Virtus Investment Partners (VIP) Q2 2026 Earnings Report

Balanced. The quarter showed meaningful progress in sales (notably institutional), strong ETF momentum (58% YoY AUM growth and $2B net flows over the past year), improved operating margin and EPS, diversified positive flows outside quality equities, and active capital management including debt reduction and buybacks. Offsetting those positives, total net outflows remain large at $5.6B, with redemptions concentrated in quality-oriented equity strategies that have faced a persistent style headwind; open-end fund sales and net flows were weak and a discrete noncash compensation charge introduced near-term volatility. Management highlighted early signs of quality strategy improvement but characterized them as preliminary.

Management gave specific modeling and capital guidance: AUM was $152.2B at June 30 (average AUM $153.3B), with Q2 investment management fees (adj) $164.8M and an average fee rate of 43.1 bps (≈1.2 bps incentive); total sales $6.1B (+5%) and total net outflows improved to $5.6B (from $8.4B); ETF AUM $5.8B (+$400M q/q) with ETF net flows +$300M; institutional sales $2.2B (best in ~3 years) and institutional net outflows -$700M (vs -$3.2B prior); open‑end sales $2.6B (-14%) and open‑end net outflows -$1.8B; fixed income ≈27% of AUM and alternatives+multi‑asset >28% (vs 21% a year ago). For expense and tax modeling they expect employment expense around 54% of revenue for Q3 (Q2 employment expense adj $102.1M; 55.6% of revenue or 53.5% excl a $3.8M discrete item), other operating expenses roughly $30–$32M/quarter (Q2 adj $31.9M), operating income adj $47.9M with an operating margin of 26.1% (28.2% excl discrete), and an effective tax rate of 13–14%. Capital and liquidity guidance: cash $176M, CLO/other investments $273M, $220M undrawn revolver capacity, gross debt $427M (net debt $251M, 0.9x EBITDA), repurchased ~70.1k shares for $10M, repaid $20M of the revolver and expect to repay the remaining $30M soon, and they anticipate issuing a new CLO this year (historically $300–$400M size with Virtus capital in the mid‑$20M to low‑$30M range); management also expects a modest decline in interest expense in Q3.