Victory Capital Company Profile

Background

Victory Capital is a diversified global asset management firm headquartered in San Antonio, Texas. As of September 30, 2024, the company managed total client assets of $181.1 billion. Victory Capital employs a next-generation business strategy that combines boutique investment qualities with the benefits of a fully integrated, centralized operating and distribution platform. The firm offers specialized investment strategies to institutions, intermediaries, retirement platforms, and individual investors through 11 autonomous Investment Franchises and a Solutions Business. Their product offerings include mutual funds, ETFs, separately managed accounts, alternative investments, third-party ETF model strategies, collective investment trusts, private funds, a 529 Education Savings Plan, and brokerage services.

Key Strategic Focus

Victory Capital's strategic focus centers on delivering specialized investment solutions through its autonomous Investment Franchises and Solutions Business. The firm emphasizes:

Diversified Product Offerings: Providing a wide array of investment products tailored to meet the diverse needs of various client segments.

Technological Integration: Investing in technology to enhance operational efficiency and client engagement.

Market Expansion: Broadening distribution platforms to reach a wider audience, including the introduction of brokerage capabilities to offer investors more choice and flexibility.

Financials and Funding

For the year ended December 31, 2023, Victory Capital reported:

Revenue: $821.0 million, a 4.0% decline from the previous year, primarily due to lower average assets under management (AUM).

Operating Expenses: Increased by 8.1% to $492.6 million, influenced by a non-cash $63.8 million difference in amounts recorded from the change in fair value of consideration payable for acquisitions.

GAAP Operating Margin: 40.0%, a decrease from 46.7% in 2022.

GAAP Net Income: $213.2 million, down 22.6% from the prior year.

Adjusted Net Income with Tax Benefit: $307.9 million, a 7.0% decrease from 2022.

Adjusted EBITDA: $418.0 million, a slight decline of 1.5% from the previous year.

As of December 31, 2023, the company held $124 million in cash and had total debt outstanding of approximately $1,002 million.

Pipeline Development

Victory Capital continually evolves its product set to align with client needs. In 2023, the firm introduced:

VictoryShares Free Cash Flow ETF (VFLO): Aimed at providing investors with exposure to companies generating significant free cash flow.

VictoryShares Small Cap Free Cash Flow ETF (SFLO): Focused on small-cap companies with strong free cash flow generation.

Additionally, the firm expanded its direct investor business by introducing brokerage capabilities, allowing investors to access a broader range of investment options.

Technological Platform and Innovation

Victory Capital differentiates itself through:

Integrated Operating Platform: Combining boutique investment qualities with a centralized operating and distribution platform to enhance efficiency and scalability.

Digital Investing Platform: Plans to introduce a digital investing platform that offers model portfolios managed based on individual investor goals.

Leadership Team

David C. Brown: Chairman and Chief Executive Officer. Under his leadership, Victory Capital has achieved significant milestones, including being ranked No. 55 on the Fortune 100 Fastest-Growing Companies list for 2022.

Leadership Changes

There have been no recent significant changes or appointments within the company's leadership team.

Competitor Profile

Market Insights and Dynamics

The asset management industry is highly competitive, with firms vying for market share through diverse product offerings, technological advancements, and global expansion. Victory Capital operates in this dynamic environment, focusing on delivering specialized investment solutions.

Competitor Analysis

Key competitors include:

BlackRock, Inc.: One of the largest global asset managers, offering a wide range of investment products and services.

The Vanguard Group: Known for low-cost index funds and ETFs, attracting a significant number of retail investors.

State Street Global Advisors: A major player in the ETF space with a strong institutional client base.

T. Rowe Price Group, Inc.: Focuses on actively managed mutual funds, emphasizing performance and research.

Franklin Templeton Investments: Offers a diverse range of investment products with a strong global presence.

Strategic Collaborations and Partnerships

Victory Capital has pursued strategic acquisitions to enhance its capabilities and broaden its investment strategies. Notable acquisitions include:

USAA® Asset Management Company: Expanded Victory Capital's product offerings and client base.

THB Asset Management: Added specialized investment strategies to the firm's portfolio.

New Energy Capital: Enhanced the firm's alternative investment capabilities.

WestEnd Advisors: Strengthened Victory Capital's position in third-party ETF model strategies.

Operational Insights

Victory Capital's integrated operating platform allows for efficient management of its diverse investment strategies. The firm's focus on technological integration and product diversification positions it competitively within the asset management industry.