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What changed in Victory Capital Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Victory Capital Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+425 added−399 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-29)

Top changes in Victory Capital Holdings, Inc.'s 2024 10-K

425 paragraphs added · 399 removed · 336 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

98 edited+16 added−10 removed82 unchanged
Biggest changeStrategy/Benchmark Index 1 year 3 years 5 years 10 years Sycamore Mid Cap Value 10.91 % 13.01 % 15.26 % 11.67 % Russell MidCap Value 12.71 % 8.36 % 11.16 % 8.26 % Excess Return (1.80) % 4.65 % 4.10 % 3.41 % Victory US 500 27.26 % 9.54 % 16.00 % 12.18 % S&P 500 26.29 % 10.00 % 15.69 % 12.03 % Excess Return (0.97) % (0.46) % 0.31 % 0.15 % Sycamore Small Cap Value 12.44 % 10.29 % 12.68 % 10.46 % Russell 2000 Value 14.65 % 7.94 % 10.00 % 6.76 % Excess Return (2.21) % 2.35 % 2.68 % 3.70 % WestEnd Global Balanced 14.00 % 2.25 % 8.88 % 6.92 % Global Balanced Benchmark 16.29 % 2.58 % 8.31 % 6.03 % Excess Return (2.29) % (0.33) % 0.57 % 0.89 % WestEnd Global Equity 20.06 % 5.58 % 13.26 % 10.06 % MSCI ACWI 22.20 % 5.75 % 11.72 % 7.93 % Excess Return (2.14) % (0.17) % 1.54 % 2.13 % 10 Table of Contents Victory NASDAQ-100 55.05 % 10.16 % 22.67 % 17.91 % NASDAQ-100 Total Return 55.13 % 10.18 % 22.66 % 17.91 % Excess Return (0.08) % (0.02) % 0.01 % 0.00 % Trivalent International Small-Cap Equity 16.77 % 0.96 % 9.12 % 6.68 % S&P Dev ex-US SmallCap 13.46 % (1.07) % 6.46 % 4.40 % Excess Return 3.31 % 2.03 % 2.66 % 2.28 % Victory Income Investors - Income 7.69 % (1.87) % 2.78 % 3.12 % Bloomberg US Aggregate 5.53 % (3.31) % 1.10 % 1.81 % Excess Return 2.16 % 1.44 % 1.68 % 1.31 % WestEnd US Sector 22.25 % 8.07 % 16.10 % 13.00 % S&P 500 26.29 % 10.00 % 15.69 % 12.03 % Excess Return (4.04) % (1.93) % 0.41 % 0.97 % Victory Income investors – Core Plus Fixed Income 7.79 % (1.32) % 3.38 % 3.49 % Bloomberg US Aggregate 5.53 % (3.31) % 1.10 % 1.81 % Excess Return 2.26 % 1.99 % 2.28 % 1.68 % A high percentage of our mutual fund and ETF assets have four- or five-star Morningstar ratings.
Biggest changeStrategy/Benchmark Index 1 year 3 years 5 years 10 years Sycamore Mid Cap Value 10.78 % 6.42 % 11.70 % 11.44 % Russell MidCap Value 13.07 % 3.88 % 8.59 % 8.10 % Excess Return (2.29) % 2.54 % 3.11 % 3.34 % Victory S&P 500 Index 25.31 % 9.08 % 14.61 % 13.15 % S&P 500 25.02 % 8.94 % 14.53 % 13.10 % Excess Return 0.29 % 0.14 % 0.08 % 0.05 % Sycamore Small Cap Value 6.44 % 4.09 % 8.60 % 10.31 % Russell 2000 Value 8.05 % 1.94 % 7.29 % 7.14 % Excess Return (1.61) % 2.15 % 1.31 % 3.17 % WestEnd Global Balanced 8.82 % 0.77 % 6.66 % 7.08 % Global Balanced Benchmark 11.57 % 2.71 % 6.62 % 6.69 % Excess Return (2.75) % (1.94) % 0.04 % 0.39 % Victory NASDAQ-100 25.94 % 9.70 % 20.18 % 18.53 % NASDAQ-100 25.88 % 9.71 % 20.18 % 18.53 % Excess Return 0.06 % (0.01) % 0.00 % 0.00 % WestEnd US Sector 20.03 % 5.26 % 14.03 % 13.34 % S&P 500 25.02 % 8.94 % 14.53 % 13.10 % Excess Return (4.99) % (3.68) % (0.50) % 0.24 % WestEnd Global Equity 14.35 % 3.61 % 10.82 % 10.47 % MSCI ACWI (ND) 17.49 % 5.44 % 10.06 % 9.23 % Excess Return (3.14) % (1.83) % 0.76 % 1.24 % Victory Income investors – Core Plus Fixed Income 3.42 % (0.69) % 1.80 % 3.19 % Bloomberg US Aggregate 1.25 % (2.41) % (0.33) % 1.35 % Excess Return 2.17 % 1.72 % 2.13 % 1.84 % 10 Table of Contents Trivalent International Small-Cap Equity 6.00 % (1.30) % 4.86 % 7.12 % S&P Dev ex-US SmallCap (ND) (0.14) % (3.96) % 1.94 % 4.79 % Excess Return 6.14 % 2.66 % 2.92 % 2.33 % Victory Income investors – Income 3.87 % (0.89) % 1.30 % 2.86 % Bloomberg US Aggregate 1.25 % (2.41) % (0.33) % 1.35 % Excess Return 2.62 % 1.52 % 1.63 % 1.51 % A high percentage of our mutual fund and ETF assets have four- or five-star Morningstar ratings.
VCM also provides mutual fund administrative services for the Victory Portfolios, Victory Variable Insurance Funds, two mutual fund series named the Victory Portfolios II and Victory Portfolios III (collectively, the “Victory Funds”), that are families of open-end mutual funds; and VictoryShares (the Company’s ETF brand), and the USAA 529 Education Savings Plan.
VCM also provides mutual fund administrative services for the Victory Portfolios, Victory Variable Insurance Funds, two mutual fund series named the Victory Portfolios II and Victory Portfolios III (collectively, the “Victory Funds”), that are families of open-end mutual funds; VictoryShares (the Company’s ETF brand), and the USAA 529 Education Savings Plan.
Our Franchises are independent from one another from an investment process perspective, maintain their own separate brands and logos, which have been built over time, and are led by dedicated Chief Investment Officers (“CIOs”) or a dedicated management team. We customize each Franchise’s integration with our operating platform to optimize their investment processes.
Our Investment Franchises are independent from one another from an investment process perspective, maintain their own separate brands and logos, which have been built over time, and are led by dedicated Chief Investment Officers (“CIOs”) or a dedicated management team. We customize each Franchise’s integration with our operating platform to optimize their investment processes.
Victory Capital’s strategies are sold directly to investors as well as through third-party investment products, including mutual funds, third-party ETF model strategies, retail SMAs and UMAs through wrap account programs, CITs, and UCITs. Our product mix could expand, as we can add investment vehicles to strategies offered by our Franchises.
Victory Capital’s strategies are sold directly to investors as well as through third-party investment products, including mutual funds, third-party ETF model strategies, retail SMAs and UMAs through wrap account programs, CITs, and UCITS. Our product mix could expand, as we can add investment vehicles to strategies offered by our Investment Franchises.
Our Franchises retain investment autonomy while benefiting from our centralized operating platform that can be tailored to meet their specific needs. We have demonstrated an ability to incorporate our Franchises onto our flexible infrastructure without significantly increasing incremental fixed costs, which is a key component to the scalability of our business model.
Our Investment Franchises retain investment autonomy while benefiting from our centralized operating platform that can be tailored to meet their specific needs. We have demonstrated an ability to incorporate our Franchises onto our flexible infrastructure without significantly increasing incremental fixed costs, which is a key component to the scalability of our business model.
Through our unified distribution platform, our Franchises can efficiently sell their products to institutional investors, retirement plans, wealth managers, directly to individual investors, as well as through retail and retirement intermediaries of all sizes, where it can be challenging for smaller managers to gain access, and directly to investors.
Through our unified distribution platform, our Franchises can efficiently sell their products to institutional investors, retirement plans, wealth managers, directly to individual investors, as well as through retail and retirement intermediaries of all sizes, where it can be challenging for smaller managers to gain access.
In addition, certain of our employees are registered with FINRA and such states and subject to SEC, state and FINRA regulation. The failure of these companies and/or employees to comply with relevant regulation could have a material adverse effect on our business. SEC Transfer Agent Registration – VCTA is a SEC-registered transfer agent.
In addition, certain of our employees are registered with FINRA and such states and subject to SEC, state and FINRA regulation. The failure of these companies and/or employees to comply with relevant regulations could have a material adverse effect on our business. SEC Transfer Agent Registration – VCTA is a SEC-registered transfer agent.
We will seek to continue to augment our differentiated investment management platform by focusing on acquisition candidates that can make our investment platform better, that expand our distribution or investment capabilities, that optimize our operating platform and/or achieve our integration and synergy expectations.
We will seek to continue to augment our differentiated investment management platform by focusing on acquisition candidates that can make our investment platform better, that expand our distribution or investment capabilities, which optimize our operating platform and/or achieve our integration and synergy expectations.
Trivalent’s investment strategy is primarily a proprietary quantitative process that drives stock selection across various countries. Trivalent frequently conducts reviews of stock selection rankings within a portfolio construction and risk management context in order to isolate performance to stock selection. Trivalent is based in Boston, MA, and managed $5.3 billion in AUM as of December 31, 2023.
Trivalent’s investment strategy is primarily a proprietary quantitative process that drives stock selection across various countries. Trivalent frequently conducts reviews of stock selection rankings within a portfolio construction and risk management context in order to isolate performance to stock selection. Trivalent is based in Boston, MA, and managed $5.3 billion in AUM as of December 31, 2024.
Despite their lower average fee rates, by managing these competitively priced strategies on our integrated platform we can earn margins in excess of our average consolidated margin on these products. Because we largely outsource our middle‑ and back‑office functions, as well as certain aspects of technology support, we have relatively minimal capital expenditure requirements.
Despite their lower average fee rates, by managing these competitively priced strategies on our integrated platform we can earn margins in excess of our average consolidated margin on these products. Because we largely outsource our middle‑ and back‑office functions, as well as certain aspects of technological support, we have relatively minimal capital expenditure requirements.
In 2021, the Company acquired WestEnd Advisors (“WestEnd”), which maintains its own RIA, which is an affiliate RIA that receives certain services from VCM. VCM employs all of the Company’s United States investment professionals across all 11 Franchises and its Solutions Platform. VCM’s wholly owned subsidiaries include RS Investment Management (Singapore) Pte.
In 2021, the Company acquired WestEnd Advisors (WestEnd”), which maintains its own RIA, which is an affiliate RIA that receives certain services from VCM. VCM employs all of the Company’s United States investment professionals across all 11 Franchises and its Solutions Platform. VCM’s wholly owned subsidiaries include RS Investment Management (Singapore) Pte.
We believe, based on our successful acquisition track record, that there is a significant opportunity for us to continue to profitably grow through additional acquisitions, as industry dynamics have expanded the universe of potential acquisition targets. Alternative Investments – In 2021, we launched our alternative investments platform with the acquisition of New Energy Capital (“NEC”).
Based on our successful acquisition track record, we believe that there is a significant opportunity for us to continue to profitably grow through additional acquisitions, as industry dynamics have expanded the universe of potential acquisition targets. Alternative Investments – We launched our alternative investments platform with the acquisition of New Energy Capital (“NEC”).
We believe the diversity in investment styles reduces the correlation between the return profiles of strategies within the same asset class, and consequently provides an additional layer of diversification of AUM and revenue stability. Our AUM also is well diversified at the Franchise level, with no Franchise accounting for more than 21% of total AUM.
We believe the diversity in investment styles reduces the correlation between the return profiles of strategies within the same asset class and consequently provides an additional layer of diversification of AUM and revenue stability. Our AUM is also well diversified at the Franchise level, with no Franchise accounting for more than 20% of total AUM.
(“VCTA”), a transfer agent registered with the SEC that acts as transfer agent for the Victory Portfolio III series of mutual funds. Our Growth Strategy We have a purposeful strategy designed to achieve continued profitable growth and success for our clients, our employees, and our shareholders. The growth we pursue is both organic and inorganic.
(“VCTA”), a transfer agent registered with the SEC that acts as transfer agent for the Victory Portfolio III series of mutual funds. Our Growth Strategy We have a purposeful strategy designed to achieve lasting profitable growth and success for our clients, our employees, and our shareholders. The growth we pursue is both organic and inorganic.
One of our key advantages in a competitive mergers and acquisition environment is our ability to provide access to multiple distribution channels. Our distribution and marketing platforms drive organic growth at our acquired Franchises both by opening new distribution channels and penetrating deeper into existing ones.
One of our key advantages in a competitive merger and acquisition environment is our ability to provide access to multiple distribution channels. Our distribution and marketing platforms drive organic growth at our acquired Franchises both by opening new distribution channels and penetrating deeper into existing ones.
We are committed to maintaining the same guiding principles with alternative Investment Franchises that led to success with our traditional Investment Franchises. 5 Table of Contents Diversification Strategy We offer an array of equity, fixed income, investment models, alternative investments, closed end private funds, and solutions strategies that encompass a diverse spectrum of market capitalization segments, industry sectors, investment styles and approaches.
We are committed to maintaining the same guiding principles with alternative Investment Franchises that led to success with our traditional Investment Franchises. Diversification Strategy We offer an array of equity, fixed income, investment models, alternative investments, closed end private funds, and solutions strategies that encompass a diverse spectrum of market capitalization segments, industry sectors, investment styles and approaches.
For additional information concerning the competitive risks that we face, refer to “Risk Factors — Industry Risks — The investment management industry is intensely competitive.” 15 Table of Contents Human Capital We have created strong alignment of interests with clients and shareholders through employee ownership, our Franchise revenue share structure, and employee investments in our products.
For additional information concerning the competitive risks that we face, refer to “Risk Factors — Industry Risks — The investment management industry is intensely competitive.” Human Capital We have created strong alignment of interests with clients and shareholders through employee ownership, our Franchise revenue share structure, and employee investments in our products.
Ltd., and RS Investments (UK) Limited, Victory Capital Digital Assets, LLC and NEC Pipeline LLC. VCS is registered with the SEC as an introducing broker-dealer and serves as distributor and underwriter for certain Victory Funds and for municipal fund securities issued by the Nevada College Savings Trust Fund under the USAA 529 Education Savings Plan.
Ltd., and RS Investments (UK) Limited, and NEC Pipeline LLC. VCS is registered with the SEC as an introducing broker-dealer and serves as distributor and underwriter for certain Victory Funds and for municipal fund securities issued by the Nevada College Savings Trust Fund under the USAA 529 Education Savings Plan.
Economic and Structural Alignment of Interests Promotes Ownership Culture – Through our revenue share compensation model for our Franchises and broad employee ownership, we have structurally aligned our employees’ interests with those of our clients and shareholders and have created an ownership culture that encourages employees to act in the best interests of clients and our Company shareholders, as well as to think long term.
Economic and Structural Alignment of Interests Promotes Ownership Culture – Through our revenue share compensation model for our Franchises and broad employee ownership, we have structurally aligned our employees’ long-term interests with those of our clients and shareholders and have created an ownership culture that encourages employees to act in the best interests of clients and our Company shareholders.
All our soft dollar arrangements are intended to be within the safe harbor provided by Section 28(e) of the Exchange Act. If our ability to use soft dollars were reduced or eliminated as a result of the implementation of statutory amendments or new regulations, our operating expenses would increase.
All our soft dollar arrangements are intended to be within 16 Table of Contents the safe harbor provided by Section 28(e) of the Exchange Act. If our ability to use soft dollars were reduced or eliminated as a result of the implementation of statutory amendments or new regulations, our operating expenses would increase.
The SEC is authorized to institute proceedings and impose sanctions for violations of the Advisers Act 16 Table of Contents and the 1940 Act, ranging from fines and censures to termination of an adviser’s registration. As an investment adviser, we have a fiduciary duty to our clients.
The SEC is authorized to institute proceedings and impose sanctions for violations of the Advisers Act and the 1940 Act, ranging from fines and censures to termination of an adviser’s registration. As an investment adviser, we have a fiduciary duty to our clients.
ERISA, the regulations 17 Table of Contents promulgated thereunder, and applicable provisions of the Internal Revenue Code impose certain duties on persons who are fiduciaries under ERISA, prohibit certain transactions involving ERISA plan clients and impose monetary penalties for violations of these prohibitions.
ERISA, the regulations promulgated thereunder, and applicable provisions of the Internal Revenue Code impose certain duties on persons who are fiduciaries under ERISA, prohibit certain transactions involving ERISA plan clients and impose monetary penalties for violations of these prohibitions.
For the year ended December 31, 2023, 81% of our total revenues were derived from our services to investment companies registered under the 1940 Act – i.e., mutual funds and ETFs. The 1940 Act imposes significant requirements and limitations on a registered fund, including with respect to its capital structure, investments, and transactions.
For the year ended December 31, 2024, 78% of our total revenues were derived from our services to investment companies registered under the 1940 Act – i.e., mutual funds and ETFs. The 1940 Act imposes significant requirements and limitations on a registered fund, including with respect to its capital structure, investments, and transactions.
We primarily seek to acquire investment management firms that will add high quality investment teams, enhance our growth and financial profile, improve our diversification by asset class and investment strategy, achieve our integration expectations, and expand our distribution capabilities.
We primarily seek to acquire investment management firms that will add high quality investment teams, enhance our growth and financial profile, improve our diversification by asset class and investment capability, achieve our integration and synergy expectations, and expand our distribution capabilities.
This penetration provides the opportunity for us to sell more products through distribution platforms. We have several products on the research recommended/model portfolios of the 14 Table of Contents top U.S. intermediary platforms. We also have several products on the recommended list of the top retirement platforms.
This penetration provides the opportunity for us to sell more products through distribution platforms. We have several products on the research recommended/model portfolios of the top U.S. intermediary platforms. We also have several products on the recommended list of the top retirement platforms.
Notably, a significant number of our employee shareholders acquired their equity in 2013 in connection with the management‑led buyout with Crestview GP from KeyCorp, as well as in connection with the acquisitions of RS Investments and Munder.
Notably, a significant number of our employee shareholders acquired their equity in 2013 in connection with the management‑led buyout with Crestview GP from KeyCorp, as well as in connection with the acquisitions of Munder, RS Investments, and USAA Asset Management Company.
Our Trivalent Investment Franchise includes six investment professionals with an average industry experience of approximately 29 years. Victory Income Investors – Victory Income Investors utilizes a rigorous process rooted in a team-oriented approach among portfolio managers, research analysts and traders. Their taxable and tax-exempt portfolios are built bond by bond using a fundamental, bottom up, credit and yield-focused analysis.
Our Trivalent Investment Franchise includes seven investment professionals with average industry experience of approximately 28 years. Victory Income Investors – Victory Income Investors utilizes a rigorous process rooted in a team-oriented approach among portfolio managers, research analysts and traders. Their taxable and tax-exempt portfolios are built bond by bond using a fundamental, bottom up, credit and yield-focused analysis.
VCS also serves as placement agent for certain private funds managed by VCM. On April 24, 2023, the Direct Investor Business was expanded to include brokerage capabilities through VCS and this channel was rebranded Victory InVest. VCH indirectly owns Victory Capital Transfer Agency, Inc.
VCS also serves as the placement agent for certain private funds managed by VCM. In April of 2023, the Direct Investor Business was expanded to include brokerage capabilities through VCS and this channel was rebranded Victory Capital inVest. VCH indirectly owns Victory Capital Transfer Agency, Inc.
As illustrated below, as of December 31, 2023, our current business is well diversified from multiple perspectives, including by asset class, by investment vehicle, and by Franchises and our Solutions Platform. Asset Class Mix 6 Table of Contents Vehicle Mix *Includes CITs, UCITs, private funds, and non-U.S. domiciled pooled vehicles.
As illustrated below, as of December 31, 2024, our current business is well diversified from multiple perspectives, including by asset class, by investment vehicle, and by Investment Franchise and our Solutions Platform. Asset Class Mix 6 Table of Contents Vehicle Mix Franchise / Platform Mix *Includes CITs, UCITS, private funds, and non-U.S. domiciled pooled vehicles.
We principally compensate our investment professionals through a revenue share program, which we believe further incentivizes our investment professionals to focus on investment performance and client retention, while simultaneously minimizing potential distractions from an expense allocation process that would be involved in a profit‑sharing program.
We principally compensate our investment professionals 15 Table of Contents through a revenue share program, which we believe further incentivizes our investment professionals to focus on investment performance and client retention, while simultaneously minimizing potential distractions from an expense allocation process that would be involved in a profit‑sharing program.
Victory Capital’s strategies are also offered through third-party investment products, including mutual funds, third-party ETF model strategies, retail separately managed accounts (“SMAs”) and unified managed accounts (“UMAs”) through wrap account programs, Collective Investment Trusts (“CITs”), and undertakings for the collective investment in transferable securities (“UCITs”).
Victory Capital’s strategies are also offered through third-party investment products, including mutual funds, third-party ETF 3 Table of Contents model strategies, retail separately managed accounts (“SMAs”) and unified managed accounts (“UMAs”) through wrap account programs, Collective Investment Trusts (“CITs”), and undertakings for the collective investment in transferable securities (“UCITS”).
The Committee’s mission is to foster an environment that attracts the best talent, values diversity of life experiences and perspectives, and encourages innovation and excellence. We also support a number of Employee Resource Groups which are employee-driven and provide support, leadership, and connection to our diverse marketplace.
This Committee’s mission is to foster an environment that attracts the best talent, values diversity of life experiences and perspectives, and encourages innovation and excellence. We also support a number of Employee Groups which are employee-driven and provide support, leadership, and connections to our diverse marketplace.
Failure to comply with applicable laws, regulations, codes, directives, notices, and guidelines issued by the MAS may result in penalties including fines, censures and the suspension or revocation of licenses granted by the MAS. VCM is also authorized by the Central Bank of Ireland, which regulates our Irish business activities, to act as an investment manager to Irish UCITS fund.
Failure to comply with applicable laws, regulations, codes, directives, notices, and guidelines issued by the MAS may result in penalties including fines, censures and the suspension or revocation of licenses granted by the MAS. VCM is cleared by the Central Bank of Ireland, which regulates our Irish business activities, to act as an investment manager to Irish UCITS funds.
Over a three‑year and five‑year basis, 53% and 65% of our fund AUM achieved four- or five-star ratings, respectively. Competitive Strengths We believe we have significant competitive strengths that position us for sustained growth and shareholder value creation over the long term.
Over a three‑year and five‑year basis, 62% and 59% of our fund AUM achieved four- or five-star ratings, respectively. Competitive Strengths We believe we have significant competitive strengths that position us for sustained growth and shareholder value creation over the long term.
These asset classes collectively comprised 88% of our $166.6 billion of total AUM, and 90% of long-term AUM, as of December 31, 2023. Product Mix – Our investment strategies are offered through actively and passively managed mutual funds, rules-based and active ETFs, institutional separate accounts, VIPs, alternative investments, private closed end funds, and a 529 Education Savings Plan.
These asset classes collectively comprised 88% of our $171.9 billion of total AUM, and 90% of long-term AUM, as of December 31, 2024. Product Mix – Our investment strategies are offered through actively and passively managed mutual funds, rules-based and active ETFs, institutional separate accounts, VIPs, alternative investments, private closed end funds, and a 529 Education Savings Plan.
Furthermore, we believe our Franchises’ brand independence reduces the impact of each individual Franchise’s performance on clients’ perceptions of the other Franchises. The distribution of AUM by Franchise 12 Table of Contents and the number of Franchises, as well as succession planning, mitigates the level of key man risk typically associated with investment management businesses.
Furthermore, we believe our Franchises’ brand independence reduces the impact of each individual Franchise’s performance on clients’ perceptions of the other Franchises. The distribution of AUM by Franchise and the number of Franchises, as well as succession planning, mitigates the level of key person risk typically associated with investment management businesses.
At year-end, our employees also had more than $200 million of their personal assets invested in our investment products at their own discretion. We believe that doing our part to maintain the health and welfare of our employees is a critical element for achieving commercial success.
At year-end, our employees also had approximately $240 million of their personal assets invested in our investment products at their own discretion. We believe that doing our part to maintain the health and welfare of our employees is a critical element for achieving commercial success.
The table below sets forth our 10 largest strategies by assets as of December 31, 2023, and their average annual total returns compared to their respective benchmark index over the one‑, three‑, five‑ and 10‑year periods ended December 31, 2023. These strategies represented approximately 48% of our total AUM as of December 31, 2023.
The table below sets forth our 10 largest strategies by assets as of December 31, 2024, and their average annual total returns compared to their respective benchmark index over the one‑, three‑, five‑ and 10‑year periods ended December 31, 2024. These strategies represented approximately 50% of our Total Assets as of December 31, 2024.
We recognize and appreciate the importance of creating an environment in which all employees feel valued, included, and empowered to do their best work and as a result our Diversity, Inclusion, Cohesion, and Engagement Committee is charged with driving best practices to promote diversity.
We recognize and appreciate the importance of creating an environment in which all employees feel valued, included, and empowered to do their best work and as a result our Diversity, Inclusion, Engagement, and Belonging Committee is charged with driving best practices to cultivate a culture of belonging.
We encourage you to review our Corporate Responsibility Report (located on our website) for more detailed information regarding our human capital programs and initiatives. Nothing on our website is deemed incorporated by reference into this Report.
We encourage you to review our Responsible Business Report (located on our website) for more detailed information regarding our human capital programs and initiatives. Nothing on our website is deemed incorporated by reference into this Report.
We maintain a public internet site at ir.vcm.com and make available free of charge through this site our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and Forms 3, 4 and 5 filed on behalf of directors and executive officers, as well as any amendments to those reports filed or furnished pursuant to the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Our SEC filings are available to the public from the SEC’s public internet site at https://www.sec.gov. 18 Table of Contents We maintain a public internet site at ir.vcm.com and make available free of charge through this site our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and Forms 3, 4 and 5 filed on behalf of directors and executive officers, as well as any amendments to those reports filed or furnished pursuant to the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
In addition to being aligned with our financial success through their equity ownership, our current employees collectively have invested more than $200 million in products we manage as of December 31, 2023. We directly align the compensation paid to our investment teams with the performance of their respective Franchises by structuring formula‑based revenue sharing on the products they manage.
In addition to being aligned with our financial success through their equity ownership, our current employees collectively have invested approximately $240 million in the products we manage as of December 31, 2024. We directly align the compensation paid to our investment teams with the performance of their respective Franchises by structuring formula‑based revenue sharing on the products they manage.
For example, U.S. mid cap equities, which accounted for approximately 18% of total AUM as of December 31, 2023, consists of five Franchises, each following a different investment strategy.
For example, U.S. mid cap equities, which accounted for approximately 17% of Total AUM as of December 31, 2024, consists of five Franchises, each following a different investment strategy.
We believe the high percentage of employee ownership creates a collective alignment with our success. Additionally, our employees invest in products managed by our Franchises and Solutions Platform, providing direct alignment with the interests of our clients. As of December 31, 2023, 86% of our employees held 15% of the equity in our Company.
We believe the high percentage of employee ownership creates a collective alignment with our success. Additionally, our employees invest in products managed by our Franchises and Solutions Platform, providing direct alignment with the interests of our clients. As of December 31, 2024, 81% of our employees held 13% of the equity in our Company.
THB serves clients in the U.S. and in Europe and Australia. Based in Norwalk, CT, our THB Investments Franchise includes eight investment professionals with an average industry experience of approximately 14 years. Trivalent Investments – Trivalent Investments utilizes a disciplined approach to stock selection across large to small companies in the international and emerging markets space.
Based in Norwalk, CT, our THB Investments Franchise includes eight investment professionals with an average industry experience of approximately 15 years. Trivalent Investments – Trivalent Investments utilizes a disciplined approach to stock selection across large to small companies in the international and emerging markets space.
Franchise/Platform Mix Data as of December 31, 2023, values may not total 100% due to rounding. Within individual asset classes and strategies, our Franchises employ different investment approaches. This diversification reduces the correlation between investment return streams generated by multiple Franchises investing within the same asset class.
All pie chart data is as of December 31, 2024, values may not total 100% due to rounding. Within individual asset classes and strategies, our Franchises employ different investment approaches. This diversification reduces the correlation between investment return streams generated by multiple Franchises investing within the same asset class.
As of December 31, 2023, 42 of our Victory Capital mutual funds and ETFs, with Morningstar overall ratings, earned ratings of four or five stars overall and 70% of our mutual fund and ETF AUM were rated four or five stars overall by Morningstar.
As of December 31, 2024, 45 of our Victory Capital mutual funds and ETFs, with Morningstar overall ratings, earned ratings of four or five stars overall and 66% of our mutual fund and ETF AUM were rated four or five stars overall by Morningstar.
In recognition of this mission, Victory Capital has established an equity awards program, in which most employees participate. As of December 31, 2023, we had 481 employees, with 86% holding ownership interests in our Company that totaled 15% of the equity in our firm.
In recognition of this mission, Victory Capital has established an equity awards program, in which most employees participate. As of December 31, 2024, we had 460 employees, with 81% holding ownership interests in our Company that totaled 13% of the equity in our firm.
On an equal‑weighted basis, 63% of our strategies have outperformed their benchmarks over a ten‑year period, 62% over a five‑year period, 63% over a three‑year period, and 56% over a one-year period. We consider both the AUM‑weighted and equal‑weighted metrics in evaluating our investment performance.
On an equally weighted basis, 65% of our strategies outperformed their benchmarks over a ten‑year period, 58% over a five‑year period, 58% over a three‑year period, and 53% over a one-year period. We consider both the AUM‑weighted and equal‑weighted metrics in evaluating our investment performance.
Item 1. Business Overview We are a diversified global asset management firm with $166.6 billion in total assets under management (“AUM”) as of December 31, 2023. Our differentiated business model combines boutique investment qualities of traditional and alternative investment managers with the benefits of an integrated, centralized (not standardized) operating and distribution platform.
Item 1. Business Overview We are a diversified global asset management firm with total assets under management (“AUM”) of $171.9 billion, and $176.1 billion in total client assets, as of December 31, 2024. Our differentiated business model combines boutique investment qualities with the benefits of an integrated, centralized (not standardized) operating and distribution platform.
Recent initiatives include investments in data and analytics, technology, distribution, and marketing to enhance organic growth in our business and increase efficiencies in our distribution channels. Inorganic Growth – We complement our organic growth through strategic acquisitions.
Recent initiatives include investments in artificial intelligence (AI), data and analytics, technology, distribution, and marketing to enhance organic growth in our business and increase the effectiveness of our distribution channels. Inorganic Growth – We complement our organic growth through strategic acquisitions.
The information on our website is not incorporated by reference into this annual report. 18 Table of Contents
The information on our website is not incorporated by reference into this annual report.
Our business also is subject to the rules and regulations of the countries in which we market our funds or services and conduct investment activities.
Regulation – In addition to the extensive regulation to which we are subject in the United States, we are subject to regulation internationally. Our business is also subject to the rules and regulations of the countries in which we market our funds or services and conduct investment activities.
(“Crestview GP”) from KeyCorp in 2013, we have successfully closed seven acquisitions, made and exited two minority investments, and through December 31, 2023, grown our AUM more than 830% from $17.9 billion to $166.6 billion. We understand the need to execute transactions while minimizing disruption to the investment teams and to the client experience.
(“Crestview GP”) from KeyCorp in 2013, we have successfully closed seven acquisitions, made, and exited two minority investments, and through December 31, 2024, grown our Total Client Assets 884% from $17.9 billion to $176.1 billion. We understand the need to execute transactions while minimizing disruption to the investment teams and to the client experience.
We believe our unique business model is attractive for potential acquisition prospects. Under our model, Franchises retain the brands they have built as well as autonomy over their investment decisions, while simultaneously benefiting from the ability to leverage our centralized distribution, marketing, and operations platform.
Under our model, Franchises retain the brands they have built as well as autonomy over their investment decisions, while simultaneously benefiting from the ability to leverage our centralized distribution, marketing, and operations platform.
As of December 31, 2023, our Franchises and our Solutions Platform collectively managed a diversified set of 118 investment strategies. 3 Table of Contents Our design logos and the marks “Victory Capital,” “Victory Capital Management,” “Victory Funds,” “VictoryShares,” “Victory Capital inVest,” “Victory Capital Solutions,” “inVest,” “Integrity,” “Integrity Asset Management,” “inVest,” “Munder,” “Munder Capital Management,” “New Energy Capital,” “THB,” “The Road to Victory,” “RS Investments,” “Sycamore Capital,” “Trivalent Investments,” “Victory Income Investors”, “USAA 529 Education Savings Plan,” and “WestEnd Advisors,” are pending, owned, or licensed for a period of time by us or one of our subsidiaries.
Our design logos and the marks “Victory Capital,” “Victory Capital Management,” “Victory Funds,” “VictoryShares,” “Victory Capital inVest,” “Victory Capital Solutions,” “inVest,” “Munder,” “Munder Capital Management,” “New Energy Capital,” “THB,” “The Road to Victory,” “RS Investments,” “Sycamore Capital,” “Trivalent Investments,” “Victory Income Investors”, “USAA 529 Education Savings Plan,” and “WestEnd Advisors,” are pending, owned, or licensed for a period of time by us or one of our subsidiaries.
The duties under ERISA require, among other obligations, that fiduciaries perform their duties solely in the interests of ERISA plan participants and beneficiaries. CFTC Regulation – VCM is registered with the Commodity Futures Trading Commission (the “CFTC”) as a commodity operator and is a member of the National Futures Association (“NFA”), a self‑regulatory organization for the U.S. derivatives industry.
The duties under ERISA require, among other obligations, that fiduciaries perform their duties solely in the interests of ERISA plan participants and beneficiaries. CFTC Regulation – VCM is registered as both a commodity pool operator and commodity trading advisor with the CFTC and a member of the National Futures Association (“NFA”).
Their distinct names and branding is designed to embody and reinforce their respective investment processes in the market. With no Investment Franchise accounting for more than 21% of total AUM, we are well diversified across asset classes and investment approaches.
Their distinct names and brands are designed to embody and reinforce their respective autonomy and investment processes in the market. With the exception of our Solutions platform, no Investment Franchise accounts for more than 20% of total AUM, we are well diversified across asset classes and investment approaches.
Because we integrate a significant portion of most of our Franchises’ distribution, operational and administrative functions, we have been able to extract significant expense synergies from certain acquisitions, enabling us to create greater value from transactions.
Through this agreement, we will have access to a broad and deep distribution and joint venture network around the globe. Because we integrate a significant portion of most of our Franchises’ distribution, operational and administrative functions, we have been able to extract significant expense synergies from certain acquisitions, enabling us to create greater value from transactions.
Investors can now leverage our open architecture brokerage option and establish brokerage accounts to invest in mutual funds and ETFs from our platform along with individual stocks and products managed by third-party providers.
In 2023, the Direct Investor Business was expanded to include brokerage capabilities through our broker-dealer entity VCS. Investors can now leverage our open architecture brokerage option and establish brokerage accounts to invest in mutual funds and ETFs from our platform along with individual stocks and products managed by third-party providers.
Victory Income Investors is based in San Antonio, TX, and managed $28.0 billion in AUM as of December 31, 2023. Our Victory Income Investors Investment Franchise has a team of 39 including 30 investment professionals with an average industry experience of approximately 22 years. In April of 2023, USAA Investments was renamed “Victory Income Investors”.
Victory Income Investors is based in San Antonio, TX, and managed $29.8 billion in AUM as of December 31, 2024. Our Victory Income Investors Investment Franchise has a team of 40 including 30 investment professionals with an average industry experience of approximately 23 years.
THB Asset Management – Founded in 1982, and formerly known as Thomson, Hortsmann & Bryant, THB Asset Management (“THB”) manages equity assets in capacity constrained, micro-cap, small-cap, and mid-cap asset classes, including strategies managing U.S., international and global portfolios. THB was an early adopter of introducing ESG factors into their investment process and security selection.
THB Asset Management – Founded in 1982, and formerly known as Thomson, Hortsmann & Bryant, THB Asset Management (“THB”) manages equity assets in capacity constrained, micro-cap, small-cap, and mid-cap asset classes, including strategies managing U.S., international and global portfolios. THB serves clients in the U.S. and in Europe and Australia.
The Solutions Platform team of 13 includes 8 investment professionals with an average industry experience of approximately 14 years. 9 Table of Contents Our Products and Investment Performance As of December 31, 2023, our 11 Franchises and Solutions Platform offered 118 investment strategies with the majority consisting of fixed income, U.S. small‑ and mid‑cap equities, global/non‑U.S. equities, model portfolios and solutions.
Our Products and Investment Performance As of December 31, 2024, our 11 Franchises and Solutions Platform offered 124 investment strategies with the majority consisting of fixed income, U.S. small‑ and mid‑cap equities, global/non‑U.S. equities, model portfolios and solutions.
This group is responsible for all legal and regulatory compliance matters, as well as for monitoring adherence to client investment guidelines. Our legal and compliance teams work through a well‑established reporting and communication structure to ensure we have a consistent and holistic program for legal and regulatory compliance. Senior management also is involved at various levels in all these functions.
Our legal and compliance teams work through a well‑established reporting and communication structure to ensure we have a consistent and holistic program for legal and regulatory compliance. Senior management also is involved at various levels in all these functions. We cannot assure that our legal and compliance functions will be effective in preventing all losses. Refer to “Item 1A.
Our distribution teams have historically focused on developing strategic long-term relationships with institutional consultants, institutional asset owners, retail and retirement intermediaries, RIAs, Family Offices, the Direct Channel, and bank trust departments. Complementing these relationships, we use data extensively to enhance the effectiveness of our distribution teams.
Our sales teams are staffed with accomplished professionals that are given specific training on how to position each of our strategies. Our distribution teams have historically focused on developing strategic long-term relationships with institutional consultants, institutional asset owners, retail and retirement intermediaries, RIAs, Family Offices, the Direct Channel, and bank trust departments.
Operations – Our highly centralized operations functions provide our Franchises and Solutions Platform with the support they need so that they can focus on their investment processes. Our Investment Franchises share operating functions such as trading platforms, risk and compliance, middle- and back‑office support, technology, data and analytics, finance, human resources, accounting, and legal.
Our Investment Franchises share operating functions such as trading platforms, risk and compliance, middle- and back‑office support, technology, data and analytics, finance, human resources, accounting, and legal.
Sycamore conducts fundamental research to find companies with strong high‑quality balance sheets that are undervalued versus comparable high-quality companies. Sycamore is based in Cincinnati, OH, and managed $35.2 billion in AUM as of December 31, 2023. Our Sycamore Investment Franchise has a team of 16 including 12 investment professionals with an average industry experience of approximately 17 years.
Sycamore is based in Cincinnati, OH, and managed $33.6 billion in AUM as of December 31, 2024. Our Sycamore Investment Franchise has a team of 16 including 12 investment professionals with average industry experience of approximately 17 years.
In addition, we believe it provides our Franchises with the benefits of operating at scale, providing them with access to a larger number of clients as well as a more streamlined cost structure. 13 Table of Contents As of December 31, 2023, we had 481 full-time employees with 160 in investment management, 206 in sales and marketing roles and 115 in management and support functions.
In addition, we believe it provides our Franchises with the benefits of operating at scale, providing them with access to a larger number of clients as well as a more streamlined cost structure.
In addition, certain of our employees are registered with the CFTC and members of NFA. Registration with the CFTC and NFA membership subjects VCM to regulation by the CFTC and the NFA including, but not limited to, reporting, recordkeeping, disclosure, self‑examination and training requirements. Registration with the CFTC also subjects VCM to periodic on‑site audits.
Registration with the CFTC and NFA membership subjects VCM to regulation by the CFTC and the NFA including, but not limited to, reporting, recordkeeping, disclosure, self‑examination, and training requirements. Registration with CFTC also subjects VCM to periodic on‑site audits. Each of the CFTC and NFA is authorized to institute proceedings and impose sanctions for violations of applicable regulations. Non‑U.S.
RS Investments is based in San Francisco, CA, and managed $7.4 billion in AUM as of December 31, 2023. Our RS Investments Investment 8 Table of Contents Franchise team total 23 members including 18 investment professionals with an average industry experience of approximately 22 years.
RS Global utilizes a highly disciplined quantitative approach to managing core‑oriented global and international equity strategies. RS Investments is based in San Francisco, CA, and managed $9.7 billion in AUM as of December 31, 2024. Our RS Investments Investment Franchise teams total 23 members including 18 investment professionals with average industry experience of approximately 23 years.
Investments in data packs from intermediaries, artificial intelligence initiatives, and predictive analytics — used to determine specific financial advisors’ propensities to buy or sell products — further enhance efficiencies. These relationships can enhance our platform’s overall reach and allow our Franchises and Solutions Platform to access more clients.
Complementing these relationships, we use data extensively to enhance the effectiveness of our distribution 13 Table of Contents teams. Investments in data packs from intermediaries, artificial intelligence initiatives, and predictive analytics — used to determine specific financial advisors’ propensities to buy or sell products — further enhance efficiencies.
We strive to maintain a balance between direct investor, retail clients, and institutional clients with 37%, 35% and 28% of our AUM as of December 31, 2023, in each of these channels, respectively. We also have the capability to deliver our strategies in investment vehicles designed to meet the needs and preferences of investors in each channel.
We strive to maintain a balance between direct investors, retail clients, and institutional clients with 35%, 41% and 24% of our Total AUM as of December 31, 2024, in each of these channels, respectively.
Business History and Organization Victory Capital Holdings, Inc. was formed in 2013 for the purpose of acquiring Victory Capital Management (“VCM”) and Victory Capital Services, Inc. (“VCS”) from KeyCorp. VCM is a U.S. registered investment adviser (“RIA”) managing assets through open-end mutual funds, institutional separate accounts, CITs, wrap account programs, UCITs, private funds, and ETFs.
VCM is a U.S. registered investment adviser (“RIA”) managing assets through open-end mutual funds, institutional separate accounts, CITs, wrap account programs, UCITS, private funds, and ETFs.
They engage with thousands of Investors every week via phone, chat or email depending on the Investor’s preference. We also have a mobile application that streamlines service for Investors and enhances internal efficiency. Through these interactions we provide Investors with account servicing, portfolio reviews, college planning assistance and investment guidance at no additional cost to the Investor.
At our direct investor business contact center, we have approximately 75 sales and service professionals focused on assisting our direct investors (the “Investors”). They engage with thousands of Investors every week via phone, chat or email depending on the Investor’s preference. We also have a mobile application that streamlines service for Investors and enhances internal efficiency.
Proven Acquirer with Compelling Value Proposition – We believe our platform allows us to continue to be a strategic acquirer within the investment management industry, providing us with an opportunity to further grow 11 Table of Contents and scale our business. Through numerous transactions, we have demonstrated an ability to successfully source, execute, and integrate new Franchises.
Proven Acquirer with Compelling Value Proposition – We believe our platform allows us to continue to be a strategic acquirer within the investment management industry, providing us with an opportunity to further grow and scale our business, expand our distribution capabilities, that optimize our operating platform and achieve our integration and synergy expectations.
With attractive fee rates, margins, longer capital commitments compared with our liquid products, and less likelihood of being disintermediated by non-active strategies, we remain interested in adding additional alternative investment capabilities.
Given our multi-faceted distribution channels, combined with our ability to develop investment vehicles to deliver these strategies, we are ideally situated to play a role in democratizing access to alternative investments for retail investors. 5 Table of Contents With attractive fee rates, margins, longer capital commitments compared with our liquid products, and less likelihood of being disintermediated by non-active strategies, we remain interested in adding additional alternative investment capabilities.
S ophus Capital – Sophus Capital utilizes a disciplined quantitative process that accesses market conditions in emerging equity markets and rank orders attractive companies that are further researched from a fundamental basis. Sophus’ team members travel to companies to conduct fundamental research.
S ophus Capital – Sophus Capital utilizes a disciplined quantitative process that accesses market conditions in emerging equity markets and rank orders attractive companies that are further researched from a fundamental basis. Sophus is based in Des Moines, IA, with employees in Europe and Asia, and managed $3.3 billion in AUM as of December 31, 2024.
To ensure high levels of client service, our sales teams liaise regularly with product specialists at our Franchises. The specialists are tasked with responding to institutional client and retail inquiries on product performance and educating prospective investors and retail partners in coordination with the relevant internal sales team members.
The specialists are tasked with responding to institutional client and retail inquiries on product performance and educating prospective investors and retail partners in coordination with the relevant internal sales team members. Our distribution and marketing professionals collaborate closely with our Franchises’ product specialists to attract new clients while also servicing and generating additional sales from existing clients.
Munder Capital Management – Munder Capital Management has an experienced team utilizing a Growth‑at‑a‑Reasonable‑Price “GARP” strategy in the U.S. equity markets designed to generate consistently strong performance over a market cycle. Munder performs extensive fundamental research in order to find attractive growth companies that it expects will exceed market expectations.
Our Integrity Investment Franchise includes 10 investment professionals with average industry experience of approximately 25 years. Munder Capital Management – Munder Capital Management has an experienced team utilizing a Growth‑at‑a‑Reasonable‑Price “GARP” strategy in the U.S. equity markets designed to generate consistently strong performance over a market cycle.
Integrity conducts fundamental stock research to find attractive companies that have compelling discounts to the prevailing market conditions. Integrity is based in Rocky River, OH, and managed $5.4 billion in AUM as of December 31, 2023. Our Integrity Investment Franchise includes 10 investment professionals with an average industry experience of approximately 24 years.
Integrity Asset Management – Integrity Asset Management utilizes a dynamic value‑oriented approach to U.S. mid‑ and small‑capitalization companies. Integrity conducts fundamental stock research to find attractive companies that have compelling discounts to the prevailing market conditions. Integrity is based in Rocky River, OH, and managed $5.8 billion in AUM as of December 31, 2024.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeInvestment Company Names Rule On September 20, 2023, the SEC adopted amendments to Rule 35d-1 under the Investment Company Act of 1940, the fund “Names Rule.” The final amendments among other things: • Improve and expand the current requirement for certain registered funds to adopt a policy to invest at least 80 percent of their assets in accordance with the investment focus the fund’s name suggests; • Providing new enhanced disclosure and reporting requirements; and • Define a time for funds that deviate from their 80% Investment Policy to come back into compliance.
Biggest changeFor example, in addition to international data protection and privacy laws and regulations like the EU’s GDPR, we are, and expect to continue to be, subject to and affected by existing, new and evolving country, federal and state laws, regulations and guidance around the world impacting consumer and personnel privacy, and various other U.S. state consumer privacy laws that provide for enhanced consumer protections for their residents and impose requirements for the handling, disclosure and deletion of personal information of their residents. 39 Table of Contents Investment Company Names Rule On September 20, 2023, the SEC adopted amendments to Rule 35d-1 under the Investment Company Act of 1940, the fund “Names Rule.” The final amendments among other things: • Improve and expand the current requirement for certain registered funds to adopt a policy to invest at least 80 percent of their assets in accordance with the investment focus the fund’s name suggests; • Providing new enhanced disclosure and reporting requirements; and • Define a time for funds that deviate from their 80% Investment Policy to come back into compliance.
Business Risks • Pandemics have, and will likely continue to have, a negative impact on the global economy and interrupt normal business activity. • The loss of key investment professionals or members of our senior management team could have a material adverse effect on our business. • We derive substantially all of our revenues from contracts and relationships that may be terminated upon short or no notice. • Investors in certain funds that we advise can redeem their assets from those funds at any time without prior notice. • Investment recommendations provided to our direct investor channel may not be suitable or fulfill regulatory requirements; representatives may not disclose or address conflicts of interest, conduct inadequate due diligence, provide inadequate disclosure; transactions may be subject to human error or fraud. • The significant growth we have experienced over the past few years may be difficult to sustain and our growth strategy is dependent in part upon our ability to make and successfully integrate new strategic acquisitions. • Our expenses are subject to fluctuations that could materially impact our results of operations. • A significant proportion of our existing AUM is managed in long‑only investments. • Our efforts to establish and develop new teams and strategies may be unsuccessful and could negatively impact our results of operations and could negatively impact our reputation and culture. 19 Table of Contents • An assignment could result in termination of our investment advisory agreements to manage SEC‑registered funds and could trigger consent requirements in our other investment advisory agreements. • Our failure to comply with investment guidelines set by our clients, including the boards of registered funds, and limitations imposed by applicable law, could result in damage awards against us and a loss of AUM, either of which could adversely affect our results of operations or financial condition. • We provide a broad range of services to the Victory Funds, VictoryShares and sub‑advised mutual funds which may expose us to liability. • Potential impairment of goodwill and intangible assets could result in not realizing the value of these assets. • If we were deemed an investment company required to register under the Investment Company Act of 1940 (the “Investment Company Act”), we would become subject to burdensome regulatory requirements and our business activities could be restricted.
Business Risks • Pandemics have, and will likely continue to have, a negative impact on the global economy and interrupt normal business activity. • The loss of key investment professionals or members of our senior management team could have a material adverse effect on our business. • We derive substantially all of our revenues from contracts and relationships that may be terminated upon short or no notice. • Investors in certain funds that we advise can redeem their assets from those funds at any time without prior notice. • Investment recommendations provided to our direct investor channel may not be suitable or fulfill regulatory requirements; representatives may not disclose or address conflicts of interest, conduct 19 Table of Contents inadequate due diligence, provide inadequate disclosure; transactions may be subject to human error or fraud. • The significant growth we have experienced over the past few years may be difficult to sustain and our growth strategy is dependent in part upon our ability to make and successfully integrate new strategic acquisitions. • Our expenses are subject to fluctuations that could materially impact our results of operations. • A significant proportion of our existing AUM is managed in long‑only investments. • Our efforts to establish and develop new teams and strategies may be unsuccessful and could negatively impact our results of operations and could negatively impact our reputation and culture. • An assignment could result in termination of our investment advisory agreements to manage SEC‑registered funds and could trigger consent requirements in our other investment advisory agreements. • Our failure to comply with investment guidelines set by our clients, including the boards of registered funds, and limitations imposed by applicable law, could result in damage awards against us and a loss of AUM, either of which could adversely affect our results of operations or financial condition. • We provide a broad range of services to the Victory Funds, VictoryShares and sub‑advised mutual funds which may expose us to liability. • Potential impairment of goodwill and intangible assets could result in not realizing the value of these assets. • If we were deemed an investment company required to register under the Investment Company Act of 1940 (the “Investment Company Act”), we would become subject to burdensome regulatory requirements and our business activities could be restricted.
If a significant portion of the investors in such investments decided to withdraw their assets or terminate their investment advisory agreements for any reason, including poor investment performance or adverse market conditions, our revenues from those investments would decline, which would have a material adverse effect on our earnings and financial condition.
If a significant portion of the investors in such investments decided to withdraw their assets or terminate their investment advisory agreements for any reason, including poor investment performance or adverse market conditions, our revenues from those investments would decline, which would have a material adverse effect on our earnings and financial condition.
An externally caused information security incident, such as a cyberattack, which could include computer viruses, malware, malicious or destructive code, social engineering, phishing, denial-of-service attacks, ransomware, or identity theft, or an internally caused issue, such as failure to control access to sensitive systems, could materially interrupt business operations or cause disclosure or modification of sensitive or confidential client or competitive information and could result in material financial loss, loss of competitive position, regulatory actions, breach of client contracts, reputational harm or legal liability.
An externally caused information security incident, such as a cyberattack, which could include computer viruses, malware, malicious or destructive code, social engineering, phishing, denial-of-service attacks, ransomware, identity theft, or an internally caused issue, such as failure to control access to sensitive systems, could materially interrupt business operations or cause disclosure or modification of sensitive or confidential client or competitive information and could result in material financial loss, loss of competitive position, regulatory actions, breach of client contracts, reputational harm or legal liability.
Changes in interest rates, the availability and cost of credit, inflation rates, economic uncertainty, changes in laws, trade barriers, commodity prices, currency exchange rates and controls and national and international political circumstances such as the increased tension between the U.S. and China (including wars (such as the military conflict between Russia and Ukraine and the conflict in Israel), pandemics, terrorist acts and security operations) and other conditions may impact the equity and credit markets, which may influence our AUM.
Changes in interest rates, the availability and cost of credit, inflation rates, economic uncertainty, changes in laws, trade barriers, tariffs, commodity prices, currency exchange rates and controls and national and international political circumstances such as the increased tension between the U.S. and China (including wars (such as the military conflict between Russia and Ukraine and the conflict in Israel), pandemics, terrorist acts and security operations) and other conditions may impact the equity and credit markets, which may influence our AUM.
Capital Structure and Public Company Risks • If a relatively large percentage of our common stock is concentrated with a small number of shareholders, it could increase the volatility in our stock trading and affect our share price . • The market price of our common stock is likely to be volatile and could decline. • Future sales of shares by shareholders could cause our stock price to decline. • If securities or industry analysts publish misleading or unfavorable research about our business, our stock price and trading volume could decline. • The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business. • Failure to maintain effective internal control over financial reporting could have a material adverse effect on our business, operating results and stock price. • Our ability to pay regular dividends is subject to our Board’s discretion and Delaware law. • Future offerings of debt or equity securities may rank senior to our common stock. • Provisions in our charter documents could discourage a takeover that shareholders may consider favorable. • Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between us and our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Capital Structure and Public Company Risks • If a relatively large percentage of our common stock is concentrated with a small number of shareholders, it could increase the volatility in our stock trading and affect our share price . • The market price of our common stock is likely to be volatile and could decline. • Future sales of shares by shareholders could cause our stock price to decline. • If securities or industry analysts publish misleading or unfavorable research about our business, our stock price and trading volume could decline. • The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business. • Failure to maintain effective internal control over financial reporting could have a material adverse effect on our business, operating results and stock price. • Our ability to pay regular dividends is subject to our Board’s discretion and Delaware law. 20 Table of Contents • Future offerings of debt or equity securities may rank senior to our common stock. • Provisions in our charter documents could discourage a takeover that shareholders may consider favorable. • Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between us and our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
We may use artificial intelligence in our business, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations. We may incorporate artificial intelligence (“AI”) solutions into our platform, offerings, services and features, and these applications may become important in our operations over time.
We may use artificial intelligence (“AI”) in our business, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations. We may incorporate AI solutions into our platform, offerings, services and features, and these applications may become important in our operations over time.
Among other things, these provisions: • permit our board of directors to establish the number of directors and fill any vacancies and newly created directorships; • authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a shareholder rights plan; • provide that our board of directors is expressly authorized to amend or repeal any provision of our bylaws; • restrict the forum for certain litigation against us to Delaware; • establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by shareholders at annual shareholder meetings; • establish a classified board of directors with three classes of directors and the removal of directors only for cause; • require that actions to be taken by our shareholders be taken only at an annual or special meeting of our shareholders, and not by written consent; • establish certain limitations on convening special shareholder meetings; and • restrict business combinations with interested shareholders.
Among other things, these provisions: • permit our board of directors to establish the number of directors and fill any vacancies and newly created directorships; • authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a shareholder rights plan; • provide that our board of directors is expressly authorized to amend or repeal any provision of our bylaws; • restrict the forum for certain litigation against us to Delaware; 36 Table of Contents • establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by shareholders at annual shareholder meetings; • establish a classified board of directors with three classes of directors and the removal of directors only for cause; • require that actions to be taken by our shareholders be taken only at an annual or special meeting of our shareholders, and not by written consent; • establish certain limitations on convening special shareholder meetings; and • restrict business combinations with interested shareholders.
Potential difficulties that we may encounter in the integration process include the following: • the integration of personnel, operations, strategies, technologies and support services; • the disruption of ongoing businesses and distraction of their respective personnel from ongoing business concerns; • the retention of the existing clients; • the retention of key intermediary distribution relationships; • the integration of corporate cultures and maintenance of employee morale; • the retention of key employees; • the creation of uniform standards, controls, procedures, policies and information systems; • the reduction of the costs associated with combining operations; • the consolidation and rationalization of information technology platforms and administrative infrastructures; and • potential unknown liabilities; The anticipated benefits and synergies include the elimination of duplicative personnel, realization of efficiencies in consolidating duplicative corporate, business support functions and amortization of purchased intangibles for tax purposes.
Potential difficulties that we may encounter in the integration process include the following: • the integration of personnel, operations, strategies, technologies and support services; • the disruption of ongoing businesses and distraction of their respective personnel from ongoing business concerns; • the retention of the existing clients; • the retention of key intermediary distribution relationships; • the integration of corporate cultures and maintenance of employee morale; 30 Table of Contents • the retention of key employees; • the creation of uniform standards, controls, procedures, policies and information systems; • the reduction of the costs associated with combining operations; • the consolidation and rationalization of information technology platforms and administrative infrastructures; and • potential unknown liabilities; The anticipated benefits and synergies include the elimination of duplicative personnel, realization of efficiencies in consolidating duplicative corporate, business support functions and amortization of purchased intangibles for tax purposes.
In making decisions regarding our quarterly dividends, we consider general economic and business conditions, our strategic plans and prospects, our businesses and investment opportunities, our financial condition and operating results, working capital requirements and anticipated cash needs, contractual restrictions (including under the terms of our Fourth Amendment to the 2019 Credit Agreement) and legal, tax, regulatory and such other factors as we may deem relevant.
In making decisions regarding our quarterly dividends, we consider general economic and business conditions, our strategic plans and prospects, our businesses and investment opportunities, our financial condition and operating results, working capital requirements and anticipated cash needs, contractual restrictions (including under the terms of our Fifth Amendment to the 2019 Credit Agreement) and legal, tax, regulatory and such other factors as we may deem relevant.
As of December 31, 2023, approximately 17% of our total AUM was invested in U.S. taxable and tax-exempt fixed-income and money market securities. While fixed-income is typically considered less volatile than the equity markets, it does exhibit different types of risks such as interest rate risk, credit risk, and over-the-counter liquidity risk.
As of December 31, 2024, approximately 17% of our total AUM was invested in U.S. taxable and tax-exempt fixed-income and money market securities. While fixed-income is typically considered less volatile than the equity markets, it does exhibit different types of risks such as interest rate risk, credit risk, and over-the-counter liquidity risk.
We provide a broad range of administrative services to the Victory Funds and VictoryShares, including providing personnel to the Victory Funds and VictoryShares to serve as directors and officers, the preparation or supervision of the preparation of the Victory Funds' and VictoryShares’ regulatory filings, maintenance of board 28 Table of Contents calendars and preparation or supervision of the preparation of board meeting materials, management of compliance and regulatory matters, provision of shareholder services and communications, accounting services, including the supervision of the activities of the Victory Funds’ and VictoryShares’ accounting services provider in the calculation of the funds’ net asset values, supervision of the preparation of the Victory Funds’ and VictoryShares’ financial statements and coordination of the audits of those financial statements, tax services, including calculation of dividend and distribution amounts and supervision of tax return preparation, supervision of the work of the Victory Funds’ and VictoryShares’ other service providers, VCTA acting as transfer agent to the Victory Funds III and VCS acting as a distributor for the Victory Funds.
We provide a broad range of administrative services to the Victory Funds and VictoryShares, including providing personnel to the Victory Funds and VictoryShares to serve as directors and officers, the preparation or supervision of the preparation of the Victory Funds' and VictoryShares’ regulatory filings, maintenance of board calendars and preparation or supervision of the preparation of board meeting materials, management of compliance and regulatory matters, provision of shareholder services and communications, accounting services, including the supervision of the activities of the Victory Funds’ and VictoryShares’ accounting services provider in the calculation of the funds’ net asset values, supervision of the preparation of the Victory Funds’ and VictoryShares’ financial statements and coordination of the audits of those financial statements, tax services, including calculation of dividend and distribution amounts and supervision of tax return preparation, supervision of the work of the Victory Funds’ and VictoryShares’ other service providers, VCTA acting as transfer agent to the Victory Funds III and VCS acting as a distributor for the Victory Funds.
We have also expanded our distribution effort into non‑U.S. markets through partnered distribution efforts and product offerings, including Australia, Europe, Japan, and Singapore.
We have also expanded our distribution effort into non‑U.S. markets through partnered distribution efforts and product offerings, including Australia, Europe, Japan, Canada, and Singapore.
The 2021 Incremental Term Loans will mature in December 2028 and will bear interest at an annual rate equal to, at the option of the Company, either LIBOR (adjusted for reserves and subject to a 50 basis point floor) plus a margin of 2.25% or an alternate base rate plus a margin of 1.25%. 2022 LIBOR to Term SOFR Rate Transition On September 23, 2022, the Company entered into the Fourth Amendment (the “Fourth Amendment”) to the 2019 Credit Agreement to change the interest rate on its debt from LIBOR to a rate based on the secured 31 Table of Contents overnight financing rate (“SOFR”) plus a ten-basis point credit spread adjustment.
The 2021 Incremental Term Loans will mature in December 2028 and will bear interest at an annual rate equal to, at the option of the Company, either LIBOR (adjusted for reserves and subject to a 50 basis point floor) plus a margin of 2.25% or an alternate base rate plus a margin of 1.25%. 2022 LIBOR to Term SOFR Rate Transition On September 23, 2022, the Company entered into the Fourth Amendment (the “Fourth Amendment”) to the 2019 Credit Agreement to change the interest rate on its debt from LIBOR to a rate based on the secured overnight financing rate (“SOFR”) plus a ten-basis point credit spread adjustment.
If our strategies perform poorly for any reason, our earnings could decline because: • our existing clients may redeem their assets from our strategies or terminate their relationships with us; • the Morningstar and Lipper ratings and rankings of mutual funds and ETFs we manage may decline, which may adversely affect the ability of those funds to attract new or retain existing assets; and • third‑party financial intermediaries, advisors or consultants may remove our investment products from recommended lists due to poor performance or for other reasons, which may lead our existing 22 Table of Contents clients to redeem their assets from our strategies or reduce asset inflows from these third parties or their clients.
If our strategies perform poorly for any reason, our earnings could decline because: • our existing clients may redeem their assets from our strategies or terminate their relationships with us; • the Morningstar and Lipper ratings and rankings of mutual funds and ETFs we manage may decline, which may adversely affect the ability of those funds to attract new or retain existing assets; and • third‑party financial intermediaries, advisors or consultants may remove our investment products from recommended lists due to poor performance or for other reasons, which may lead our existing clients to redeem their assets from our strategies or reduce asset inflows from these third parties or their clients.
Our assessment concluded that our internal control over financial reporting was effective as of December 31, 2023; however, there can be no assurance that we will be able to maintain the adequacy of our internal control over financial reporting, as such standards are modified, supplemented or amended from time to time in future periods.
Our assessment concluded that our internal control over financial reporting was effective as of December 31, 2024; however, there can be no assurance that we will be able to maintain the adequacy of our internal control over financial reporting, as such standards are modified, supplemented or amended from time to time in future periods.
We may support our money market funds to maintain their stable net asset values, or other products we manage, which could affect our revenues or operating results. Approximately 2% of our AUM as of December 31, 2023, consisted of assets in money market funds. Money market funds seek to preserve a stable net asset value.
We may support our money market funds to maintain their stable net asset values, or other products we manage, which could affect our revenues or operating results. Approximately 2% of our AUM as of December 31, 2024, consisted of assets in money market funds. Money market funds seek to preserve a stable net asset value.
Although we maintain a system of internal controls designed to provide reasonable assurance that fraudulent activity is either prevented or detected on a timely basis and we take other protective measures and endeavor to modify them as circumstances warrant, our computer systems, software, networks and mobile devices may be vulnerable to cyber‑attacks, sabotage, unauthorized access, computer viruses, worms or other malicious code, and other events that have a security impact.
Although we maintain a system of internal controls designed to provide reasonable assurance that fraudulent activity is either prevented or detected on a timely basis and we take other protective measures and endeavor to modify them as circumstances warrant, our computer systems, software, networks and mobile devices may be vulnerable to cyberattacks, sabotage, unauthorized access, computer viruses, worms or other malicious code, and other events that have a security impact.
Material risks that may adversely affect our business, financial condition or results of operations include, but are not limited to, the following: Market and Investment Performance Risks • We earn substantially all of our revenues based on AUM, and any reduction in AUM would reduce our revenues and profitability. • The ongoing conflicts in Ukraine and Israel have, and will likely continue to, negatively impact the global economy. • If our strategies perform poorly, clients could redeem their assets and we could suffer a decline in our AUM, which would reduce our earnings. • The historical returns of our strategies may not be indicative of their future results or of the strategies we may develop in the future. • We may support our money market funds to maintain their stable net asset values, or other products we manage, which could affect our revenues or operating results . • The performance of our strategies or the growth of our AUM may be constrained by unavailability of appropriate investment opportunities.
Material risks that may adversely affect our business, financial condition or results of operations include, but are not limited to, the following: Market and Investment Performance Risks • We earn substantially all of our revenues based on AUM, and any reduction in AUM would reduce our revenues and profitability. • The ongoing conflicts in Ukraine and Israel have, and will likely continue to, negatively impact the global economy. • We are exposed to risks arising from our International Activities. • If our strategies perform poorly, clients could redeem their assets and we could suffer a decline in our AUM, which would reduce our earnings. • The historical returns of our strategies may not be indicative of their future results or of the strategies we may develop in the future. • We may support our money market funds to maintain their stable net asset values, or other products we manage, which could affect our revenues or operating results . • The performance of our strategies or the growth of our AUM may be constrained by unavailability of appropriate investment opportunities.
While it has not had a material adverse effect on our business, operations and financial results, the extent to which the geopolitical uncertainty and conflicts impact our business, operations and financial results going forward will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration and scope of the uncertainty and conflicts; governmental and business actions that have been and continue to be taken in response, and the impact on economic activity.
While it has not had a material adverse effect on our business, operations and financial results, the extent to which the geopolitical uncertainty and conflicts impact our business, operations and financial results going forward will depend on numerous evolving factors that we may not be able to accurately predict, including: 22 Table of Contents the duration and scope of the uncertainty and conflicts; governmental and business actions that have been and continue to be taken in response, and the impact on economic activity.
Operational risks such as trading or other operational errors or interruption of our financial, accounting, trading, compliance and other data processing systems, whether caused by human error, fire, other natural disaster or pandemic, power or telecommunications failure, cyber‑attack or viruses, act of terrorism or war or otherwise, could result in a disruption of our business, liability to clients, regulatory intervention or reputational damage, and thus materially adversely affect our business.
Operational risks such as trading or other operational errors or interruption of our financial, accounting, trading, compliance and other data processing systems, whether caused by human error, fire, other natural disaster or pandemic, power or telecommunications failure, cyberattack or viruses, act of terrorism or war or otherwise, could result in a disruption of our business, liability to clients, regulatory intervention or reputational damage, and thus materially adversely affect our business.
For the year ended December 31, 2023, we generated approximately 84% of our total revenues from mutual funds and other pooled investment vehicles that we advise (including our proprietary mutual funds, or the Victory Funds, VictoryShares, and other entities for which we are adviser or sub‑adviser).
For the year ended December 31, 2024, we generated approximately 84% of our total revenues from mutual funds and other pooled investment vehicles that we advise (including our proprietary mutual funds, or the Victory Funds, VictoryShares, and other entities for which we are adviser or sub‑adviser).
Our ability to repay the principal amount of any outstanding loans under the 2019 Credit Agreement, to refinance our debt or to obtain additional financing through debt or the sale of additional equity securities will depend on our performance, as well as financial, business and other general economic factors affecting the credit and equity markets generally or our business in particular, many of which are beyond our control.
Our ability to repay the principal amount of any outstanding loans under the 2019 Credit Agreement, to refinance our debt or 31 Table of Contents to obtain additional financing through debt or the sale of additional equity securities will depend on our performance, as well as financial, business and other general economic factors affecting the credit and equity markets generally or our business in particular, many of which are beyond our control.
ERISA and applicable provisions of the Internal Revenue Code impose certain duties on persons who are fiduciaries under ERISA, require the investment adviser to carry bonds insuring against losses caused by fraud or dishonesty, prohibit certain transactions involving ERISA plan clients and impose excise taxes for violations of these prohibitions, and mandate certain required periodic reporting and disclosures.
ERISA and applicable provisions of the Internal Revenue Code impose certain duties on persons who are fiduciaries under ERISA, 37 Table of Contents require the investment adviser to carry bonds insuring against losses caused by fraud or dishonesty, prohibit certain transactions involving ERISA plan clients and impose excise taxes for violations of these prohibitions, and mandate certain required periodic reporting and disclosures.
The continued long‑term growth of our business will depend on, among other things, successfully making new acquisitions, retaining key investment professionals, maintaining existing strategies and selectively developing new, value‑added strategies.
The continued long‑term growth of our business will depend on, among other things, successfully making new acquisitions, achieving our synergies, retaining key investment professionals, maintaining existing strategies and selectively developing new, value‑added strategies.
We also believe our primary source of income is properly characterized as income earned in exchange for the provision of services. We believe less than 40% of our total assets (exclusive of U.S. 29 Table of Contents government securities and cash items) on an unconsolidated basis comprise assets that could be considered investment securities.
We also believe our primary source of income is properly characterized as income earned in exchange for the provision of services. We believe less than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis comprise assets that could be considered investment securities.
In the future, our expenses in connection with those intermediary relationships could increase if the portion of those fees determined to be in connection with marketing and distribution, or otherwise allocated to us, increased. Clients of these intermediaries may not continue to be accessible to us on terms we consider commercially reasonable, or at all.
In the future, our expenses in connection with those intermediary relationships could increase if the portion of those fees determined to be in connection with marketing and distribution, or otherwise allocated to us, 41 Table of Contents increased. Clients of these intermediaries may not continue to be accessible to us on terms we consider commercially reasonable, or at all.
Public companies with a relatively concentrated level of institutional shareholders, often have difficulty generating trading volume in their stock, which may increase the volatility in the price of the common stock. Crestview GP owns a significant amount of our common stock and its interests may conflict with ours or other shareholders’ in the future.
Public companies with a relatively concentrated level of institutional shareholders, often have difficulty generating trading volume in their stock, which may increase the volatility in the price of the common stock. 32 Table of Contents Crestview GP owns a significant amount of our common stock and its interests may conflict with ours or other shareholders’ in the future.
In addition, any acquisition can involve a number of risks, including the existence of known, unknown or contingent liabilities. An acquisition may impose additional demands on our staff that could strain our operational resources and require expenditure of substantial legal, investment banking and accounting fees.
In addition, any acquisition can involve a number of risks, including the 26 Table of Contents existence of known, unknown or contingent liabilities. An acquisition may impose additional demands on our staff that could strain our operational resources and require expenditure of substantial legal, investment banking and accounting fees.
Department of State. Similar laws in non‑U.S. jurisdictions may also impose stricter or more onerous requirements and implementing them may disrupt our business or cause us to incur significantly more costs to comply with those laws. Different laws may also contain conflicting provisions, making compliance with all laws more difficult.
Similar laws in non‑U.S. jurisdictions may also impose stricter or more onerous requirements and implementing them may disrupt our business or cause us to incur significantly more costs to comply with those laws. Different laws may also contain conflicting provisions, making compliance with all laws more difficult.
The investment management industry is intensely competitive, with competition based on a variety of factors, including investment performance, fees, continuity of investment professionals and client relationships, the quality of services provided to clients, corporate positioning and business reputation, continuity of selling arrangements with intermediaries and differentiated products.
The investment management industry is intensely competitive. 40 Table of Contents The investment management industry is intensely competitive, with competition based on a variety of factors, including investment performance, fees, continuity of investment professionals and client relationships, the quality of services provided to clients, corporate positioning and business reputation, continuity of selling arrangements with intermediaries and differentiated products.
We depend on the skills and expertise of our portfolio managers and other investment professionals and our success depends on our ability to retain the key members of our investment teams, who possess substantial experience in investing and have been primarily responsible for the historical investment performance we have achieved.
We depend on the skills and expertise of our portfolio managers and other investment professionals and our success depends on our ability to retain the key members of our investment teams, who possess substantial 24 Table of Contents experience in investing and have been primarily responsible for the historical investment performance we have achieved.
The absence of such access could have a material adverse effect on our results of operations. 40 Table of Contents We access institutional clients primarily through consultants. Our institutional business is dependent upon referrals from consultants. Many of these consultants review and evaluate our products and our firm from time to time.
The absence of such access could have a material adverse effect on our results of operations. We access institutional clients primarily through consultants. Our institutional business is dependent upon referrals from consultants. Many of these consultants review and evaluate our products and our firm from time to time.
As a result, we could experience material financial loss, loss of competitive position, regulatory fines and/or sanctions, breach of client contracts, reputational harm or legal liability, which, in turn, could have an adverse effect on our financial condition and results of operations.
As a result, we could experience material financial loss, loss of 43 Table of Contents competitive position, regulatory fines and/or sanctions, breach of client contracts, reputational harm or legal liability, which, in turn, could have an adverse effect on our financial condition and results of operations.
Factors that could cause the market price of our Common Stock to fluctuate significantly include: • our operating and financial performance and prospects and the performance of other similar companies; • our quarterly or annual earnings or those of other companies in our industry; • conditions that impact demand for our products and services; • the public’s reaction to our press releases, financial guidance and other public announcements, and filings with the SEC; 32 Table of Contents • changes in earnings estimates or recommendations by securities or research analysts who track our Common Stock; • market and industry perception of our level of success in pursuing our growth strategy; • strategic actions by us or our competitors, such as acquisitions or restructurings; • changes in government and other regulations; changes in accounting standards, policies, guidance, interpretations or principles; • departure of key personnel; • the number of shares publicly traded; • sales of our Common Stock by us, our investors or members of our management team; and • changes in general market, economic and political conditions in the U.S. and global economies or financial markets, including those resulting from natural disasters, telecommunications failures, cyber‑attacks, civil unrest in various parts of the world, acts of war, terrorist attacks or other catastrophic events.
Factors that could cause the market price of our Common Stock to fluctuate significantly include: • our operating and financial performance and prospects and the performance of other similar companies; • our quarterly or annual earnings or those of other companies in our industry; • conditions that impact demand for our products and services; • the public’s reaction to our press releases, financial guidance and other public announcements, and filings with the SEC; • changes in earnings estimates or recommendations by securities or research analysts who track our Common Stock; • market and industry perception of our level of success in pursuing our growth strategy; • strategic actions by us or our competitors, such as acquisitions or restructurings; • changes in government and other regulations; changes in accounting standards, policies, guidance, interpretations or principles; • departure of key personnel; • the number of shares publicly traded; • sales of our Common Stock by us, our investors or members of our management team; and • changes in general market, economic and political conditions in the U.S. and global economies or financial markets, including those resulting from natural disasters, telecommunications failures, cyber‑attacks, civil unrest in various parts of the world, acts of war, terrorist attacks or other catastrophic events. 33 Table of Contents Any of these factors may result in large and sudden changes in the trading volume and market price of our Common Stock.
We have complied with our disclosure requirements, however the amendments will require ongoing evaluation and analysis of possible changes in 34 Table of Contents our applicable processes and procedures, including regarding cyber incident response plans and procedures, disclosure analysis framework, risk management processes, and board oversight structure.
We have complied with our disclosure requirements, however the amendments will require ongoing evaluation and analysis of possible changes in our applicable processes and procedures, including regarding cyber incident response plans and procedures, disclosure analysis framework, risk management processes, and board oversight structure.
Thus, holders of our Common Stock will bear the risk of our 35 Table of Contents future offerings reducing the market price of our Common Stock and diluting the value of their shareholdings in us. Provisions in our charter documents could discourage a takeover that shareholders may consider favorable.
Thus, holders of our Common Stock will bear the risk of our future offerings reducing the market price of our Common Stock and diluting the value of their shareholdings in us. Provisions in our charter documents could discourage a takeover that shareholders may consider favorable.
We are also subject to a number of laws and regulations governing payments and contributions to political persons or other third parties, including restrictions imposed by the Foreign Corrupt Practices Act (the “FCPA”), as well as trade sanctions administered by the Office of Foreign Assets Control, or OFAC, the U.S. Department 44 Table of Contents of Commerce and the U.S.
We are also subject to a number of laws and regulations governing payments and contributions to political persons or other third parties, including restrictions imposed by the Foreign Corrupt Practices Act (the “FCPA”), as well as trade sanctions administered by the Office of Foreign Assets Control, or OFAC, the U.S. Department of Commerce and the U.S. Department of State.
When a sub‑adviser terminates its sub‑advisory agreement to manage a fund that we advise there is a risk that investors in the fund could redeem their assets in the fund, which would cause our AUM to decrease. Similarly, our fund administration, accounting, and transfer agency agreements are subject to annual fund board approval.
When a sub‑adviser terminates its sub‑advisory agreement to manage a fund that we advise there is a risk that investors in the fund 25 Table of Contents could redeem their assets in the fund, which would cause our AUM to decrease. Similarly, our fund administration, accounting, and transfer agency agreements are subject to annual fund board approval.
In addition, we are required under the Exchange Act to maintain disclosure controls and procedures and internal control over financial reporting. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations.
In addition, we are required under the Exchange Act to maintain disclosure controls and procedures and internal control over financial reporting. Any failure to 34 Table of Contents implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations.
Our sales team’s recommendations may not fulfill regulatory requirements as a result of their failing to collect sufficient information about an investor or failing to understand the investor’s 25 Table of Contents needs or risk tolerances.
Our sales team’s recommendations may not fulfill regulatory requirements as a result of their failing to collect sufficient information about an investor or failing to understand the investor’s needs or risk tolerances.
In addition, our interconnectivity with service providers and other third parties may be adversely affected if any of them are subject to a successful cyber-attack or other information security event.
In addition, our interconnectivity with service providers and other third parties may be adversely affected if any of them are subject to a successful cyberattack or other information security event.
Our investment strategies are rated, ranked, recommended or assessed by independent third parties, distribution partners, and industry 21 Table of Contents periodicals and services. These assessments may influence the investment decisions of our clients.
Our investment strategies are rated, ranked, recommended or assessed by independent third parties, distribution partners, and industry periodicals and services. These assessments may influence the investment decisions of our clients.
The U.S. mutual funds and ETFs we manage are registered with and regulated by the SEC as investment companies under the 1940 Act. The Advisers Act imposes numerous obligations on investment advisers, including recordkeeping, advertising, compliance and operating requirements, disclosure obligations and prohibitions on fraudulent activities.
The U.S. mutual funds and ETFs we manage are registered with and regulated by the SEC as investment companies under the 1940 Act. The Advisers Act imposes numerous obligations on investment advisers, including recordkeeping, advertising, compliance and operating requirements, conflict of interest and supervision requirements, disclosure obligations and prohibitions on fraudulent activities.
Legal and Regulatory Risks • As an investment management firm and brokerage firm, we are subject to extensive regulation. 20 Table of Contents • The regulatory environment in which we operate is subject to continual change and regulatory developments designed to increase oversight and may materially adversely affect our business.
Legal and Regulatory Risks • As an investment management firm and brokerage firm, we are subject to extensive regulation. • The regulatory environment in which we operate is subject to continual change and regulatory developments designed to increase oversight and may materially adversely affect our business.
The 1940 Act imposes similar obligations, as well as additional detailed operational requirements, on registered funds, which must be adhered to by their investment 36 Table of Contents advisers. Investment advisers also are subject to certain state securities laws and regulations.
The 1940 Act imposes similar obligations, as well as additional detailed operational requirements, on registered funds, which must be adhered to by their investment advisers. Investment advisers also are subject to certain state securities laws and regulations.
Other expenses 33 Table of Contents associated with being a public company include increases in auditing, accounting, compliance and legal fees and expenses, investor relations expenses, increased directors’ fees and director and officer liability insurance costs, registrar and transfer agent fees and listing fees, as well as other expenses.
Other expenses associated with being a public company include increases in auditing, accounting, compliance and legal fees and expenses, investor relations expenses, increased directors’ fees and director and officer liability insurance costs, registrar and transfer agent fees and listing fees, as well as other expenses.
We electronically receive, process, store and transmit sensitive information of our clients including personal data, such as, without limitation, names and addresses, social security numbers, driver's license numbers, such information is necessary to support our clients’ investment transactions.
We electronically receive, process, store and transmit sensitive information of our clients including personal data, such as, without limitation, names, addresses, social security numbers, and driver's license numbers, which may be necessary to support our clients’ investment transactions.
In those instances, we may choose to limit access to those strategies to new or existing investors, such as we have done for two mutual funds managed by the Sycamore Capital Franchise which had an aggregate of $25.1 billion in AUM as of December 31, 2023. • General domestic and global economic and political conditions can influence AUM.
In those instances, we may choose to limit access to those strategies to new or existing investors, such as we have done for two mutual funds managed by the Sycamore Capital Franchise which had an aggregate of $24.9 billion in AUM as of December 31, 2024. • General domestic and global economic and political conditions can influence AUM.
To the extent that climate change impacts changes in weather patterns, our offices could experience severe weather, including hurricanes, severe winter 45 Table of Contents storms, and coastal flooding due to increases in storm intensity and rising sea levels.
To the extent that climate change impacts changes in weather patterns, our offices could experience severe weather, including hurricanes, severe winter storms, and coastal flooding due to increases in storm intensity and rising sea levels.
Investors will be able to leverage our open architecture brokerage option and establish brokerage accounts to invest in mutual funds and ETFs from our platform along with individual stocks and products managed by third-party providers including cash management capabilities, these brokerage activities are likely to result in increased focus from FINRA as we will have to comply with extensive regulations imposed by FINRA.
The Direct Investor Business allows Investors to leverage our open architecture brokerage option and establish brokerage accounts to invest in mutual funds and ETFs from our platform along with individual stocks and products managed by third-party providers including cash management capabilities, these brokerage activities are likely to result in increased focus from FINRA as we will have to comply with extensive regulations imposed by FINRA.
General Risks • Reputational harm could result in a loss of AUM and revenues. • If our techniques for managing risk are ineffective, we may be exposed to material unanticipated losses. • Certain of our strategies invest principally in the securities of non‑U.S. companies, which involve foreign currency exchange, tax, political, social and economic uncertainties and risks. • The expansion of our business outside of the United States raises tax and regulatory risks, may adversely affect our profit margins and places additional demands on our resources and employees. • Failure to properly address conflicts of interest could harm our reputation, business and results of operations. • Our contractual obligations may subject us to indemnification obligations to third parties. • Insurance may not be available on a cost-effective basis to protect us from liability. • Failure to protect our intellectual property may negatively impact our business. • Climate change may adversely affect our office locations.
General Risks • Reputational harm could result in a loss of AUM and revenues. • If our techniques for managing risk are ineffective, we may be exposed to material unanticipated losses. • Certain of our strategies invest principally in the securities of non‑U.S. companies, which involve foreign currency exchange, tax, political, social and economic uncertainties and risks. • The expansion of our business outside of the United States raises tax and regulatory risks, may adversely affect our profit margins and places additional demands on our resources and employees. • Failure to properly address conflicts of interest could harm our reputation, business and results of operations. • Our contractual obligations may subject us to indemnification obligations to third parties. • Insurance may not be available on a cost-effective basis to protect us from liability. • Failure to protect our intellectual property may negatively impact our business. • Climate change may adversely affect our office locations. 21 Table of Contents Market and Investment Performance Risks We earn substantially all of our revenues based on AUM, and any reduction in AUM would reduce our revenues and profitability.
In addition, the prices of equity securities may fluctuate more widely than the prices of other types of securities, making the level of our AUM and related revenues more volatile. As of December 31, 2023, of the 81% of our AUM invested in U.S. and international equity approximately 28% of the AUM was concentrated in U.S. small‑ and mid‑cap equities.
In addition, the prices of equity securities may fluctuate more widely than the prices of other types of securities, making the level of our AUM and related revenues more volatile. As of December 31, 2024, of the 82% of our AUM invested in U.S. and international equity approximately 26% of the AUM was concentrated in U.S. small‑ and mid‑cap equities.
Consequently, either event could have either a temporary or permanent negative impact on our results of operations. 26 Table of Contents A significant proportion of our existing AUM is managed in long‑only investments. As of December 31, 2023, approximately 81% of our AUM was invested in U.S. and international equity.
Consequently, either event could have either a temporary or permanent negative impact on our results of operations. A significant proportion of our existing AUM is managed in long‑only investments. As of December 31, 2024, approximately 82% of our AUM was invested in U.S. and international equity.
General Risks Reputational harm could result in a loss of AUM and revenues. The integrity of our brands and reputation is critical to our ability to attract and retain clients, business partners and employees and maintain relationships with consultants. We operate within the highly regulated financial services industry and various potential scenarios could result in harm to our reputation.
The integrity of our brands and reputation is critical to our ability to attract and retain clients, business partners and employees and maintain relationships with consultants. We operate within the highly regulated financial services industry and various potential scenarios could result in harm to our reputation.
However, appropriately dealing with conflicts of interest is complex and difficult and if we fail, or appear to fail, to deal appropriately with conflicts of interest, we could face reputational damage, litigation or regulatory proceedings or penalties, any of which may adversely affect our revenues or net income. Our contractual obligations may subject us to indemnification obligations to third parties.
However, appropriately dealing with conflicts of interest is complex and difficult and if we fail, or appear to fail, to deal appropriately with conflicts of interest, we could face reputational damage, litigation or regulatory proceedings or penalties, any of which may adversely affect our revenues or net income.
We may decline to manage assets from potential clients who demand lower fees even though such assets would increase our revenue and AUM in the short term. The investment management industry is intensely competitive.
We may decline to manage assets from potential clients who demand lower fees even though such assets would increase our revenue and AUM in the short term.
Crestview GP does not hold any of our common stock, but beneficially owns 18.0% of our common stock as of December 31, 2023.
Crestview GP does not hold any of our common stock, but beneficially owns 12.0% of our common stock as of December 31, 2024.
Our AUM has increased from $17.9 billion following our 2013 management‑led buyout with Crestview GP from KeyCorp to $166.6 billion as of December 31, 2023, primarily as a result of acquisitions. The absolute measure of our AUM represents a significant rate of growth that may be difficult to sustain.
Our total client assets has increased from $17.9 billion following our 2013 management‑led buyout with Crestview GP from KeyCorp to $176.1 billion as of December 31, 2024, primarily as a result of acquisitions. The absolute measure of our AUM represents a significant rate of growth that may be difficult to sustain.
The Draft Merger Guidelines provide that, under a variety of circumstances, the DoJ 30 Table of Contents and FTC may challenge transactions that may not have been challenged under the current guidelines and this could have a material impact on our ability to execute on our corporate strategy. Indebtedness Risks Our substantial indebtedness may expose us to material risks.
The Draft Merger Guidelines provide that, under a variety of circumstances, the DoJ and FTC may challenge transactions that may not have been challenged under the current guidelines and this could have a material impact on our ability to execute on our corporate strategy.
As of December 31, 2023, we had approximately $1,002 million of outstanding debt that consisted of (i) an existing term loan balance of $631 million and (ii) incremental term loans in an aggregate principal amount of $371 million. In addition, we maintain a $100 million revolving credit facility, though no amounts were outstanding as of December 31, 2023.
As of December 31, 2024, we had approximately $972 million of outstanding debt that consisted of (i) an existing term loan balance of $625 million and (ii) incremental term loans in an aggregate principal amount of $347 million. In addition, we maintain a $100 million revolving credit facility, though no amounts were outstanding as of December 31, 2024.
If market events lead to incidences where ETFs trade at prices that deviate significantly from an ETF’s net asset value, or trading halts are invoked by the relevant stock exchange or market, investors may lose confidence in ETF products and redeem their holdings, which may cause our AUM, revenue and earnings to decline.
If market events lead to incidences where ETFs trade at prices that deviate significantly from an ETF’s net asset value, or trading halts are invoked by the relevant stock exchange or market, investors may lose confidence in ETF products and redeem their holdings, which may cause our AUM, revenue and earnings to decline. 44 Table of Contents General Risks Reputational harm could result in a loss of AUM and revenues.
In the ordinary course of business, we enter into contracts with third parties, including, without limitation, clients, vendors, and other service providers, that contain a variety of representations and warranties and that provide for indemnifications by us in certain circumstances.
Our contractual obligations may subject us to indemnification obligations to third parties. 46 Table of Contents In the ordinary course of business, we enter into contracts with third parties, including, without limitation, clients, vendors, and other service providers, that contain a variety of representations and warranties and that provide for indemnifications by us in certain circumstances.
Non-compliance with the Advisers Act, the 1940 Act or other federal and state securities laws and regulations could result in investigations, sanctions, disgorgement, fines and reputational damage.
Non-compliance with the Advisers Act, the 1940 Act or other federal and state securities laws and regulations could result in investigations, sanctions, disgorgement, fines, reputational damage, or loss of registration to conduct advisory business.
Operational and Cybersecurity Risks Operational risks may disrupt our business, result in losses or limit our growth. We are heavily dependent on the capacity and reliability of the communications, information and technology systems supporting our operations, whether developed, owned and operated by us or by third parties. We also rely on manual workflows and a variety of manual user controls.
Operational and Cybersecurity Risks Operational risks may disrupt our business, result in losses or limit our growth. 42 Table of Contents We are heavily dependent on the capacity and reliability of the communications, information and technology systems supporting our operations, whether developed, owned and operated by us or by third parties.
Our fees vary by asset class and produce different revenues per dollar of AUM based on factors such as the type of assets being managed, the applicable strategy, the type of client and the client fee schedule.
A reduction in the fees charged by us could reduce our revenues and net income. Our fees vary by asset class and produce different revenues per dollar of AUM based on factors such as the type of assets being managed, the applicable strategy, the type of client and the client fee schedule.
We earn substantially all of our revenues from asset‑based fees from investment management products and services to individuals and institutions. Therefore, if our AUM declines, our fee revenue will decline, which will reduce our profitability as certain of our expenses are fixed.
AUM fluctuates based on many factors, including investment performance, client withdrawals and difficult market conditions. We earn substantially all of our revenues from asset‑based fees from investment management products and services to individuals and institutions. Therefore, if our AUM declines, our fee revenue will decline, which will reduce our profitability as certain of our expenses are fixed.
Continued geopolitical uncertainty such as the ongoing conflicts in Ukraine and Israel and tension between the U.S. and China has, and will likely continue to, negatively impact the global economy. Continued geopolitical uncertainty such as the ongoing conflicts in Ukraine and Israel and tension between the U.S. and China has created significant volatility, uncertainty and economic disruption.
Continued geopolitical uncertainty such as the ongoing conflicts in Ukraine and Israel and tension between the U.S., China, North Korea, Iran and Russia has, and will likely continue to, negatively impact the global economy.
Sustainable Investing and ESG, and Climate-Related Disclosure Sustainable investing and ESG continue to be the focus of increased regulatory scrutiny across jurisdictions.
Responsible Investing and Climate-Related Disclosure Responsible investing (including the integration of ESG factors) continue to be the focus of increased regulatory and legal scrutiny across jurisdictions.
In addition, we could have penalties imposed on us, be required to pay fines or be subject to private litigation, any of which could decrease our future income or negatively affect our current business or our future growth prospects. Potential impairment of goodwill and intangible assets could result in not realizing the value of these assets.
In addition, we could have penalties imposed on us, be required to pay fines or be subject to private litigation, any of which could decrease our future income or negatively affect our current business or our future growth prospects.
The ability of our investment teams to deliver strong investment performance depends in large part on their ability to identify appropriate investment opportunities in which to invest client assets.
The performance of our strategies or the growth of our AUM may be constrained by unavailability of appropriate investment opportunities. The ability of our investment teams to deliver strong investment performance depends in large part on their ability to identify appropriate investment opportunities in which to invest client assets.
As of December 31, 2023, our goodwill and intangible assets totaled $2.3 billion. The value of these assets may not be realized for a variety of reasons, including, but not limited to, significant redemptions, loss of clients, damage to brand name and unfavorable economic conditions.
The value of these assets may not be realized for a variety of reasons, including, but not limited to, significant redemptions, loss of clients, damage to brand name and unfavorable economic conditions.
The competitive nature of the investment management industry has led to a trend toward 39 Table of Contents lower fees in certain segments of the investment management market. Our ability to sustain fee levels depends on future growth in specific asset classes and distribution channels.
The competitive nature of the investment management industry has led to a trend toward lower fees in certain segments of the investment management market. Our ability to sustain fee levels depends on future growth in specific asset classes and distribution channels. These factors, as well as regulatory changes, could further inhibit our ability to sustain fees for certain products.
If we elect to provide support, we could incur losses from the support we provide and incur additional costs, including financing costs, in connection with the support. These losses and additional costs could be material and could adversely affect our earnings.
If we elect to provide support, we could incur losses from the support we provide and incur additional costs, including financing costs, in connection with the support. These losses and additional costs could be material and could adversely affect our earnings. In addition, certain proposed regulatory reforms could adversely impact the operating results of our money market funds.
The investment performance we achieve for our clients varies over time and the variance can be wide. The ratings and rankings we or the mutual funds, ETFs and other pooled investment vehicles that we advise have received are typically revised monthly. Our strategies’ returns have benefited during some periods from investment opportunities and positive economic and market conditions.
The investment performance we achieve for our clients varies over time and the variance can be wide. The ratings and rankings we or the mutual funds, ETFs and other pooled investment vehicles that we advise have received are typically 23 Table of Contents revised monthly.
Shortening the Securities Transaction Settlement Cycle On February 15, 2023, the SEC adopted rules to shorten the settlement cycle for most securities transactions from two business days after trade date (T+2) to one (T+1). This rule, as adopted, may present additional operational burdens and settlement risk for the Company.
This rule, as passed, will significantly increase registered funds disclosures and compliance obligations, and create additional operational complexities for the Victory Funds. Shortening the Securities Transaction Settlement Cycle On February 15, 2023, the SEC adopted rules to shorten the settlement cycle for most securities transactions from two business days after trade date (T+2) to one (T+1).
Sales of substantial amounts of our Common Stock in the public market, or the perception that these sales could occur, could cause the market price of our Common Stock to decline. As of February 20, 2024, 64,316,865 shares of our Common Stock are outstanding.
Future sales of shares by shareholders could cause our stock price to decline. Sales of substantial amounts of our Common Stock in the public market, or the perception that these sales could occur, could cause the market price of our Common Stock to decline. As of February 19, 2025, 63,661,988 shares of our Common Stock are outstanding.
If new strategies, whether managed by a new team or by an existing team, invest in instruments, or present operational issues and risks, with which we have little or no experience, it could strain our resources and increase the likelihood of an error or failure. 27 Table of Contents In addition, the historical returns of our existing strategies may not be indicative of the investment performance of any new strategy, and the poor performance of any new strategy could negatively impact the reputation of our other strategies.
If new strategies, whether managed by a new team or by an existing team, invest in instruments, or present operational issues and risks, with which we have little or no experience, it could strain our resources and increase the likelihood of an error or failure.
Because our clients invest in our strategies in order to gain exposure to the portfolio securities of the respective strategies, we have not adopted corporate‑level risk management policies to manage market, interest rate or exchange rate risks that could affect the value of our overall AUM. 43 Table of Contents Certain of our strategies invest principally in the securities of non‑U.S. companies, which involve foreign currency exchange, tax, political, social and economic uncertainties and risks.
Because our clients invest in our strategies in order to gain exposure to the portfolio securities of the respective strategies, we have not adopted corporate‑level risk management policies to manage market, interest rate or exchange rate risks that could affect the value of our overall AUM.
Additionally, if the content, analyses, or recommendations that AI applications assist in producing are or are alleged to be deficient, inaccurate, or biased, our business, financial condition, and results of operations may be adversely affected. 42 Table of Contents The use of AI applications has resulted in, and may in the future result in, cybersecurity incidents that implicate the personal data of end users of such applications.
Additionally, if the content, analyses, or recommendations that AI applications assist in producing are or are alleged to be deficient, inaccurate, or biased, our business, financial condition, and results of operations may be adversely affected.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur cybersecurity program assesses our cybersecurity risk profile through inventories of physical devices, software, and information systems, evaluations of critical third-party systems, and a catalogue of security risks. Periodic assessments are conducted to ensure the risk catalog is up to date. We protect our information systems, data, and network through technical and procedural controls and security awareness training.
Biggest changePeriodic assessments are conducted to ensure the risk catalog is up to date. We protect our information systems, data, and network through technical and procedural controls and security awareness training. We deploy multiple technical controls to achieve a layered security strategy including systems access controls, firewalls, web application gateways, antivirus software, e-mail filtering, and endpoint protection.
The IRP is designed to provide guidance for effective, efficient, and orderly response to a variety of cybersecurity incidents. The ISC is responsible for communication escalation as necessary up to and including to the Board of Directors.
The IRP is designed to provide guidance for effective, efficient, and orderly response to a variety of cybersecurity incidents. The ISC is responsible for communication escalation as necessary up to and including to the Board of Directors. The IRP is periodically exercised through tabletop exercises. 48 Table of Contents
The program is modeled upon the National Institute of Standards and Technology Cybersecurity Framework, a well-established and widely adopted framework in the financial services industry. The ISC is chaired by our Chief Information Security Officer (“CISO”) and membership includes executive and management level representation from our technology, legal, and compliance departments.
The program is modeled upon the National Institute of Standards and Technology Cybersecurity Framework, a well-established and widely adopted framework in the financial services industry.
We also engage third-party providers to perform penetration testing designed to identify vulnerabilities for remediation. We rotate penetration testing providers to diversify testing approaches.
We also engage third-party providers to perform penetration testing designed to identify vulnerabilities for remediation. We rotate penetration testing providers to diversify testing approaches. No known cybersecurity threats or incidents have materially affected, or are likely to materially affect, our business strategy, results of operations, or financial condition.
We deploy multiple technical controls to achieve a layered security strategy including systems access controls, firewalls, web application gateways, antivirus software, e-mail filtering, and endpoint protection. Security awareness training is mandatory for all employees and conducted at hire and periodically on topics such as phishing, ransomware, social engineering, public Wi-Fi risks, password security, and mobile device security.
Security awareness training is mandatory for all employees and conducted at time of hire and periodically thereafter. The security awareness training program is designed to ensure employees are prepared to identify and avoid cyber risks and may cover topics such as phishing, ransomware, social engineering, public Wi-Fi risks, password security, and mobile device security.
These risks are carried through to our management-level Enterprise Risk Committee which maintains a broader inventory of risk, providing another layer of governance oversight. The third-party security operations center and endpoint managed detection and response service is overseen by the CISO.
The Enterprise Risk Committee and the Vendor Oversight Committee report their activities to the Audit Committee at least annually. The third-party security operations center, the endpoint managed detection and response service, and third-party penetration testing vendors are overseen by the CISO.
Management also maintains a Vendor Oversight Committee which provides additional governance over the risks associated with use of third-party vendors, including cybersecurity risk. The Chair of the Enterprise Risk Committee and the Vendor Oversight Committee also reports on its activities to the Audit Committee at least annually.
Additional review and oversight is provided by the Enterprise Risk Committee where cybersecurity risk is vetted against other risk categories. Management also maintains a Vendor Oversight Committee which governs the use of third-party vendors and assesses cybersecurity risk related to those vendors.
Our CTO joined the firm in 2020 with 25 years of IT experience, including 12 years of executive level technology experience in the asset management industry. 46 Table of Contents The CISO serves as the Chair of the ISC which serves as the steering committee for aligning our overall security strategy with business objectives and is responsible for overseeing the cataloguing of cybersecurity risks and assessments described above.
Our CTO joined the firm in 2020 with 30 years of IT experience, including over 20 years of executive level technology experience in the asset management industry. Both the CISO and CTO serve on the ISC. The Audit Committee of the Board of Directors oversees our enterprise risk management, which includes cybersecurity.
Removed
At this time, we are not aware of any risks from cybersecurity threats, including as a result of any previous cyber security incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.
Added
The ISC is chaired by our Chief Information Security Officer (“CISO”) and membership includes executive and management level representation from our technology, legal, and compliance departments. 47 Table of Contents Our cybersecurity program assesses our cybersecurity risk profile through inventories of physical devices, software, and information systems, evaluations of critical third-party systems, and a catalog of security risks.
Removed
Despite our efforts to prevent and detect cybersecurity threats and incidents, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced undetected cybersecurity incidents. Refer to “Item 1A. Risk factors” in this annual report on Form 10-K for additional discussion about cybersecurity-related risks.
Added
While we maintain robust prevention and detection measures, we cannot eliminate all cybersecurity risks or guarantee absence of undetected incidents. For further details on cybersecurity risks, see "Item 1A. Risk Factors" in this Form 10-K. Governance Role of the Board of Directors and Management Our CISO and Chief Technology Officer (“CTO”) oversee the day-to-day technology and security activities.
Removed
Governance Role of the Board of Directors and Management The Audit Committee of the Board of Directors oversees our enterprise risk management, which includes cybersecurity. The Chair of the ISC reports on our cybersecurity program to our Board at least annually. Our CISO and Chief Technology Officer (“CTO”) oversee our day-to-day technology and security activities.
Added
The ISC provides a report on our cybersecurity program to our Board at least annually. Other key functions of the ISC are to align the overall security strategy with business objectives and to oversee the cataloging of cybersecurity risks and assessments.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOutside the United States, the Company leases office space in Singapore. The Company believes its existing facilities are adequate to meet its current and future business requirements. Item 3. Legal Proceedings. From time to time, the Company may be subject to legal proceedings and claims in the ordinary course of business.
Biggest changeOutside the United States, the Company leases office space in Singapore. The Company believes its existing facilities are adequate to meet its current and future business requirements.
Item 2. Pr operties. The Company leases its principal executive offices, which are located in San Antonio, TX. In the United States, the Company also leases office space in Brooklyn, OH; Birmingham, MI; Boston, MA; Rocky River, OH; Cincinnati, OH; Charlotte, NC; Denver, CO; Des Moines, IA; Hanover, NH; New York, NY; Norwalk, CT; and San Francisco, CA.
Item 2. Pr operties. The Company leases its principal executive offices, which are located in San Antonio, TX. In the United States, the Company also leases office space in Brooklyn, OH; Birmingham, MI; Boston, MA; Rocky River, OH; Cincinnati, OH; Charlotte, NC; Denver, CO; Clive, IA; Hanover, NH; New York, NY; Norwalk, CT; and San Francisco, CA.
Removed
The Company is not currently a party to any material legal proceedings. Item 4. Mine Saf ety Disclosures. Not applicable 47 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 47 PART II Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities 48 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 51 Item 7A. Qualitative and Quantitative Disclosures Regarding Market Risk 70 Item 8. Financial Statements and Supplementary Data 72
Biggest changeItem 4. Mine Safety Disclosures 49 PART II Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities 50 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 53 Item 7A. Qualitative and Quantitative Disclosures Regarding Market Risk 74 Item 8. Financial Statements and Supplementary Data 76

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe 2024 Share Repurchase Program can be suspended or discontinued at any time. • In 2023, the Company repurchased 4.2 million shares of Common Stock at a total cost of $134.5 million, which included $1.0 million in excise taxes payable on share repurchases, for an average price of $32.33 per share. • In 2022, the Company repurchased 3.0 million shares of Common Stock at a total cost of $87.3 million for an average price of $28.76 per share. • In 2021, 0.9 million shares of Common Stock were repurchased under programs authorized by the Company’s Board of Directors at a total cost of $26.2 million for an average price of $29.53 per share.
Biggest changeIn 2023, the Company repurchased 4.2 million shares of Common Stock at a total cost of $134.5 million, which included $1.0 million in excise taxes payable on share repurchases, for an average price of $32.33 per share.
Under the 2024 Share Repurchase Program, which took effect in December 2023, the Company may purchase its shares from time to time in privately negotiated transactions, through block trades, pursuant to open market purchases, or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the SEC.
Under the 2025 Share Repurchase Program, which took effect in December 2024, the Company may purchase its shares from time to time in privately negotiated transactions, through block trades, pursuant to open market purchases, or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the SEC.
Item 5. Market for Registrant’s Common Equity, Related Shar eholder Matters and Issuer Purchases of Equity Securities. Shares of the Company’s Common Stock are listed and trade on NASDAQ under the symbol “VCTR”. As of December 31, 2023, there were approximately 22,000 beneficial shareholders of the Company’s Common Stock.
Item 5. Market for Registrant’s Common Equity, Related Shar eholder Matters and Issuer Purchases of Equity Securities. Shares of the Company’s Common Stock are listed and trade on NASDAQ under the symbol “VCTR”. As of December 31, 2024, there were approximately 41,000 beneficial shareholders of the Company’s Common Stock.
In December 2023, the Company’s Board of Directors approved a new share repurchase program (the “2024 Share Repurchase Program”) authorizing the repurchase of up to $100.0 million of the Company’s Common Stock through December 31, 2025.
In December 2023, the Company’s Board of Directors approved a new share repurchase program (the “2024 Share Repurchase Program”) authorizing the repurchase of up to $100.0 million of the Company’s Common Stock through December 31, 2025. The 2024 Share Repurchase Program was completed in December 2024.
The stock price performance of the following graph is not necessarily indicative of future stock price performance. 48 Table of Contents Purchases of Equity Securities by the Issuer and Affiliated Purchasers. The following table sets out information regarding purchases of equity securities by the Company for the three months ended December 31, 2023.
The stock price performance of the following graph is not necessarily indicative of future stock price performance. 50 Table of Contents Purchases of Equity Securities by the Issuer and Affiliated Purchasers. The following table sets out information regarding purchases of equity securities by the Company for the three months ended December 31, 2024.
Potential increases to the Company’s cash dividend rate will be assessed annually. 50 Table of Contents
Potential increases to the Company’s cash dividend rate will be assessed annually. 52 Table of Contents
Performance Graph The following graph shows a comparison from December 31, 2018 through December 31, 2023 of the cumulative total return of our Common Stock, the Standard & Poor’s 500 Stock Index (S&P 500 Index) and a peer group comprised of Affiliated Managers Group, Inc., Artisan Partners Asset Management Inc., BrightSphere Investment Group plc, Eaton Vance Corp., and Virtus Investment Partners, Inc.
Performance Graph The following graph shows a comparison from December 31, 2019 through December 31, 2024 of the cumulative total return of our Common Stock, the Standard & Poor’s 500 Stock Index (S&P 500 Index) and a peer group comprised of Affiliated Managers Group, Inc., Artisan Partners Asset Management Inc., Acadian Asset Management, and Virtus Investment Partners, Inc.
The amount and timing of purchases under the 2024 Share Repurchase Program will depend on a number of factors including the price and availability of the Company’s shares, trading volume, capital availability, Company performance and general economic and market conditions.
The amount and timing of purchases under the 2025 Share Repurchase Program will depend on a number of factors including the price and availability of the Company’s shares, trading volume, capital availability, Company performance and general economic and market conditions. The 2025 Share Repurchase Program can be suspended or discontinued at any time.
During 2022, the Company’s Board declared $1.00 of cash dividends per share, an increase of $0.47, or 89%, from the $0.53 per share of cash dividends declared in 2021. During 2023 the Company’s Board declared $1.28 of cash dividends per share, an increase of $0.28, or 28%, from the $1.00 per share of cash dividends declared in 2022.
During 2023, the Company’s Board declared $1.28 of cash dividends per share, an increase of $0.28, or 28%, from the $1.00 per share of cash dividends declared in 2022. During 2024, the Company’s Board declared $1.56 of cash dividends per share, an increase of $0.28, or 22%, from the $1.28 per share of cash dividends declared in 2023.
Eaton Vance Corp. was acquired and ceased to publicly trade on March 1, 2021. The graph assumes that $100 was invested at the market close on December 31, 2018 in our common stock, the S&P 500 Index and the peer group and assumes reinvestment of any dividends.
The graph assumes that $100 was invested at the market close on December 31, 2019 in our common stock, the S&P 500 Index and the peer group and assumes reinvestment of any dividends.
Total Number of Shares of Common Stock Average Price Paid Per Share of Common Total Number of Shares of Common Stock Purchased as Part of Publicly Announced Plans Approximate Dollar Value That May Yet Be Purchased Under Outstanding Plans or Programs Period Purchased Stock or Programs (in millions) (1) October 1-31, 2023 — $ — — $ 51.9 November 1-30, 2023 1,178,191 32.26 1,178,191 13.9 December 1-31, 2023 570,915 33.63 570,915 95.2 Total 1,749,106 $ 32.71 1,749,106 (1) Six share repurchase programs were authorized from 2018 to 2021, each for $15.0 million of the Company’s Common Stock, that were completed in September 2019, June 2020, October 2020, May 2021, January 2022 and May 2022.
Total Number of Shares of Common Stock Average Price Paid Per Share of Common Total Number of Shares of Common Stock Purchased as Part of Publicly Announced Plans Approximate Dollar Value That May Yet Be Purchased Under Outstanding Plans or Programs Period Purchased Stock or Programs (in millions) (1) October 1-31, 2024 — $ — — $ 95.2 November 1-30, 2024 1,128,240 67.92 1,128,240 19.0 December 1-31, 2024 275,061 69.79 275,061 200.0 Total 1,403,301 $ 68.29 1,403,301 (1) Six share repurchase programs were authorized from 2018 to 2021, each for $15.0 million of the Company’s Common Stock, that were completed in September 2019, June 2020, October 2020, May 2021, January 2022 and May 2022.
As of December 31, 2023, $95.2 million was available for future repurchases under the 2024 Share Repurchase Program, and a cumulative total of 11.3 million shares of Common Stock had been repurchased under programs authorized by the Company’s Board of Directors at a total cost of $295.8 million for an average price of $26.26 per share.
As of December 31, 2024, $200.0 million was available for future repurchases under the 2025 Share Repurchase Program, and a cumulative total of 12.7 million shares of Common Stock had been repurchased under programs authorized by the Company’s Board of Directors at a total cost of $391.6 million for an average price of $30.91 per share. 51 Table of Contents Dividend Policy In 2019, the Company announced the initiation of cash dividends and paid its first quarterly dividend to shareholders in September of that year.
Dividend Policy In 2019, the Company announced the initiation of cash dividends and paid its first quarterly dividend to shareholders in September of that year. Each year, since the commencement of cash dividends in 2019, the 49 Table of Contents Company has increased the per-share amount of the quarterly cash dividends distributed to shareholders.
Each year, since the commencement of cash dividends in 2019, the Company has increased the per-share amount of the quarterly cash dividends distributed to shareholders. During 2022, the Company’s Board declared $1.00 of cash dividends per share, an increase of $0.47, or 89%, from the $0.53 per share of cash dividends declared in 2021.
Added
In December 2024, the Company’s Board of Directors approved a new share repurchase program (the “2025 Share Repurchase Program”) authorizing the repurchase of up to $200.0 million of the Company’s Common Stock through December 31, 2026.
Added
In 2024, the Company repurchased 1.4 million shares of Common Stock at a total cost of $95.8 million, which included $0.6 million in excise taxes payable on share repurchases, for an average price of $68.29 per share.
Added
In 2022, 3.0 million shares of Common Stock were repurchased under programs authorized by the Company’s Board of Directors at a total cost of $87.3 million for an average price of $28.76 per share.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeEquity Solutions Alternative Investments Total Long-term Money Market / Short-term Total Year Ended December 31, 2023 Beginning AUM $ 27,892 $ 15,103 $ 26,353 $ 10,973 $ 14,160 $ 51,507 $ 3,663 $ 149,649 $ 3,302 $ 152,952 Gross client cash inflows 5,090 2,741 4,024 284 2,581 6,937 1,593 23,251 853 24,104 Gross client cash outflows (5,536 ) (3,859 ) (6,129 ) (1,286 ) (2,304 ) (8,310 ) (2,002 ) (29,426 ) (1,245 ) (30,671 ) Net client cash flows (446 ) (1,117 ) (2,105 ) (1,002 ) 276 (1,373 ) (409 ) (6,176 ) (391 ) (6,567 ) Market appreciation / (depreciation) 3,153 1,978 1,595 2,809 2,431 9,494 270 21,729 149 21,878 Realizations and distributions — — — — — — (100 ) (100 ) — (100 ) Acquired & divested assets / Net transfers (2) 5 (4 ) (1,487 ) (145 ) (96 ) (43 ) 7 (1,763 ) 211 (1,552 ) Ending AUM $ 30,604 $ 15,959 $ 24,355 $ 12,635 $ 16,772 $ 59,585 $ 3,431 $ 163,340 $ 3,271 $ 166,611 Year Ended December 31, 2022 Beginning AUM $ 30,578 $ 20,094 $ 35,154 $ 15,766 $ 16,050 $ 60,364 $ 2,548 $ 180,554 $ 3,100 $ 183,654 Gross client cash inflows 6,859 3,162 5,524 406 4,149 8,169 5,045 33,313 621 33,934 Gross client cash outflows (6,919 ) (5,214 ) (9,545 ) (1,498 ) (3,111 ) (6,247 ) (3,324 ) (35,858 ) (807 ) (36,666 ) Net client cash flows (60 ) (2,053 ) (4,020 ) (1,093 ) 1,038 1,921 1,721 (2,545 ) (187 ) (2,732 ) Market appreciation / (depreciation) (2,641 ) (2,965 ) (3,345 ) (3,328 ) (3,153 ) (10,887 ) (215 ) (26,533 ) 39 (26,495 ) Realizations and distributions — — — — — — (376 ) (376 ) — (376 ) Acquired & divested assets / Net transfers 14 27 (1,436 ) (372 ) 226 107 (16 ) (1,450 ) 350 (1,100 ) Ending AUM $ 27,892 $ 15,103 $ 26,353 $ 10,973 $ 14,160 $ 51,507 $ 3,663 $ 149,649 $ 3,302 $ 152,952 Year Ended December 31, 2021 (1) Beginning AUM $ 26,230 $ 18,368 $ 36,639 $ 14,230 $ 14,141 $ 33,676 $ 422 $ 143,706 $ 3,534 $ 147,241 Gross client cash inflows 5,935 4,562 6,756 364 2,822 6,217 1,213 27,869 386 28,254 Gross client cash outflows (7,742 ) (5,644 ) (9,000 ) (1,565 ) (2,362 ) (5,305 ) (201 ) (31,820 ) (914 ) (32,734 ) Net client cash flows (1,807 ) (1,082 ) (2,244 ) (1,202 ) 460 912 1,012 (3,952 ) (528 ) (4,480 ) Market appreciation / (depreciation) 6,169 2,685 649 2,766 1,662 6,611 30 20,573 10 20,583 Realizations and distributions — — — — — — — — — — Acquired & divested assets / Net transfers (14 ) 122 110 (28 ) (214 ) 19,165 1,084 20,226 84 20,310 Ending AUM $ 30,578 $ 20,094 $ 35,154 $ 15,766 $ 16,050 $ 60,364 $ 2,548 $ 180,554 $ 3,100 $ 183,654 (1) Beginning in January 2022, the Company's "Other" asset class has been categorized to Solutions, Fixed Income, Global / Non-U.S.
Biggest changeEquity Solutions Alternative Investments Total Long-term Money Market / Short-term Total AUM (1) Year Ended December 31, 2024 Beginning AUM $ 30,604 $ 15,959 $ 24,355 $ 12,635 $ 16,772 $ 54,296 $ 3,431 $ 158,051 $ 3,271 $ 161,322 Gross client cash inflows 4,516 2,043 4,912 284 3,762 8,634 1,105 25,255 912 26,167 Gross client cash outflows (7,685 ) (4,195 ) (5,905 ) (1,540 ) (2,893 ) (8,509 ) (1,618 ) (32,345 ) (1,200 ) (33,545 ) Net client cash flows (3,169 ) (2,152 ) (993 ) (1,256 ) 869 125 (513 ) (7,090 ) (287 ) (7,377 ) Market appreciation / (depreciation) 3,189 1,035 924 2,873 1,570 8,290 47 17,929 172 18,100 Realizations and distributions — — — — — — (2 ) (2 ) — (2 ) Acquired & divested assets / Net transfers (40 ) (58 ) 116 (104 ) (115 ) (118 ) 17 (301 ) 188 (113 ) Ending AUM $ 30,584 $ 14,785 $ 24,402 $ 14,148 $ 19,095 $ 62,593 $ 2,980 $ 168,586 $ 3,344 $ 171,930 Year Ended December 31, 2023 Beginning AUM $ 27,892 $ 15,103 $ 26,353 $ 10,973 $ 14,160 $ 46,317 $ 3,663 $ 144,460 $ 3,302 $ 147,762 Gross client cash inflows 5,090 2,741 4,024 284 2,581 6,337 1,593 22,651 853 23,504 Gross client cash outflows (5,536 ) (3,859 ) (6,129 ) (1,286 ) (2,304 ) (7,119 ) (2,002 ) (28,235 ) (1,245 ) (29,480 ) Net client cash flows (446 ) (1,117 ) (2,105 ) (1,002 ) 276 (781 ) (409 ) (5,584 ) (391 ) (5,976 ) Market appreciation / (depreciation) 3,153 1,978 1,595 2,809 2,431 8,804 270 21,039 149 21,188 Realizations and distributions — — — — — — (100 ) (100 ) — (100 ) Acquired & divested assets / Net transfers (2) 5 (4 ) (1,487 ) (145 ) (96 ) (43 ) 7 (1,763 ) 211 (1,552 ) Ending AUM $ 30,604 $ 15,959 $ 24,355 $ 12,635 $ 16,772 $ 54,296 $ 3,431 $ 158,051 $ 3,271 $ 161,322 Year Ended December 31, 2022 Beginning AUM $ 30,578 $ 20,094 $ 35,154 $ 15,766 $ 16,050 $ 54,426 $ 2,548 $ 174,616 $ 3,100 $ 177,716 Gross client cash inflows 6,859 3,162 5,524 406 4,149 7,872 5,045 33,016 621 33,637 Gross client cash outflows (6,919 ) (5,214 ) (9,545 ) (1,498 ) (3,111 ) (5,871 ) (3,324 ) (35,481 ) (807 ) (36,289 ) Net client cash flows (60 ) (2,053 ) (4,020 ) (1,093 ) 1,038 2,001 1,721 (2,465 ) (187 ) (2,652 ) Market appreciation / (depreciation) (2,641 ) (2,965 ) (3,345 ) (3,328 ) (3,153 ) (10,218 ) (215 ) (25,864 ) 39 (25,826 ) Realizations and distributions — — — — — — (376 ) (376 ) — (376 ) Acquired & divested assets / Net transfers 14 27 (1,436 ) (372 ) 226 107 (16 ) (1,450 ) 350 (1,100 ) Ending AUM $ 27,892 $ 15,103 $ 26,353 $ 10,973 $ 14,160 $ 46,317 $ 3,663 $ 144,460 $ 3,302 $ 147,762 58 Table of Contents (1) Total AUM includes both discretionary assets under management and non-discretionary assets under advisement and excludes other assets.
The objective of this section of the Annual Report on Form 10-K is to provide a discussion and analysis, from management’s perspective, of the key performance indicators and material information necessary to assess our financial condition, results of operations, liquidity and cash flows for the year ended December 31, 2023.
The objective of this section of the Annual Report on Form 10-K is to provide a discussion and analysis, from management’s perspective, of the key performance indicators and material information necessary to assess our financial condition, results of operations, liquidity and cash flows for the year ended December 31, 2024.
(3) The balance at December 31, 2023 and 2022 represents the Company’s undrawn $99.9 million revolving credit facility and a $0.1 million standby letter of credit used as collateral for THB’s real estate location.
(3) The balance at December 31, 2024 and 2023 represents the Company’s undrawn $99.9 million revolving credit facility and a $0.1 million standby letter of credit used as collateral for THB’s real estate location.
The portion of the effective income tax rate attributable to state and local income taxes varies from year to year depending on amounts of income apportioned to each jurisdiction, whether we file income tax returns on a unitary or separate return basis and with changes in tax laws. 59 Table of Contents The following table presents our GAAP results of operations for the years ended December 31, 2023, 2022 and 2021 (in thousands except per share data).
The portion of the effective income tax rate attributable to state and local income taxes varies from year to year depending on amounts of income apportioned to each jurisdiction, whether we file income tax returns on a unitary or separate return basis and with changes in tax laws. 63 Table of Contents The following table presents our GAAP results of operations for the years ended December 31, 2024, 2023 and 2022 (in thousands except per share data).
Our primary uses of cash include: (i) repayment of our debt obligations, (ii) funding of acquisitions, (iii) payment of contingent consideration for previous acquisitions, and (iv) working capital needs. Cash flows from operations also allow us to meet certain other cash uses such as quarterly cash dividends and the repurchase of our Common Stock.
Our primary uses of cash include: (i) repayment of our debt obligations, (ii) funding of acquisitions, (iii) payment of contingent consideration for previous acquisitions, and (iv) working capital needs. Cash flows from operations also allow us to meet certain other cash uses such as quarterly cash dividends and 69 Table of Contents the repurchase of our Common Stock.
VCS is the primary obligor under the contracts with the Victory Funds and has the ability to select the service provider and establish pricing. Substantially all of VCS’s revenue is recorded gross of payments made to third parties. 57 Table of Contents Fund transfer agent fees are earned for providing mutual fund shareholder services.
VCS is the primary obligor under the contracts with the Victory Funds and has the ability to select the service provider and establish pricing. Substantially all of VCS’s revenue is recorded gross of payments made to third parties. Fund transfer agent fees are earned for providing mutual fund shareholder services.
In preparing these financial statements, our estimates and judgements are based on historical experience, information from third-party valuation professionals and various other assumptions, giving due consideration to materiality. We consider the accounting policy discussed below to be critical to the understanding of our consolidated financial statements.
In preparing these financial statements, our estimates and judgements are based on historical experience, information from third-party valuation professionals and various other assumptions, giving due consideration to materiality. We 73 Table of Contents consider the accounting policy discussed below to be critical to the understanding of our consolidated financial statements.
We attribute this growth to our success in sourcing acquisitions and evolving them into organic growers, generating strong investment returns, and developing institutional, retail, and direct investor channels with deep penetration. 51 Table of Contents WestEnd Acquisition (the “WestEnd Acquisition”) – On December 31, 2021, the Company completed the acquisition of 100% of the equity interests of WestEnd pursuant to the WestEnd purchase agreement (as amended, the “WestEnd Purchase Agreement”).
We attribute this growth to our success in sourcing acquisitions and evolving them into organic growers, generating strong investment returns, and developing institutional, retail, and direct investor channels with deep penetration. 53 Table of Contents WestEnd Acquisition (the “WestEnd Acquisition”) – On December 31, 2021, the Company completed the acquisition of 100% of the equity interests of WestEnd Advisors, LLC ("WestEnd") pursuant to the WestEnd purchase agreement (as amended, the “WestEnd Purchase Agreement”).
The net outflows were driven by $2.2 billion in fixed income strategies, $1.8 billion our U.S. mid cap equity strategies, $1.2 billion in our U.S. large cap equity strategies, $1.1 billion in our U.S. small cap equity strategies and $0.5 billion in money market and short-term strategies, partially offset by $1.0 billion in net inflows into our alternative investment strategies, $0.9 billion into our Solutions Platform and $0.5 billion into our global/non-U.S. equity strategies.
Net outflows were driven by $3.2 billion in our U.S. mid cap equity strategies, $2.2 billion in our U.S. small cap equity strategies, $1.3 billion in our U.S. large cap equity strategies, $1.0 billion in fixed income strategies, $0.5 billion in our alternative investment strategies and $0.3 billion in money market and short-term strategies, partially offset by $0.9 billion in net inflows into our global/non-U.S. equity strategies and $0.1 billion in our Solutions Platform.
As of December 31, 2023, there were no outstanding borrowings under the revolving credit facility and the Company was in compliance with its financial performance covenant.
As of December 31, 2024, there were no outstanding borrowings under the revolving credit facility and the Company was in compliance with its financial performance covenant.
The fees paid to the sub‑advisers 58 Table of Contents are contractual based on a percentage of assets that they manage or based upon a percentage of revenue. • We have outsourced middle‑office operations to achieve a scalable operational infrastructure that utilizes a variable‑cost model.
The fees paid to the sub‑advisers are contractual based on a percentage of assets that they manage or based upon a percentage of revenue. • We have outsourced middle‑office operations to achieve a scalable operational infrastructure that utilizes a variable‑cost model.
General and Administrative Expenses – General and administrative expenses primarily consist of investment research and technology costs, professional and marketing fees, travel, rent and insurance expenses. Depreciation and Amortization – Depreciation and amortization expense consists primarily of the depreciation of property and equipment as well as the amortization of acquired intangibles that have a definite life.
General and Administrative Expenses – General and administrative expenses primarily consist of investment research and technology costs, professional and marketing fees, travel, rent and insurance expenses. 62 Table of Contents Depreciation and Amortization – Depreciation and amortization expense consists primarily of the depreciation of property and equipment as well as the amortization of acquired intangibles that have a definite life.
Distribution and other asset-based expenses decreased $11.5 million, or 7.1%, to $149.6 million in 2023 compared to $161.1 million in 2022, primarily due to a decrease in average AUM over the comparable period. 2022 compared to 2021 – Distribution and other asset‑based expenses are primarily based on AUM.
Distribution and other asset-based expenses decreased $11.5 million, or 7.1%, to $149.6 million in 2023 compared to $161.1 million in 2022, primarily due to a decrease in average AUM over the comparable period.
As of December 31, 2023, the unamortized deferred gain on Swap monetization was $41.6 million, before tax. The Swap unwind costs of $2.4 million were recorded in general and administrative costs on the Consolidated Statement of Operations for the year ended December 31, 2023.
As of December 31, 2024 and 2023, the unamortized deferred gain on Swap monetization was $24.9 million and $41.6 million, respectively, before tax. The Swap unwind costs of $2.4 million were recorded in general and administrative costs on the Consolidated Statement of Operations for the year ended December 31, 2023.
Excludes $78.3 million and $28.0 million at December 31, 2023 and 2022, respectively, related to the estimated fair value of the contingent consideration that is expected to be paid over the next twelve month period resulting from the USAA AMCO and WestEnd Acquisitions. 2019 Credit Agreement On July 1, 2019, concurrent with the USAA AMCO Acquisition, the Company entered into the 2019 Credit Agreement, repaid all indebtedness outstanding under the prior credit agreement (the “2018 Credit Agreement”), and terminated the 2018 Credit Agreement.
Excludes $62.7 million and $78.3 million at December 31, 2024 and 2023, respectively, related to the estimated fair value of the contingent consideration that is expected to be paid over the next twelve month period resulting from the WestEnd Acquisition. 2019 Credit Agreement On July 1, 2019, concurrent with the USAA AMCO Acquisition, the Company entered into the 2019 Credit Agreement, repaid all indebtedness outstanding under the prior credit agreement (the “2018 Credit Agreement”), and terminated the 2018 Credit Agreement.
Refer to “Supplemental Non‑GAAP Financial Information” for more information about how we calculate Adjusted Net Income and a reconciliation of net income to Adjusted Net Income. • GAAP earnings per diluted share was $3.12 for the year ended December 31, 2023 compared to $3.81 for the same period in 2022.
Refer to “Supplemental Non‑GAAP Financial Information” for more information about how we calculate Adjusted Net Income and a reconciliation of net income to Adjusted Net Income. • GAAP earnings per diluted share was $4.38 for the year ended December 31, 2024 compared to $3.12 for the same period in 2023.
Net outflows were driven by $4.0 billion in fixed income strategies, $2.1 billion our U.S. small cap equity strategies, $1.1 billion in our U.S. large cap equity strategies, and $0.2 billion in money market and short-term strategies, partially offset by $1.9 billion in net inflows into our Solutions Platform, $1.7 billion into our alternative investment strategies, and $1.0 billion into our global/non-U.S. equity strategies.
Net outflows were driven by $2.1 billion in fixed income strategies, $1.1 billion in our U.S. small cap equity strategies, $1.0 billion in our U.S. large cap equity strategies, $0.8 billion in our Solutions Platform, $0.4 billion in our U.S. mid cap equity strategies, $0.4 billion in our alternative investment strategies and $0.4 billion in money market and short-term strategies, partially offset by $0.3 billion in net inflows into our global/non-U.S. equity strategies.
The deferred gain on the Swap monetization is being amortized on a straight-line basis through July 1, 2026 and is included in interest expense and other financing costs on the Consolidated Statements of Operations. For the year ended December 31, 2023, the Company recorded $2.8 million in amortization of deferred gain on Swap monetization.
The deferred gain on the Swap monetization is being amortized on a straight-line basis through July 1, 2026 and is included in interest expense and other financing costs on the Consolidated Statements of Operations. For the years ended December 31, 2024 and 2023, the Company recorded $16.7 million and $2.8 million, respectively, in amortization of deferred gain on Swap monetization.
The $4.9 million decrease in cash provided by operating activities was due to a $62.4 million decrease in net income partially offset by the combination of a $19.2 million increase in working capital and a $38.3 million increase in non-cash items. 2022 compared to 2021 – Cash provided by operating activities was $335.2 million in 2022, compared to $376.2 million in 2021.
The $4.9 million decrease in cash provided by operating activities was due to a $62.4 million decrease in net income partially offset by the combination of a $19.2 million increase in working capital and a $38.3 million increase in non-cash items.
The decrease was due to a decrease in the net unrealized fair value of deferred compensation plan investments in 2022 compared to an increase in dividend income and unrealized gains on deferred compensation plan investments in 2021.
The increase was due to an increase in dividend income and an increase in the net unrealized fair value of deferred compensation plan investments in 2023 compared to a decrease in the net unrealized fair value of deferred compensation plan investments in 2022.
The following table presents our liquidity position as of December 31, 2023 and 2022: December 31, December 31, (in thousands) 2023 2022 Cash and cash equivalents (1) $ 123,547 $ 38,171 Accounts and other receivables (2) 87,570 84,473 Undrawn commitment on revolving credit facility (3) 100,000 100,000 Accounts and other payables (4) (111,933 ) (109,320 ) (1) We manage our cash balances in order to fund our day-to-day operations and invest excess cash into money market funds and other short-term investments.
The following table presents our liquidity position as of December 31, 2024 and 2023: December 31, December 31, (in thousands) 2024 2023 Cash and cash equivalents (1) $ 126,731 $ 123,547 Accounts and other receivables (2) 100,667 87,570 Undrawn commitment on revolving credit facility (3) 100,000 100,000 Accounts and other payables (4) (109,599 ) (111,933 ) (1) We manage our cash balances in order to fund our day-to-day operations and invest excess cash into money market funds and other short-term investments.
Refer to “Supplemental 52 Table of Contents Non‑GAAP Financial Information” for more information about how we calculate Adjusted Net Income and a reconciliation of net income to Adjusted Net Income. • Adjusted EBITDA and Adjusted EBITDA margin was $418.0 million and 50.9%, respectively, for the year ended December 31, 2023 compared to $424.2 million and 49.6%, respectively, for the year ended December 31, 2022.
Refer to “Supplemental 54 Table of Contents Non‑GAAP Financial Information” for more information about how we calculate Adjusted Net Income and a reconciliation of net income to Adjusted Net Income. • Adjusted EBITDA and Adjusted EBITDA margin was $475.6 million and 53.2%, respectively, for the year ended December 31, 2024 compared to $418.0 million and 50.9%, respectively, for the year ended December 31, 2023.
The following table presents the components of acquisition, restructuring and exit costs for the periods indicated: Year Ended December 31, (in thousands) 2023 2022 2021 Acquisition-related costs $ 217 $ 534 $ 16,262 Change in value of consideration payable for acquisition of business 23,236 (40,600 ) 13,800 Restructuring and integration costs 595 881 2,578 Personnel compensation and benefits 5,534 10,463 1,906 Interest income and other (income) expense (600 ) — — Total acquisition, restructuring and exit costs $ 28,982 $ (28,722 ) $ 34,546 Liquidity, Capital Resources and Contractual Obligations Sources and Uses of Cash – We generate strong cash flows from operations that allow us to meet our cash requirements.
The following table presents the components of acquisition, restructuring and exit costs for the periods indicated: Year Ended December 31, (in thousands) 2024 2023 2022 Acquisition-related costs $ 11,285 $ 217 $ 534 Change in value of consideration payable for acquisition of business 2,694 23,236 (40,600 ) Restructuring and integration costs 1,411 595 881 Personnel compensation and benefits (13,655 ) 5,534 10,463 Interest income and other (income) expense — (600 ) — Total acquisition, restructuring and exit costs $ 1,735 $ 28,982 $ (28,722 ) Liquidity, Capital Resources and Contractual Obligations Sources and Uses of Cash – We generate strong cash flows from operations that allow us to meet our cash requirements.
Change in Value of Consideration Payable for Acquisition of Business 2023 compared to 2022 - The change in value of consideration payable for acquisition of business increased $63.8 million as a result of increases of $8.7 million and $14.5 million in the fair value of the contingent consideration associated with the USAA AMCO and WestEnd Acquisitions, respectively, for the year ended December 31, 2023 compared to decreases of $3.6 million and $37.0 million in the fair value of the contingent consideration associated with the USAA AMCO and WestEnd Acquisitions, respectively, for the year ended December 31, 2022.
Refer to Note 4, Acquisitions, for further details on the fair value of contingent consideration payable. 2023 compared to 2022 - The change in value of consideration payable for acquisition of business increased $63.8 million as a result of increases of $8.7 million and $14.5 million in the fair value of the contingent consideration associated with the USAA AMCO and WestEnd Acquisitions, respectively, for the year ended December 31, 2023 compared to decreases of $3.6 million and $37.0 million in the fair value of the contingent 66 Table of Contents consideration associated with the USAA AMCO and WestEnd Acquisitions, respectively, for the year ended December 31, 2022.
GAAP Expenses Our GAAP expenses principally consist of: (i) personnel compensation and benefits; (ii) distribution and other asset‑based expenses; (iii) general and administrative expenses; (iv) depreciation and amortization charges; and (v) acquisition‑related expenses comprising of changes in the fair value of contingent acquisition payments and restructuring and acquisition costs.
GAAP Expenses Our GAAP expenses principally consist of: (i) personnel compensation and benefits; (ii) distribution and other asset‑based expenses; (iii) general and administrative expenses; (iv) depreciation and amortization charges; and (v) acquisition‑related expenses comprising of changes in the fair value of contingent acquisition payments and restructuring and acquisition costs. 61 Table of Contents Personnel Compensation and Benefits – Personnel compensation and benefits is our most significant category of expense.
Refer to Note 4, Acquisitions, for further details on the fair value of contingent consideration payable. Acquisition‑Related Costs 2023 compared to 2022 – Acquisition-related costs decreased $0.3 million to $0.2 million for the year ended December 31, 2023 compared to $0.5 million in the prior year.
Refer to Note 4, Acquisitions, for further details on the fair value of contingent consideration payable. Acquisition‑Related Costs 2024 compared to 2023 – Acquisition-related costs increased $11.1 million to $11.3 million for the year ended December 31, 2024 compared to $0.2 million in the prior year.
December 31, 2023 AUM – Our total AUM at December 31, 2023 increased by $13.6 billion, or 8.9%, to $166.6 billion from $153.0 billion at December 31, 2022, primarily driven by positive market movement of $21.9 billion, partially offset by net outflows of $6.6 billion.
December 31, 2023 AUM – Our total AUM at December 31, 2023 increased by $13.5 billion, or 9.2%, to $161.3 billion from $147.8 billion at December 31, 2022, primarily driven by positive market movement of $21.2 billion, partially offset by net outflows of $6.0 billion.
Adjusted net income with tax benefit per diluted share was $4.51 and $4.58, respectively, for the years ended December 31, 2023 and 2022.
Adjusted net income with tax benefit per diluted share was $5.36 and $4.51, respectively, for the years ended December 31, 2024 and 2023.
The increase of $3.9 million, or 7.5%, was primarily due to an increase in marketing expense as well as a one-time expense associated with the unwinding of the Company's floating-to-fixed interest rate swap transaction (“Swap”).
The increase of $3.9 million, or 7.5%, was primarily due to an increase in marketing expense as well as a one-time expense associated with the unwinding of the Company's floating-to-fixed interest rate swap transaction (“Swap”). Refer to Note 12, Derivatives, for further details on the Swap.
Investment performance : • 42 of our total Victory Capital mutual funds and ETFs had overall Morningstar ratings of four or five stars and 70% of our fund and ETF AUM were rated four or five stars overall by Morningstar. 49% of our strategies by AUM had investment returns in excess of their respective benchmarks over a one-year period, 62% over a three-year period, 84% over a five-year period and 79% over a ten-year period.
Investment performance : • 45 of our total Victory Capital mutual funds and ETFs had overall Morningstar ratings of four or five stars and 66% of our fund and ETF AUM were rated four or five stars overall by Morningstar. 47% of our strategies by AUM had investment returns in excess of their respective benchmarks over a one-year period, 59% over a three-year period, 73% over a five-year period and 79% over a ten-year period.
On an equal-weighted basis, 56% of our strategies have outperformed their respective benchmarks over a one-year period, 63% over a three-year period, 62% over a five-year period and 63% over a ten-year period.
On an equal-weighted basis, 53% of our strategies have outperformed their respective benchmarks over a one-year period, 58% over a three-year period, 58% over a five-year period and 65% over a ten-year period.
Interest Expense and Other Financing Costs 2023 compared to 2022 – Interest expense and other financing costs increased $17.3 million to $61.3 million in 2023 from $44.0 million in 2022 as a result of a of a higher average interest rate over the comparable period. 2022 compared to 2021 – Interest expense and other financing costs increased $19.3 million to $44.0 million in 2022 from $24.7 million in 2021.
Interest Expense and Other Financing Costs 2024 compared to 2023 – Interest expense and other financing costs increased $2.6 million to $63.8 million in 2024 from $61.3 million in 2023 as a result of a higher average interest rate over the comparable period. 2023 compared to 2022 – Interest expense and other financing costs increased $17.3 million to $61.3 million in 2023 from $44.0 million in 2022 as a result of a higher average interest rate over the comparable period.
Debt issuance costs (7) 5,394 5,620 5,589 Tax effect of above adjustments (9) (18,847 ) (6,080 ) (16,883 ) Adjusted Net Income $ 269,694 $ 293,750 $ 329,039 Tax benefit of goodwill and acquired intangibles (10) $ 38,252 $ 37,490 $ 28,012 Adjustments made to GAAP Net Income to calculate Adjusted EBITDA and Adjusted Net Income, as applicable, are: (1) Adding back interest paid on debt and other financing costs, net of interest income.
Debt issuance costs (7) 3,385 5,394 5,620 Tax effect of above adjustments (9) (8,028 ) (18,847 ) (6,080 ) Adjusted Net Income $ 312,944 $ 269,694 $ 293,750 Tax benefit of goodwill and acquired intangibles (10) $ 40,171 $ 38,252 $ 37,490 Adjustments made to GAAP Net Income to calculate Adjusted EBITDA and Adjusted Net Income, as applicable, are: (1) Adding back interest paid on debt and other financing costs, net of interest income.
For the years ended December 31, 2023 and 2022, the Company recorded an increase of $8.7 million and a decrease of $3.6 million, respectively, in contingent payment liabilities associated with the USAA AMCO Acquisition.
For the years ended December 31, 2024 and 2023, the Company recorded no activity and an increase of $8.7 million, respectively, in contingent payment liabilities associated with the USAA AMCO Acquisition.
Other business taxes (3) 1,707 2,118 1,657 ii. Amortization of acquisition-related intangible assets (4) 32,805 35,160 12,631 iii. Share-based compensation (5) 6,496 10,143 13,110 iv. Acquisition, restructuring and exit costs (6) 28,982 (28,722 ) 34,546 v.
Other business taxes (3) 1,525 1,707 2,118 ii. Amortization of acquisition-related intangible assets (4) 21,217 32,805 35,160 iii. Share-based compensation (5) 4,246 6,496 10,143 iv. Acquisition, restructuring and exit costs (6) 1,735 28,982 (28,722 ) v.
Financial highlights : • Total revenue for the year ended December 31, 2023 was $821.0 million compared to $854.8 million for the year ended December 31, 2022. • Net income was $213.2 million and $275.5 million, respectively, for the years ended December 31, 2023 and 2022.
Financial highlights : • Total revenue for the year ended December 31, 2024 was $893.5 million compared to $821.0 million for the year ended December 31, 2023. • Net income was $288.9 million and $213.2 million, respectively, for the years ended December 31, 2024 and 2023.
As of December 31, 2023, our Franchises and our Solutions Platform collectively managed a diversified set of 118 investment strategies. Franchises – Our Franchises are largely operationally integrated but are separately branded and make investment decisions independently from one another within guidelines established by their respective investment mandates.
As of December 31, 2024, our Franchises and our Solutions Platform collectively managed a diversified set of 124 investment strategies for a wide range of institutional and retail clients and direct investors. Franchises – Our Franchises are largely operationally integrated but are separately branded and make investment decisions independently from one another within guidelines established by their respective investment mandates.
Personnel Compensation and Benefits The following table presents the components of GAAP compensation expense for the year ended December 31, 2023, 2022 and 2021: Year Ended December 31, (in thousands) 2023 2022 2021 Salaries, payroll related taxes and employee benefits $ 90,884 $ 87,819 $ 87,101 Incentive compensation 87,081 94,511 108,952 Sales-based compensation (1) 20,945 27,589 19,249 Equity awards granted to employees and directors (2) 16,548 17,816 17,625 Acquisition and transaction-related compensation 5,534 10,463 1,906 Total personnel compensation and benefits expense $ 220,992 $ 238,198 $ 234,833 (1) Represents sales‑based commissions paid to our distribution teams.
Personnel Compensation and Benefits The following table presents the components of GAAP compensation expense for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, (in thousands) 2024 2023 2022 Salaries, payroll related taxes and employee benefits $ 88,599 $ 90,884 $ 87,819 Incentive compensation 102,712 87,081 94,511 Sales-based compensation (1) 24,338 20,945 27,589 Equity awards granted to employees and directors (2) 15,220 16,548 17,816 Acquisition and transaction-related compensation (13,655 ) 5,534 10,463 Total personnel compensation and benefits expense $ 217,214 $ 220,992 $ 238,198 (1) Represents sales‑based commissions paid to our distribution teams.
Specifically, we make use of the non‑GAAP financial measures “Adjusted EBITDA” and “Adjusted Net Income.” 64 Table of Contents The following table sets forth a reconciliation from GAAP financial measures to non‑GAAP measures for the periods indicated: Year Ended December 31, (in thousands) 2023 2022 2021 Reconciliation of non-GAAP financial measures: Net income (GAAP) $ 213,157 $ 275,511 $ 278,389 Income tax expense (62,751 ) (74,522 ) (72,253 ) Income before income taxes $ 275,908 $ 350,033 $ 350,642 Interest expense (1) 57,820 41,024 24,285 Depreciation (2) 8,842 8,045 6,209 Other business taxes (3) 1,707 2,118 1,657 Amortization of acquisition-related intangible assets (4) 32,805 35,160 12,631 Share-based compensation (5) 6,496 10,143 13,110 Acquisition, restructuring and exit costs (6) 28,982 (28,722 ) 34,546 Debt issuance costs (7) 5,394 5,620 5,589 Losses from equity method investments (8) — 825 331 Adjusted EBITDA $ 417,954 $ 424,246 $ 449,000 Year Ended December 31, (in thousands) 2023 2022 2021 Reconciliation of non-GAAP financial measures: Net income (GAAP) $ 213,157 $ 275,511 $ 278,389 Adjustments to reflect the operating performance of the Company: i.
Specifically, we make use of the non‑GAAP financial measures “Adjusted EBITDA” and “Adjusted Net Income.” The following table sets forth a reconciliation from GAAP financial measures to non‑GAAP measures for the periods indicated: Year Ended December 31, (in thousands) 2024 2023 2022 Reconciliation of non-GAAP financial measures: Net income (GAAP) $ 288,864 $ 213,157 $ 275,511 Income tax expense (84,892 ) (62,751 ) (74,522 ) Income before income taxes $ 373,756 $ 275,908 $ 350,033 Interest expense (1) 60,799 57,820 41,024 Depreciation (2) 8,959 8,842 8,045 Other business taxes (3) 1,525 1,707 2,118 Amortization of acquisition-related intangible assets (4) 21,217 32,805 35,160 Share-based compensation (5) 4,246 6,496 10,143 Acquisition, restructuring and exit costs (6) 1,735 28,982 (28,722 ) Debt issuance costs (7) 3,385 5,394 5,620 Losses from equity method investments (8) — — 825 Adjusted EBITDA $ 475,622 $ 417,954 $ 424,246 68 Table of Contents Year Ended December 31, (in thousands) 2024 2023 2022 Reconciliation of non-GAAP financial measures: Net income (GAAP) $ 288,864 $ 213,157 $ 275,511 Adjustments to reflect the operating performance of the Company: i.
Depreciation and Amortization 2023 compared to 2022 – Depreciation and amortization decreased by $1.6 million, or 3.6%, to $41.6 million in 2023, from $43.2 million in 2022, primarily due to a decrease in amortization expense related to definite-lived intangible assets in connection with the USAA AMCO acquisition partially offset by the write down of a trade name asset primarily as a result of a change in the estimated useful life. 2022 compared to 2021 – Depreciation and amortization increased by $24.4 million, 129.3%, to $43.2 million in 2022, from $18.8 million in 2021, primarily due to the increase in amortization expense related to definite lived intangible assets in connection with the WestEnd and NEC acquisitions in the fourth quarter of 2021.
Depreciation and Amortization 2024 compared to 2023 – Depreciation and amortization decreased by $11.5 million, or 27.5%, to $30.2 million in 2024, from $41.6 million in 2023, primarily due to a decrease in amortization expense related to definite-lived intangible assets in connection with prior acquisitions. 2023 compared to 2022 – Depreciation and amortization decreased by $1.6 million, or 3.6%, to $41.6 million in 2023, from $43.2 million in 2022, primarily due to a decrease in amortization expense related to definite-lived intangible assets in connection with the USAA AMCO acquisition partially offset by the write down of a trade name asset primarily as a result of a change in the estimated useful life.
The increase was due to an increase in dividend income and an increase in the net unrealized fair value of deferred compensation plan investments in 2023 compared to a decrease in the net unrealized fair value of deferred compensation plan investments in 2022. 2022 compared to 2021 – Interest income and other income (expense) was expense of $2.5 million in 2022 compared to income of $6.0 million in 2021.
The increase was due to an increase in dividend income partially offset by a decrease in the net unrealized fair value of deferred compensation plan investments over the comparable period. 2023 compared to 2022 – Interest income and other income (expense) was income of $8.7 million in 2023 compared to expense of $2.5 million in 2022.
Refer to Note 4, Acquisitions, for further details on the USAA AMCO Acquisition. Business Highlights in 2023 Assets under management : • AUM at December 31, 2023 increased by $13.6 billion, or approximately 8.9%, to $166.6 billion from $153.0 billion at December 31, 2022, primarily driven by positive market action of $21.9 billion.
Refer to Note 4, Acquisitions, for further details on the USAA AMCO Acquisition. Business Highlights in 2024 Assets under management : • AUM at December 31, 2024 increased by $10.6 billion, or approximately 6.6%, to $171.9 billion from $161.3 billion at December 31, 2023, primarily driven by positive market action of $18.1 billion.
Adjusted Net Income was $269.7 million for the year ended December 31, 2023 compared to $293.8 million for the year ended December 31, 2022.
Adjusted Net Income was $312.9 million for the year ended December 31, 2024 compared to $269.7 million for the year ended December 31, 2023.
The expense for the years ended December 31, 2023 and 2022 was primarily due to legal and professional fees. 2022 compared to 2021 – Acquisition-related costs decreased $15.7 million to $0.5 million for the year ended December 31, 2022 compared to $16.3 million in the prior year.
The expense for the year ended December 31, 2024 was primarily due to legal and professional fees associated with the Amundi transaction. 2023 compared to 2022 – Acquisition-related costs decreased $0.3 million to $0.2 million for the year ended December 31, 2023 compared to $0.5 million in the prior year.
The related advertising and marketing expense is recorded in general and administrative expense in the Consolidated Statements of Operations. The balance of amounts paid less amortized expense are included in the Consolidated Balance Sheets in other assets when cumulative payments exceed amortized expense and in other liabilities when amortized expense exceeds cumulative payments.
The balance of amounts paid less amortized expense are included in the Consolidated Balance Sheets in other assets when cumulative payments exceed amortized expense and in other liabilities when amortized expense exceeds cumulative payments.
The 2019 Credit Agreement was entered into among Victory, as borrower, the lenders from time to time party thereto and Barclays Bank PLC, as administrative agent and collateral agent, pursuant to which the Company obtained a seven-year term loan in an aggregate principal amount of $1.1 billion (the “2019 Term Loans”) and established a five-year revolving credit facility (which was unfunded as of the closing date) with aggregate commitments of $100.0 million (with a $10.0 million sub-limit for the issuance of letters of credit). 66 Table of Contents The obligations of the Company under the 2019 Credit Agreement are guaranteed by the Company’s domestic subsidiaries (other than VCS) (the “Guarantors”) and secured by substantially all of the assets of the Company and the Guarantors, subject in each case to certain customary exceptions.
The 2019 Credit Agreement was entered into among Victory, as borrower, the lenders from time to time party thereto and Barclays Bank PLC, as administrative agent and collateral agent, pursuant to which the Company obtained a seven-year term loan in an aggregate principal amount of $1.1 billion (the “2019 Term Loans”) and established a five-year revolving credit facility (which was unfunded as of the closing date) with aggregate commitments of $100.0 million (with a $10.0 million sub-limit for the issuance of letters of credit).
We have grown our AUM from $17.9 billion following the management-led buyout with Crestview GP in August 2013 to $166.6 billion at December 31, 2023.
We have grown our total client assets from $17.9 billion following the management-led buyout with Crestview GP in August 2013 to $176.1 billion at December 31, 2024.
Year Ended December 31, (in thousands) 2023 2022 2021 Net cash provided by operating activities $ 330,291 $ 335,211 $ 376,196 Net cash used in investing activities (7,841 ) (6,317 ) (556,588 ) Net cash (used in) provided by financing activities (237,132 ) (360,186 ) 227,217 Operating Activities 2023 compared to 2022 – Cash provided by operating activities was $330.3 million in 2023, compared to $335.2 million in 2022.
Year Ended December 31, (in thousands) 2024 2023 2022 Net cash provided by operating activities $ 339,979 $ 330,291 $ 335,211 Net cash used in investing activities (3,979 ) (7,841 ) (6,317 ) Net cash used in financing activities (332,763 ) (237,132 ) (360,186 ) Operating Activities 2024 compared to 2023 – Cash provided by operating activities was $340.0 million in 2024, compared to $330.3 million in 2023.
(6) Adding back direct incremental costs of acquisitions, including restructuring costs. (7) Adding back debt issuance and Swap unwind cost expense. (8) Adjusting for losses (earnings) on equity method investments.
(6) Adding back direct incremental costs of acquisitions, including restructuring costs. (7) Adding back debt issuance and Swap unwind cost expense. (8) Adjusting for losses (earnings) on equity method investments. (9) Subtracting an estimate of income tax expense applied to the sum of the adjustments above.
Long-term gross inflows were $23.3 billion and $33.3 billion for the years ended December 31, 2023 and 2022, respectively. Long-term net outflows were $6.2 billion and $2.5 billion for the years ended December 31, 2023 and 2022, respectively.
Long-term gross inflows were $25.3 billion and $22.7 billion for the years ended December 31, 2024 and 2023, respectively. Long-term net outflows were $7.1 billion and $5.6 billion for the years ended December 31, 2024 and 2023, respectively.
Year Ended Year Ended Year Ended December 31, December 31, December 31, 2023 2022 2021 Revenue Investment management fees $ 640,876 $ 664,710 $ 674,539 Fund administration and distribution fees 180,152 190,090 215,726 Total revenue 821,028 854,800 890,265 Expenses Personnel compensation and benefits 220,992 238,198 234,833 Distribution and other asset-based expenses 149,596 161,105 176,385 General and administrative 56,287 52,373 53,722 Depreciation and amortization 41,647 43,201 18,840 Change in value of consideration payable for acquisition of business 23,236 (40,600 ) 13,800 Acquisition-related costs 217 534 16,262 Restructuring and integration costs 595 881 2,578 Total operating expenses 492,570 455,692 516,420 Income from operations 328,458 399,108 373,845 Other income (expense) Interest income and other income (expense) 8,732 (2,463 ) 6,045 Interest expense and other financing costs (61,282 ) (43,964 ) (24,652 ) Loss on debt extinguishment — (2,648 ) (4,596 ) Total other income (expense), net (52,550 ) (49,075 ) (23,203 ) Income before income taxes 275,908 350,033 350,642 Income tax expense (62,751 ) (74,522 ) (72,253 ) Net income $ 213,157 $ 275,511 $ 278,389 Earnings per share of common stock Basic $ 3.22 $ 4.02 $ 4.10 Diluted $ 3.12 $ 3.81 $ 3.75 Weighted average number of shares outstanding Basic 66,202 68,481 67,976 Diluted 68,214 72,266 74,151 Dividends declared per share of common stock $ 1.28 $ 1.00 $ 0.53 Investment Management Fees 2023 compared to 2022 – Investment management fees decreased $23.8 million, or 3.6%, to $640.9 million in 2023 from $664.7 million in 2022 due to decrease in average AUM.
Year Ended December 31, 2024 2023 2022 Revenue Investment management fees $ 704,583 $ 640,876 $ 664,710 Fund administration and distribution fees 188,894 180,152 190,090 Total revenue 893,477 821,028 854,800 Expenses Personnel compensation and benefits 217,214 220,992 238,198 Distribution and other asset-based expenses 146,489 149,596 161,105 General and administrative 56,694 56,287 52,373 Depreciation and amortization 30,176 41,647 43,201 Change in value of consideration payable for acquisition of business 2,694 23,236 (40,600 ) Acquisition-related costs 11,285 217 534 Restructuring and integration costs 1,411 595 881 Total operating expenses 465,963 492,570 455,692 Income from operations 427,514 328,458 399,108 Other income (expense) Interest income and other income (expense) 10,441 8,732 (2,463 ) Interest expense and other financing costs (63,836 ) (61,282 ) (43,964 ) Loss on debt extinguishment (363 ) — (2,648 ) Total other income (expense), net (53,758 ) (52,550 ) (49,075 ) Income before income taxes 373,756 275,908 350,033 Income tax expense (84,892 ) (62,751 ) (74,522 ) Net income $ 288,864 $ 213,157 $ 275,511 Earnings per share of common stock Basic $ 4.47 $ 3.22 $ 4.02 Diluted $ 4.38 $ 3.12 $ 3.81 Weighted average number of shares outstanding Basic 64,607 66,202 68,481 Diluted 65,928 68,214 72,266 Dividends declared per share of common stock $ 1.555 $ 1.28 $ 1.00 Investment Management Fees 2024 compared to 2023 – Investment management fees increased $63.7 million, or 9.9%, to $704.6 million in 2024 from $640.9 million in 2023 due to an increase in average AUM.
The decrease is due primarily to lower mutual fund average net assets. 2022 compared to 2021 – Fund administration and distribution fees decreased $25.6 million, or 11.9%, to $190.1 million in 2022 compared to $215.7 million in 2021. The decrease is due primarily to lower mutual fund average net assets.
The increase is due primarily to higher mutual fund average net assets. 2023 compared to 2022 – Fund administration and distribution fees decreased $9.9 million, or 5.2%, to $180.2 million in 2023 compared to $190.1 million in 2022. The decrease is due primarily to lower mutual fund average net assets.
(2) Represents only ETF assets held by third parties. Excludes ETF assets held by other Victory Capital products. (3) Includes collective trust funds, wrap program accounts, UMAs, UCITs, private funds and non-U.S. domiciled pooled vehicles.
Excludes ETF assets held by other Victory Capital products. (3) Includes collective trust funds, wrap program accounts, UMAs, UCITs, private funds and non-U.S. domiciled pooled vehicles. (4) Reflects divested assets associated with the INCORE transaction.
Please refer to the sections of this report entitled “Forward‑Looking Statements” and “Risk Factors.” Overview Our Business – Victory is a diversified global asset management firm with $166.6 billion in total AUM as of December 31, 2023.
Please refer to the sections of this report entitled “Forward‑Looking Statements” and “Risk Factors.” Overview Our Business – Victory is a diversified global asset management firm with total client assets of $176.1 billion, assets under management of $171.9 billion and other assets of $4.2 billion as of December 31, 2024.
Restructuring and Integration Costs 2023 compared to 2022 – Restructuring and integration costs decreased $0.3 million to $0.6 million for the year ended December 31, 2023 compared to $0.9 million in the prior year.
The expense primarily relates to personnel restructuring and the year ended December 31, 2024 also includes integration and conversion costs related to the Amundi transaction. 2023 compared to 2022 – Restructuring and integration costs decreased $0.3 million to $0.6 million for the year ended December 31, 2023 compared to $0.9 million in the prior year.
Capital Requirements VCS is a registered broker‑dealer subject to the Uniform Net Capital requirements under the Exchange Act, which requires maintenance of certain minimum net capital levels. In addition, we have certain non‑U.S. subsidiaries that have minimum capital requirements. As a result, such subsidiaries of our Company may be restricted in their ability to transfer cash to their parents.
Capital Requirements VCS is a registered broker‑dealer subject to the Uniform Net Capital requirements under the Exchange Act, which requires maintenance of certain minimum net capital levels. In addition, we have certain non‑U.S. 72 Table of Contents subsidiaries that have minimum capital requirements.
For the year ended December 31, 2022, the Company had $2.6 million in losses on debt extinguishment due to repayments of term loan principal. 63 Table of Contents 2022 compared to 2021 – Loss on debt extinguishment decreased by $1.9 million to $2.6 million in 2022 compared to $4.6 million in the prior year.
The Company had no losses on debt extinguishment for the year ended December 31, 2023. 2023 compared to 2022 – The Company had no losses on debt extinguishment for the year ended December 31, 2023. For the year ended December 31, 2022, the Company had $2.6 million in losses on debt extinguishment due to repayments of term loan principal.
Refer to Note 10, Income Taxes, to the audited financial statements for further details on income taxes. 2022 compared to 2021 – Our effective tax rate increased 0.7% from 20.6% in 2021 to 21.3% in 2022. The change in the effective tax rate was primarily due to increased non-deductible expenses.
Refer to Note 10, Income Taxes, to the audited financial statements for further details on income taxes. 2023 compared to 2022 – Our effective tax rate increased 1.4% from 21.3% in 2022 to 22.7% in 2023. The change in the effective tax rate was primarily due to lower excess tax benefits on share-based compensation.
The value of share-based compensation is recognized as compensation expense over the vesting period. 2023 compared to 2022 – Personnel compensation and benefits were $221.0 million in 2023, a decrease of $17.2 million, or 7.2%, from $238.2 million in 2022 primarily due to a decrease in variable costs such as sales-based and incentive compensation as a result of a decline in operating results.
These decreases were offset by higher sales-based and incentive compensation of $19.0 million during 2024 relating to an increase in operating results. 2023 compared to 2022 – Personnel compensation and benefits were $221.0 million in 2023, a decrease of $17.2 million, or 7.2%, from $238.2 million in 2022 primarily due to a decrease in variable costs such as sales-based and incentive compensation as a result of a decline in operating results.
Acquired intangible assets and goodwill may be amortized for tax purposes, generally over a 15‑year period. The tax benefit from amortization on these assets is included to show the full economic benefit of deductions for all acquired intangibles with a step‑up in tax basis.
The tax benefit from amortization on these assets is included to show the full economic benefit of deductions for all acquired intangibles with a step‑up in tax basis. Due to our acquisitive nature, tax deductions allowed on acquired intangible assets and goodwill provide us with a significant economic benefit.
Small Cap Equity 15,959 15,103 20,094 18,368 17,346 U.S. Large Cap Equity 12,635 10,973 15,766 14,230 14,091 Global / Non-U.S.
Mid Cap Equity 30,584 30,604 27,892 30,578 26,230 U.S. Small Cap Equity 14,785 15,959 15,103 20,094 18,368 U.S. Large Cap Equity 14,148 12,635 10,973 15,766 14,230 Global / Non-U.S.
Incentive compensation and equity awards granted to employees and directors were $94.5 million and $17.8 million, respectively, for the year ended December 31, 2022, compared to $109.0 million and $17.6 million, respectively, for the same period in 2021. 61 Table of Contents Distribution and Other Asset‑based Expenses The following table presents the components of distribution and other asset‑based expenses for the year ended December 31, 2023, 2022 and 2021: Year Ended December 31, (in thousands) 2023 2022 2021 Broker-dealer distribution fees $ 20,275 $ 22,703 $ 26,008 Platform distribution fees 92,509 98,155 108,245 Sub-administration 15,877 16,261 17,129 Sub-advisory 10,576 13,573 14,124 Middle-office 10,359 10,413 10,879 Total distribution and other asset-based expenses $ 149,596 $ 161,105 $ 176,385 2023 compared to 2022 – Distribution and other asset‑based expenses are primarily based on AUM.
Sales-based compensation was $20.9 million and $27.6 million for the years ended December 31, 2023 and 2022, respectively. 65 Table of Contents Distribution and Other Asset‑based Expenses The following table presents the components of distribution and other asset‑based expenses for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, (in thousands) 2024 2023 2022 Broker-dealer distribution fees $ 20,222 $ 20,275 $ 22,703 Platform distribution fees 89,233 92,509 98,155 Sub-administration 17,010 15,877 16,261 Sub-advisory 9,152 10,576 13,573 Middle-office 10,872 10,359 10,413 Total distribution and other asset-based expenses $ 146,489 $ 149,596 $ 161,105 2024 compared to 2023 – Distribution and other asset‑based expenses are primarily based on AUM.
Equity, or Alternative Investments based on the underlying investment strategy. Additionally, all assets managed using alternative investment strategies are now included in the Company's Alternative Investments asset class. Prior-period figures have been adjusted accordingly. (2) Reflects the divested assets associated with the INCORE transaction.
Equity, or Alternative Investments based on the underlying investment strategy. Additionally, all assets managed using alternative investment strategies are now included in the Company's Alternative Investments asset class. Prior-period figures have been adjusted accordingly. Asset Flows by Asset Class – the following table summarizes our asset flows by asset class for the periods indicated: (in millions) U.S.
Equity 16,772 14,160 16,050 14,141 12,754 Alternative Investments 3,431 3,663 2,548 422 81 Total Long-Term Assets $ 163,340 $ 149,649 $ 180,554 $ 143,707 $ 140,245 Money Market / Short-Term 3,271 3,302 3,100 3,534 11,587 Total Assets $ 166,611 $ 152,952 $ 183,654 $ 147,241 $ 151,832 (1) Includes the impact of acquired assets from the THB, NEC and WestEnd Acquisitions, which closed on March 1, 2021, November 1, 2021 and December 31, 2021, respectively, and increased our AUM by approximately $547 million, $795 million and $19.3 billion, at closing, respectively.
Equity 19,095 16,772 14,160 16,050 14,141 Alternative Investments 2,980 3,431 3,663 2,548 422 Total Long-Term AUM $ 168,586 $ 158,051 $ 144,460 $ 174,616 $ 140,554 Money Market / Short-Term 3,344 3,271 3,302 3,100 3,534 Total AUM $ 171,930 $ 161,322 $ 147,762 $ 177,716 $ 144,088 (1) Includes the impact of acquired assets from the THB, NEC and WestEnd Acquisitions, which closed on March 1, 2021, November 1, 2021 and December 31, 2021, respectively, and increased our AUM by approximately $547 million, $795 million and $19.3 billion, at closing, respectively.
Average AUM was $164.0 billion in 2022 compared to $158.6 billion in 2021. 60 Table of Contents Fund Administration and Distribution Fees 2023 compared to 2022 – Fund administration and distribution fees decreased $9.9 million, or 5.2%, to $180.2 million in 2023 compared to $190.1 million in 2022.
Average AUM was $153.5 billion in 2023 compared to $158.7 billion in 2022. 64 Table of Contents Fund Administration and Distribution Fees 2024 compared to 2023 – Fund administration and distribution fees increased $8.7 million, or 4.9%, to $188.9 million in 2024 compared to $180.2 million in 2023.
Refer to “Supplemental Non‑GAAP Financial Information” for more information about how we calculate Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA. • Returned a record high—more than $243 million—of capital to shareholders in 2023, through share repurchases and cash dividends.
Refer to “Supplemental Non‑GAAP Financial Information” for more information about how we calculate Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA.
The Company incurred a total of $9.1 million of other third party costs related to the 2021 Incremental Term Loans, which were recorded as term loan debt issuance costs. 67 Table of Contents Fourth Amendment On September 23, 2022, the Company entered into the Fourth Amendment (the “Fourth Amendment”) to the 2019 Credit Agreement to change the interest rate on its debt from LIBOR to a rate based on the secured overnight financing rate (“SOFR”) plus a ten-basis point credit spread adjustment.
Fourth Amendment On September 23, 2022, the Company entered into the Fourth Amendment (the “Fourth Amendment”) to the 2019 Credit Agreement to change the interest rate on its debt from LIBOR to a rate based on the secured overnight financing rate (“SOFR”) plus a ten-basis point credit spread adjustment.
Key Performance Indicators The following table presents the key performance indicators we focus on when reviewing our results: Year Ended December 31, ($ in millions, except for basis points and percentages) 2023 2022 2021 AUM at period end $ 166,611 $ 152,952 $ 183,654 Average AUM 158,268 164,025 158,590 Gross flows 24,104 33,934 28,254 Net short term flows (391 ) (187 ) (528 ) Net long term flows (6,176 ) (2,545 ) (3,952 ) Net flows (6,567 ) (2,732 ) (4,480 ) Total revenue 821.0 854.8 890.3 Revenue on average AUM 51.9 bps 52.1 bps 56.1 bps Net income 213.2 275.5 278.4 Adjusted EBITDA (1) 418.0 424.2 449.0 Adjusted EBITDA margin (1)(2) 50.9 % 49.6 % 50.4 % Adjusted Net Income (1) 269.7 293.8 329.0 Tax benefit of goodwill and acquired intangibles (3) 38.3 37.5 28.0 (1) Our management uses Adjusted EBITDA and Adjusted Net Income to measure the operating profitability of the business.
Key Performance Indicators The following table presents the key performance indicators we focus on when reviewing our results: Year Ended December 31, ($ in millions, except for basis points and percentages) 2024 2023 2022 AUM at period end $ 171,930 $ 161,322 $ 147,762 Average AUM 169,658 153,455 158,699 Gross flows 26,167 23,504 33,637 AUM net short term flows (287 ) (391 ) (187 ) AUM net long term flows (7,090 ) (5,584 ) (2,465 ) AUM net flows (7,377 ) (5,976 ) (2,652 ) Total revenue 893.5 821.0 854.8 Revenue realization on average AUM 52.6 bps 53.4 bps 53.9 bps Net income 288.9 213.2 275.5 Adjusted EBITDA (1) 475.6 418.0 424.2 Adjusted EBITDA margin (1)(2) 53.2 % 50.9 % 49.6 % Adjusted Net Income (1) 312.9 269.7 293.8 Tax benefit of goodwill and acquired intangibles (3) 40.2 38.3 37.5 (1) Our management uses Adjusted EBITDA and Adjusted Net Income to measure the operating profitability of the business.
NEC Acquisition (the “NEC Acquisition”) – On November 1, 2021, the Company completed the acquisition of 100% of the equity interests in NEC. Founded in 2004 and based in Hanover, NH, NEC is an alternative asset management firm focused on debt and equity investments in clean energy infrastructure projects and companies.
Founded in 2004 and based in Hanover, NH, NEC is an alternative asset management firm focused on debt and equity investments in clean energy infrastructure projects and companies. Refer to Note 4, Acquisitions, for further details on the NEC Acquisition.
Our differentiated business platform combines boutique investment qualities of traditional and alternative investment managers with the benefits of an integrated, centralized (not standardized) operating and distribution platform. Victory Capital provides specialized investment strategies to institutions, intermediaries, retirement platforms and individual investors.
The Company operates a next-generation business model combining boutique investment qualities with the benefits of an integrated, centralized operating and distribution platform. Victory Capital provides specialized investment strategies to institutions, intermediaries, retirement platforms and individual investors with 11 autonomous Investment Franchises and a Solutions Platform.
First Amendment Amounts outstanding under the 2019 Credit Agreement originally accrued interest at an annual rate equal to, at the option of the Company, either LIBOR (adjusted for reserves) plus a margin of 3.25% or an alternate base rate plus a margin of 2.25%.
First Amendment Amounts outstanding under the 2019 Credit Agreement originally accrued interest at an annual rate equal to, at the option of the Company, either LIBOR (adjusted for reserves) plus a margin of 3.25% or an alternate base rate plus a margin of 2.25%. 70 Table of Contents On January 17, 2020, the Company entered into the First Amendment (the “First Amendment”) to the 2019 Credit Agreement with the other loan parties thereto, Barclays Bank PLC, as administrative agent, and the Royal Bank of Canada as fronting bank.
VCS and our non‑U.S. subsidiaries were in compliance with these requirements as of and for the years ended December 31, 2023, 2022 and 2021. Cash Flows – The following table is derived from our Consolidated Statements of Cash Flows for the year ended December 31, 2023, 2022 and 2021.
Cash Flows – The following table is derived from our Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022.
The expense for the years ended December 31, 2023 and 2022 was primarily due to personnel restructuring. 2022 compared to 2021 – Restructuring and integration costs decreased $1.7 million to $0.9 million for the year ended December 31, 2022 compared to $2.6 million in the prior year. The decrease is due to personnel restructuring within the direct to investor business.
The expense for the years ended December 31, 2023 and 2022 was primarily due to legal and professional fees. Restructuring and Integration Costs 2024 compared to 2023 – Restructuring and integration costs increased $0.8 million to $1.4 million for the year ended December 31, 2024 compared to $0.6 million in the prior year.
We generated $24.1 billion in gross flows and $6.6 billion in net outflows ($6.2 billion long-term, $0.4 billion short-term) for the year ended December 31, 2023, compared to $33.9 billion in gross flows and $2.7 billion in net outflows ($2.5 billion long-term, $0.2 billion short-term) for the same period in 2022.
We generated $26.2 billion in gross flows and $7.4 billion in net outflows ($7.1 billion long-term, $0.3 billion short-term) for the year ended December 31, 2024, compared to $23.5 billion in gross flows and $6.0 billion in net outflows ($5.6 billion long-term, $0.4 billion short-term) for the same period in 2023. • Within the following tables and disclosures, AUM includes both discretionary assets under management and non-discretionary assets under advisement and excludes other assets.
The decrease was primarily due to no term loan prepayments in 2023 partially offset by increases in repurchases of Common Stock and payment of dividends.
The decrease was primarily due to no term loan prepayments in 2023 partially offset by increases in repurchases of Common Stock and payment of dividends. Cash used in repurchases of our Common Stock, payment of dividends and payment of taxes related to settlement of equity awards totaled $139.3 million, $85.4 million, and $18.7 million, respectively, during 2023.
Contingent Consideration At December 31, 2023, the Company had $217.2 million in contingent consideration that is estimated to be payable over the next one to four years resulting from the WestEnd Acquisition. At December 31, 2022, the Company had $230.4 million in contingent consideration that was estimated to be payable from the USAA AMCO and WestEnd Acquisitions.
Refer to Note 12, Derivatives, for further information on the Swap. Contingent Consideration At December 31, 2024 and 2023, the Company had $139.9 million and $217.2 million, respectively, in contingent consideration that is estimated to be payable over the next one to three years resulting from the WestEnd Acquisition.
The increase was primarily due to a $2.3 million increase in net trading activity. 2022 compared to 2021 – Cash used in investing activities decreased by $550.3 million to $6.3 million in 2022, from $556.6 million in 2021.
The increase was primarily due to a $2.3 million increase in net trading activity. Financing Activities 2024 compared to 2023 – Cash used in financing activities increased $95.6 million to $332.8 million in 2024 from $237.1 million in 2023.
Loss on Debt Extinguishment 2023 compared to 2022 – The Company had no losses on debt extinguishment for the year ended December 31, 2023.
Loss on Debt Extinguishment 2024 compared to 2023 – For the year ended December 31, 2024, the Company had $0.4 million in losses on debt extinguishment due to repayments of term loan principal.
Refer to Note 4, Acquisitions, for further details on the fair value of contingent consideration payable. 2022 compared to 2021 - The change in value of consideration payable for acquisition of business decreased $54.4 million as a result of decreases of $3.6 million and $37.0 million in the fair value of the contingent 62 Table of Contents consideration associated with the USAA AMCO and WestEnd Acquisitions, respectively, for the year ended December 31, 2022 compared to an increase of $13.8 million associated with the USAA AMCO Acquisition for the year ended December 31, 2021.
Change in Value of Consideration Payable for Acquisition of Business 2024 compared to 2023 - The change in value of consideration payable for acquisition of business decreased $20.5 million as a result of an increase of $2.7 million in the fair value of the contingent consideration associated with the WestEnd Acquisition for the year ended December 31, 2024, compared to increases of $8.7 million and $14.5 million associated with the USAA AMCO Acquisition and WestEnd Acquisition, respectively, for the year ended December 31, 2023.
The $41.0 million decrease in cash provided by operating activities was due to the combination of a $24.0 million decrease in working capital and a $14.2 million decrease in non-cash items. Investing Activities 2022 compared to 2021 – Cash used in investing activities increased by $1.5 million to $7.8 million in 2023, from $6.3 million in 2022.
The $9.7 million increase in cash provided by operating activities was due to a $75.7 million increase in net income partially offset by the combination of a $31.2 million decrease in working capital and a $34.8 million decrease in non-cash items. 2023 compared to 2022 – Cash provided by operating activities was $330.3 million in 2023, compared to $335.2 million in 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe same 10% increase or decrease in the value of our total AUM, if attributed entirely to a proportionate increase or decrease in the AUM of the Victory Funds, to which we provide a range of services in addition to those provided to institutional separate accounts, would cause an annualized increase or decrease in our revenues of approximately $101.9 million at the Victory Funds’ aggregate weighted-average fee rate of 61 basis points for the year ended December 31, 2023.
Biggest changeThe same 10% increase or decrease in the value of our total AUM, if attributed entirely to a proportionate increase or decrease in the AUM of the Victory Funds and USAA Funds, to which we provide a range of services in addition to those provided to institutional separate accounts, would cause an annualized increase or decrease in our revenues of approximately $103.2 million at the Victory Funds’ and USAA Funds’ aggregate weighted-average fee rate of 60 basis points for the year ended December 31, 2024.
Each investment team monitors its own exposure to exchange rate risk and makes decisions on how to manage that risk in the portfolios they manage. We believe many of our clients invest in those strategies in order to gain exposure to non‑U.S. currencies, or may implement their own hedging programs.
Each investment team monitors its own exposure to exchange rate risk and makes decisions on how to manage that risk in the portfolios they manage. We believe many of our clients invest in those strategies in order to gain exposure to non‑U.S. currencies, or may implement their own 74 Table of Contents hedging programs.
In addition, such depreciation could cause our clients to withdraw their assets in favor of other investment alternatives that they perceive to offer higher returns or lower risk, which could cause our revenues and net income to decline further. The value of our AUM was approximately $167 billion at December 31, 2023.
In addition, such depreciation could cause our clients to withdraw their assets in favor of other investment alternatives that they perceive to offer higher returns or lower risk, which could cause our revenues and net income to decline further. The value of our AUM was approximately $172 billion at December 31, 2024.
We believe our clients invest in each of our strategies in order to gain exposure to the portfolio securities of the 70 Table of Contents respective strategies and may implement their own risk management program or procedures.
We believe our clients invest in each of our strategies in order to gain exposure to the portfolio securities of the respective strategies and may implement their own risk management program or procedures.
At December 31, 2023, we were exposed to interest rate risk as a result of the amounts outstanding under the 2019 Credit Agreement, as amended. Refer to Note 11, Debt, for a description of the amounts outstanding as of such date and the applicable interest rate. 71 Table of Contents
At December 31, 2024, we were exposed to interest rate risk as a result of the amounts outstanding under the 2019 Credit Agreement, as amended. Refer to Note 11, Debt, for a description of the amounts outstanding as of such date and the applicable interest rate. 75 Table of Contents
On October 30, 2023, the Company monetized the gain on the Swap and entered into an agreement to terminate the Swap, which was effective on October 30, 2023. Refer to Note 12, Derivatives, for further information on the Swap.
On October 30, 2023, the Company decided to monetize the gain on the Swap and entered into an agreement to terminate the Swap, which was effective on October 30, 2023. Refer to Note 12, Derivatives, for further information on the Swap.
Assuming 10% of our AUM are invested in securities denominated in currencies other than the U.S. dollar and excluding the impact of any hedging arrangement, a 10% increase or decrease in the value of the U.S. dollar would decrease or increase the fair value of our AUM by approximately $1.7 billion, which would cause an annualized increase or decrease in revenues of approximately $8.8 million at our weighted-average fee rate for the business of 52 basis points for the year ended December 31, 2023.
Assuming 11% of our AUM are invested in securities denominated in currencies other than the U.S. dollar and excluding the impact of any hedging arrangement, a 10% increase or decrease in the value of the U.S. dollar would decrease or increase the fair value of our AUM by approximately $1.9 billion, which would cause an annualized increase or decrease in revenues of approximately $10.0 million at our weighted-average fee rate for the business of 53 basis points for the year ended December 31, 2024.
If the same 10% increase or decrease in the value of our total AUM was attributable entirely to a proportionate increase or decrease in the assets of our institutional separate accounts, it would cause an annualized increase or decrease in our revenues of approximately $55.1 million at the weighted-average fee rate across all of our institutional separate accounts of 33 basis points for the year ended December 31, 2023.
If the same 10% increase or decrease in the value of our total AUM was attributable entirely to a proportionate increase or decrease in the assets of our institutional separate accounts, it would cause an annualized increase or decrease in our revenues of approximately $72.2 million at the weighted-average fee rate across all of our institutional separate accounts of 42 basis points for the year ended December 31, 2024.
A 10% increase or decrease in the value of our AUM, if proportionately distributed over all of our strategies, products and client relationships, would cause an annualized increase or decrease in our revenues of approximately $86.8 million at our weighted-average fee rate of 52 basis points for the year ended December 31, 2023.
A 10% increase or decrease in the value of our AUM, if proportionately distributed over all of our strategies, products and client relationships, would cause an annualized increase or decrease in our revenues of approximately $91.2 million at our weighted-average fee rate of 53 basis points for the year ended December 31, 2024.
Added
We operate in several foreign countries and incur operating expenses associated with these operations. In addition, we have revenue and revenue-sharing arrangements that are denominated in non-U.S. currencies. We do not believe foreign currency fluctuations materially affect our results of operations.

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