Artisan Partners Sees Revenue Growth, Net Income Up Slightly

TL;DR

**APAM's revenue growth is solid, but rising costs are eating into profits, making it a hold for now.**

AI Summary

Artisan Partners Asset Management Inc. (APAM) reported a mixed financial performance for the nine months ended September 30, 2025. Total revenues increased to $861.183 million from $814.751 million in the prior year, a 5.7% rise, primarily driven by management fees which grew to $861.162 million from $814.665 million. However, net income attributable to APAM saw a modest increase to $195.524 million from $190.045 million, a 2.9% improvement. Operating expenses rose to $593.057 million from $557.283 million, with compensation and benefits increasing by $38.575 million to $484.279 million. The company's cash and cash equivalents significantly increased to $300.158 million as of September 30, 2025, from $201.172 million at December 31, 2024. Deferred tax assets decreased to $363.546 million from $409.386 million, while amounts payable under tax receivable agreements also declined to $303.145 million from $341.461 million. The company's strategic outlook remains focused on providing high value-added, active investment strategies to sophisticated clients globally, as stated in Note 1.

Why It Matters

For investors, APAM's modest net income growth of 2.9% despite a 5.7% revenue increase suggests tightening margins, primarily due to rising compensation and benefits. This could impact future dividend growth, which saw a healthy increase to $2.75 per share for the nine months ended September 30, 2025, from $2.34 in the prior year. The competitive landscape in asset management is fierce, and APAM's ability to control operating expenses while maintaining strong management fees will be crucial. Employees might see continued investment in compensation, but the overall profitability trend will dictate long-term stability. Customers benefit from the company's focus on high value-added strategies, but performance fees saw a significant drop from $86 thousand to $21 thousand, indicating potential underperformance in some areas.

Risk Assessment

Risk Level: medium — The company faces medium risk due to increasing operating expenses, specifically compensation and benefits, which rose by $38.575 million to $484.279 million for the nine months ended September 30, 2025. Additionally, performance fees significantly declined from $86 thousand in 2024 to $21 thousand in 2025, indicating potential volatility in revenue streams tied to investment performance.

Analyst Insight

Investors should monitor APAM's operating expense growth, particularly compensation and benefits, relative to its revenue expansion. While the dividend yield is attractive, future increases may be constrained if cost pressures persist. Consider holding existing positions but await clearer signs of margin improvement before adding more.

Financial Highlights

revenue

$861.183M

total Assets

$1,581,619,000

total Debt

$189,146,000

net Income

$195.524M

cash Position

$300.158M

revenue Growth

+5.7%

Revenue Breakdown

Key Numbers

• $861.183M — Total Revenues (Increased from $814.751 million for the nine months ended September 30, 2024, a 5.7% rise.)
• $195.524M — Net Income Attributable to APAM (Increased from $190.045 million for the nine months ended September 30, 2024, a 2.9% rise.)
• $593.057M — Total Operating Expenses (Increased from $557.283 million for the nine months ended September 30, 2024.)
• $484.279M — Compensation and Benefits (Increased from $445.704 million for the nine months ended September 30, 2024, a $38.575 million increase.)
• $300.158M — Cash and Cash Equivalents (As of September 30, 2025, up from $201.172 million at December 31, 2024.)
• $2.75 — Dividends Declared per Class A Common Share (For the nine months ended September 30, 2025, up from $2.34 in the prior year.)
• $21K — Performance Fees (Decreased significantly from $86 thousand for the nine months ended September 30, 2024.)
• $363.546M — Deferred Tax Assets (Decreased from $409.386 million at December 31, 2024.)
• $303.145M — Amounts Payable Under Tax Receivable Agreements (Decreased from $341.461 million at December 31, 2024.)

Key Players & Entities

• Artisan Partners Asset Management Inc. (company) — registrant
• APAM (company) — ticker symbol
• Artisan Partners Holdings LP (company) — holding company for investment management business
• New York Stock Exchange (regulator) — exchange where Class A common stock is registered
• Securities and Exchange Commission (regulator) — filing authority
• U.S. Private Securities Litigation Reform Act of 1995 (regulator) — safe harbor provisions
• Milwaukee, WI (location) — principal executive offices
• Delaware (location) — state of incorporation

FAQ

Risk Factors

• Dependence on Management Fees [high — financial]: The company's revenue is heavily reliant on management fees, which constituted almost all of its total revenue ($861.162 million out of $861.183 million for the nine months ended September 30, 2025). A significant decline in assets under management or a shift in client preferences away from active management could materially impact revenue.
• Fluctuations in Performance Fees [medium — financial]: Performance fees, while a smaller component, can be volatile. They decreased significantly by 75.6% to $21,000 for the nine months ended September 30, 2025, compared to $86,000 in the prior year. This volatility reflects the inherent risk in strategies that aim for alpha generation.
• Tax Receivable Agreements [medium — financial]: The company has substantial amounts payable under tax receivable agreements ($303.145 million as of September 30, 2025). Changes in tax laws or the company's tax position could affect the valuation and settlement of these agreements, impacting cash flows and financial position.
• Rising Compensation Costs [medium — operational]: Compensation and benefits expenses increased by $38.575 million to $484.279 million for the nine months ended September 30, 2025. This rise in operating expenses, particularly compensation, could pressure profit margins if revenue growth does not keep pace.
• Deferred Tax Assets Valuation [medium — financial]: Deferred tax assets decreased to $363.546 million from $409.386 million. The realizability of these assets depends on future taxable income, and any changes in tax regulations or the company's profitability could affect their value.

Industry Context

The asset management industry is characterized by intense competition, fee compression, and a growing demand for specialized, high-value investment strategies. Active managers like APAM face pressure from passive investment vehicles and increasing regulatory scrutiny. Success hinges on demonstrating consistent alpha generation, managing operational costs effectively, and adapting to evolving client needs and market dynamics.

Regulatory Implications

APAM operates within a heavily regulated financial services sector. Changes in tax laws, particularly those affecting corporate tax rates or the treatment of tax attributes, could impact the valuation of deferred tax assets and tax receivable agreements. Increased regulatory oversight on investment advisory practices and fee structures could also influence operational costs and business strategies.

What Investors Should Do

1. Monitor operating expense growth, particularly compensation and benefits, relative to revenue growth.
2. Analyze the drivers behind the significant decrease in performance fees.
3. Assess the impact of the decrease in deferred tax assets and tax receivable agreements on future cash flows.
4. Evaluate the company's strategy for managing assets and generating returns in a competitive landscape.

Key Dates

• 2025-09-30: Nine Months Ended — Reporting period for the consolidated financial statements, showing revenue growth and increased net income, but also rising operating expenses.
• 2025-09-30: Cash and Cash Equivalents — Increased to $300.158 million, indicating improved liquidity compared to $201.172 million at year-end 2024.
• 2024-12-31: Year End — Prior period comparison point for cash and cash equivalents, deferred tax assets, and amounts payable under tax receivable agreements.

Glossary

Management Fees

Fees earned by asset managers based on a percentage of the assets they manage. (The primary source of revenue for APAM, indicating the scale of assets under management.)

Performance Fees

Fees earned by asset managers when their investment strategies achieve returns above a certain benchmark or target. (Represents a variable component of APAM's revenue, reflecting investment strategy success.)

Deferred Tax Assets

Potential future tax benefits that a company can use to reduce its tax liability in the future. (Represents a significant asset on APAM's balance sheet, subject to future taxable income and tax law changes.)

Tax Receivable Agreements (TRAs)

Agreements where a company agrees to pay a portion of the tax benefits it receives from certain tax attributes (like those from prior ownership structures) to the parties that generated those attributes. (Represents a significant liability for APAM, impacting its cash flow and financial obligations.)

Noncontrolling Interests

The portion of equity in a subsidiary that is not attributable to the parent company. (Reflects ownership stakes in consolidated entities that do not belong to APAM's shareholders.)

Year-Over-Year Comparison

For the nine months ended September 30, 2025, Artisan Partners Asset Management Inc. reported a 5.7% increase in total revenues to $861.183 million, primarily driven by higher management fees. However, net income saw a more modest 2.9% rise to $195.524 million, indicating margin pressure. This was largely due to a significant increase in operating expenses, with compensation and benefits rising by $38.575 million. Cash and cash equivalents saw a substantial improvement, increasing by nearly $100 million to $300.158 million, while key balance sheet items like deferred tax assets and tax receivable agreements decreased.

Key Financial Figures

• $0.01 — stered Class A common stock, par value $0.01 per share APAM New York Stock Exchange

Filing Documents

• apam-20250930.htm (10-Q) — 2332KB
• apam-ex101x2025x09x30.htm (EX-10.1) — 9KB
• apam-ex311x2025x09x30.htm (EX-31.1) — 9KB
• apam-ex312x2025x09x30.htm (EX-31.2) — 9KB
• apam-ex321x2025x09x30.htm (EX-32.1) — 4KB
• apam-ex322x2025x09x30.htm (EX-32.2) — 5KB
• 0001517302-25-000086.txt ( ) — 9411KB
• apam-20250930.xsd (EX-101.SCH) — 55KB
• apam-20250930_cal.xml (EX-101.CAL) — 71KB
• apam-20250930_def.xml (EX-101.DEF) — 408KB
• apam-20250930_lab.xml (EX-101.LAB) — 663KB
• apam-20250930_pre.xml (EX-101.PRE) — 551KB
• apam-20250930_htm.xml (XML) — 1353KB

Unaudited Consolidated Financial Statements

Item 1. Unaudited Consolidated Financial Statements Unaudited Condensed Consolidated Statements of Financial Condition as of September 30, 2025 and December 31, 2024 1 Unaudited Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024 2 Unaudited Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2025 and 2024 3 Unaudited Consolidated Statements of Changes in Stockholders' Equity for the three and nine months ended September 30, 2025 and 2024 4 Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 6 Notes to Unaudited Consolidated Financial Statements 7

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 24

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 46

Controls and Procedures

Item 4. Controls and Procedures 46

Other Information

Part II Other Information

Legal Proceedings

Item 1. Legal Proceedings 47

Risk Factors

Item 1A. Risk Factors 47

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 47

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 47

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 47

Other Information

Item 5. Other Information 47

Exhibits

Item 6. Exhibits 48

Signatures

Signatures 49 Except where the context requires otherwise, in this report, references to the "Company", "Artisan", "we", "us" or "our" refer to Artisan Partners Asset Management Inc. ("APAM") and its direct and indirect subsidiaries, including Artisan Partners Holdings LP ("Artisan Partners Holdings" or "Holdings"). On March 12, 2013, APAM closed its initial public offering and related corporate reorganization. Prior to that date, APAM was a subsidiary of Artisan Partners Holdings.

Forward-Looking Statements

Forward-Looking Statements This report contains, and from time to time our management may make, forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements regarding future events and our future performance, as well as management's current expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. In some cases, you can identify these statements by forward-looking words such as "may", "might", "will", "should", "expects", "intends", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue", the negative of these terms and other comparable terminology. Forward-looking statements are only predictions based on current expectations of our management and information available to us at the time such statements are made. Forward-looking statements are subject to a number of risks and uncertainties, and there are important factors that could cause actual results, level of activity, performance, actions or achievements to differ materially from the results, level of activity, performance, actions or achievements expressed or implied by the forward-looking statements. These factors include: the loss of key investment professionals or senior management, adverse market or economic conditions, poor performance of our investment strategies, significant changes in client cash inflows or outflows or declines in market value of the assets in the accounts we manage, change in the legislative and regulatory environment in which we operate, changes in trade policies, including the imposition of new or increased tariffs and the economic impact, volatility and uncertainty resulting therefrom, our ability to maintain our current fee rates, operational or technical errors or other damage to our reputation and other factors disclosed in the Company's filings with the Securities and Exchange

Forward-looking statements include, but are not limited to, statements about

Forward-looking statements include, but are not limited to, statements about: our anticipated future results of operations; our potential operating performance and efficiency, including our ability to operate under different and unique circumstances; our expectations with respect to future business initiatives, including the development of new investment teams, strategies and vehicles; our expectations with respect to the performance of our investment strategies; our expectations with respect to future levels of AUM, including the capacity of our strategies and client cash inflows and outflows; our expectations with respect to industry trends and how those trends may impact our business; our financing plans, cash needs and liquidity position; our intention to pay dividends and our expectations about the amount of those dividends; our expected levels of compensation of our employees, including equity- and cash-based long-term incentive compensation; our expectations with respect to future expenses and the level of future expenses; our expected tax rate, and our expectations with respect to deferred tax assets; and our estimates of future amounts payable pursuant to our tax receivable agreements. ii Table of Contents

— Financial Information

Part I — Financial Information

Unaudited Consolidated Financial Statements

Item 1. Unaudited Consolidated Financial Statements ARTISAN PARTNERS ASSET MANAGEMENT INC. Unaudited Condensed Consolidated Statements of Financial Condition (U.S. dollars in thousands, except per share amounts) September 30, 2025 December 31, 2024 ASSETS Cash and cash equivalents $ 300,158 $ 201,172 Accounts receivable 113,967 118,667 Investment securities 257,409 208,792 Property and equipment, net 34,782 41,472 Deferred tax assets 363,546 409,386 Prepaid expenses and other assets 18,632 17,731 Operating lease assets 108,699 83,364 Assets of consolidated investment products Cash and cash equivalents 42,025 67,046 Accounts receivable and other 13,105 8,986 Investment assets, at fair value 329,296 462,140 Total assets $ 1,581,619 $ 1,618,756 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND STOCKHOLDERS' EQUITY Accounts payable, accrued expenses, and other $ 33,795 $ 33,406 Accrued short-term incentive compensation 120,066 20,547 Accrued long-term incentive compensation 92,472 58,952 Borrowings 189,146 199,430 Operating lease liabilities 124,890 101,277 Amounts payable under tax receivable agreements 303,145 341,461 Liabilities of consolidated investment products Accounts payable, accrued expenses, and other 20,140 105,984 Investment liabilities, at fair value 898 7,780 Total liabilities 884,552 868,837 Commitments and contingencies Redeemable noncontrolling interests 256,194 327,917 Common stock Class A common stock ($ 0.01 par value per share, 500,000,000 shares authorized, 70,461,656 and 70,074,120 shares outstanding at September 30, 2025 and December 31, 2024, respectively) 705 701 Class B common stock ($ 0.01 par value per share, 200,000,000 shares authorized, 1,221,063 and 1,574,068 shares outstanding at September 30, 2025 and December 31, 2024, respectively) 12 16 Class C common stock ($ 0.01 par value per share, 400,000,000 shares authorized, 9,014,456 and 8,712,951 shares outstanding at September 30, 2025 and Decem

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