy group has been extremely busy. You can also see at the bottom we haven't been terribly prolific. We've only added one team over that last five-year period. But we have been very, very deep in the weeds with a number of really interesting opportunities. And I would say our pipeline has largely been homegrown. This isn't areas where we're seeing interesting things from bankers. We're really doing this on a bottom-up basis, which has always been the hallmark of how Artisan has identified, you know, great talent. And so when you think about those three areas, the one that probably comes, you know, most to mind in terms of our activity levels has been in the area of real estate. And I hearken back to a quarterly call about four or five quarters ago where we talked a little bit more about how close we were with one opportunity in particular. That clearly didn't come to fruition, but we're also back at a point where we're seeing really good upside and opportunity from another opportunity specifically in real estate. But I think it's also important to reinforce that what we did say and we will continue to say is that the M&A opportunities that we're going to look at are not going to be transformative. We're going to look at things that are going to keep us true to who we are, build around a really exciting and talented group or individual, resource them, make sure that we have an alignment from a business mindset, and grow it. And in alternatives, that's going to require from time to time considering M&A, an upfront consideration, and then trying to align on the back end. We don't have a one-size-fits-all. We obviously want to make sure that we look at talent first and then make the determination around what the consideration is going to look like. But I just really want to point out that none of these are going to be transformative, at least the early ones. We really just want to stay true. And we think we can align the M&A model very much to how we think about liftouts. And so you'll hear and you'll see that if we, in fact, do a transaction. We would consider any and all alternatives when it comes to M&A, whether it be stock, additional leverage, or just cash. You know, I think given the size of the opportunity that we're looking at, cash is probably the most prevalent source of opportunity when thinking about these.

That's great.

Thank you. And the next question, Congressman Bill Katz with TD Cowan.

Great. Thank you very much for taking the question. I apologize for a little bit of a hoarse voice here. Just, Jason, you mentioned that you're focused on trying to improve the gross flows and stem the redemptions. and it seems like you have a lot of really good things happening here, but the growth flow has been persistently flattish. Can you talk a little bit about some of the efforts you are doing to sort of redesign or amplify the opportunity set? And then within that, you also mentioned that you continue to reorient distribution. Maybe just give us an update on what you're doing incrementally just to try and better map for the opportunity to grow it.

Maybe the latter first. When it comes to distribution, I think there's a couple of things that we've talked about, And as you know, Bill, you know, some of these things take a little time to really germinate and to see the benefits of. But the first one is we've, you know, we've been working with our model to just align compensation to more of a sales orientation and less of a service orientation. We've also been recruiting and hiring people. So if you think about our intermediate wealth and within that, we have an intermediary business that's, you know, facing off against RIAs, multifamily, single family offices, et cetera. And we had about 10 people on the field and, you know, we've been working really aggressively to sort of double that and we're sort of where we need to be there. but you you got to take the time to enculturate the individuals make sure that they understand the philosophy the process uh the people and you know we're starting to see some green shoots with the individuals that we brought on to the uh to the platform and so we're you know we're excited to see some leverage and some opportunity there also we're looking at uh growing out and expanding our regional footprint. So we haven't done a tremendous amount within the UK wealth market. And, you know, we would expect to, you know, have some people really targeting that area of the market, which we think is a really interesting and untapped opportunity. And, you know, at some point in the not too distant future, we would expect to have additional resources aligned to the Middle East, which we think is a big and broadening opportunity. And so that's one piece of it. I think the other pieces within our distribution efforts, we are really building out our capabilities around capital formation and having a team really dedicated to help identify and leverage the opportunity set across both intermediate wealth as well as the institutional channel. And those are very deliberate campaigns that we're running. You're hearing and probably heard a little bit about that in our commentary around emerging markets where we have we've faced off resources against the opportunity set and we're starting to see the the fruits of that it's a very very early campaign I believe we began that in late August and you know the I think for the quarter we had about 400 million in gross inflows just off of that campaign so early days but we're also seeing early early opportunity there and then you know One of the things that we've been talking a lot about internally and we're beginning to execute on is the modernization of our vehicle lineup. We've always been vehicle agnostic, being able to utilize our IP in wrappers that make sense for our business. We're seeing an evolution of our client base and their preferences, and we need to evolve with those preferences. And we're certainly working our way towards that evolution. and that can come in many different forms, models, SMAs, ETFs, semi-liquid funds, as well as private funds. And so, you'll see more and more of that to be a little bit more forward lean when it comes

to just the vehicle of choice. Great. Thank you. Just a follow-up, just to come back to your conversation, and I sort of appreciate slide five, so thank you for that. You sort of mentioned both internal and external opportunities. Could you bifurcate a little bit like where you see the internal opportunity set? Like when I think of real estate, secondaries, and private credit, I don't automatically think of artisan, so no offense intended by that. So I'm just trying to think about what your existing team could sort of transition into versus what you'd have to look out, look for

externally. Thank you. Yeah, it's a good question. You know, the private credit is clearly a natural extension. You know, Brian has done a tremendous amount to, he does a lot of work across both the private markets and the public markets. And I think where he is and with his franchise and with the depth and the quality of his team, that would be a natural evolution point for our private credit platform if we so desire to go in there. You know, Brian has and sources opportunities, the credits that he's looking at are looking at it both from a public market perspective and from a private market perspective. They're just looking for where they can get the best opportunity. And so he's very much in the mix on a lot of the pricing and deal activity across those markets, and they seem to be converging. And so it's obviously a prime opportunity if we decide to move in that direction to leverage Brian, his brand, his platform, and his performance in that regard. You're certainly right. I think private real estate is clearly one where if we were to go and do something, it would be from an external perspective. I think in private equity, there's a couple of teams that we could work with. I think our growth franchise has the depth and the skill to be able to go a little bit more into, you know, late-stage opportunities and potentially do something in a hybrid structure. But those are really, you know, opportunities that we were very early in conversations on. You know, frankly, private equity in general is just pure buyout or middle market is relatively difficult for us because we just don't know from a competitive standpoint if we're really in the right spot. That's why we've really focused on secondaries, which again would require us to likely go outside of the firm if we were to do something. And the pipeline really has been stacked in a way to align to that. So I'd say private equity secondaries has been a really strong area of interest for us, and we're seeing a lot of great talent. Real estate externally has and continues to be a really strong pipeline of opportunity. And private credit, probably a little less so. It's been more idiosyncratic, but we're not actively trying to pursue opportunities because we think the opportunities that might be right in front of us on our platform.

Thank you very much.

Thank you. And the next question comes from Kenneth Lee with RBC Capital Markets.

Hey, good afternoon, and thanks for taking my question. Just around the third quarter, you mentioned in the prepared remarks seeing some client rebalancing activity. I wonder if you could just give a little bit more color around that. What sorts of trends are you seeing around that area? Thanks.

Yeah, we could just dive in a little bit. So in Q3, we had three pretty big rebalances within our intermediate wealth space, space and these were they impacted a couple of teams international value international small mid in particular where you know clearly the performance remains quite strong these were in no way shape or form terminations they were just reductions in the overall exposure you know one of the things that we have we found and we're excited about is within the intermediate well space the the folks that were we're talking with are highly sophisticated and they run very similar models to what you think of a very large pension or institution would be running so you know there's pretty frequent rebalances and given the size of the programs that we're in the models that they're they're running it's not to be unexpected you know we're in a we're in a high class problem environment when it comes to our equity business they're producing phenomenal returns over short intermediate and long periods of time, which in and of itself means that we're going to be a right candidate for rebalancing. And certainly Q3 was no different in that regard. And then the one area where we did see a termination was a relatively small one, but again, it's a little bit more idiosyncratic. It's more idiosyncratic due to the market. It was an Australian client, And as we've talked about on past calls, you know, the Australian market from a regulatory perspective has forced a lot of people to reevaluate their allocations to active management, ultimately favoring passive management and just in-house strategies. And so that was a bit of a continuation there, but nothing that we could say was specific to the artisan platform.

Gotcha. Very helpful there. And just one follow-up, if I may, in terms of the expenses, wondering if there's any kind of updated outlook over the near term around expenses.

Hey, Ken. It's CJ. You know, I would just note that I think, you know, back in the beginning of the year, and I've confirmed we thought we'd be around mid-single digits for, you know, fixed expense growth for the year. You know, we're tracking there maybe slightly a little bit better. You know, we're in the process of looking forward to 2026 budgeting, any updates there. But, you know, as we mentioned, you know, we've been, you know, very disciplined on expenses in 2025 after a couple years of strong years of headcount growth and building out distribution operations, adding capabilities to Jason Esposito. So I don't expect, and the guidance that we gave for 2025 still stands, might come in, you know, a tad better.

Thanks again.

Thank you. And this concludes the question and answer session as well as the event. Thank you for attending today's presentation.

You may now disconnect your lines.