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Good day, and welcome to the Artisan Partners Third Quarter 2025 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Brennan Hughes. Please go ahead.

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

Thank you, Brennan, and thank you for joining the call today. Our purpose is to generate and compound wealth for our clients over the long term. We do so by maintaining an ideal home for investment talent, providing a unique combination of autonomy, degrees of freedom, resources and support. Our goal is to be one of the world's preeminent multi-asset class investment platforms. Over our history, we have steadily expanded our capabilities across equities, credit and alternatives. While doing so, we have maintained our focus on investment and business results and delivered for our clients and shareholders. Turning to Slide 3. Investment performance remained strong across our platform with over 70% of our AUM outperforming their benchmarks for periods over 3 years. All 12 Artisan strategies with track records over 10 years have outperformed their benchmarks since inception. These 12 strategies have compounded capital at average annual rates of return from nearly 6% to over 13% net of fees. They have outperformed their benchmarks by an average of 243 basis points annually. On a shorter-term basis, several strategies have generated exceptional results, highlighting the breadth and diversity of our platform. In equities, the sustainable emerging markets, non-U.S. growth, global value and franchise strategies have all generated year-to-date returns of more than 20% with outperformance ranging from 425 to 934 basis points net of fees. In credit, the emerging markets local opportunity strategy has generated a year-to-date return of over 19%, 373 basis points above its benchmark. In alternatives, both credit opportunities and global unconstrained have generated absolute returns in excess of 8%, and Antero Peak has generated year-to-date returns of almost 21%. Across the broader platform, trailing 1-year performance has been weighed down by underperformance in several of our largest equity strategies, including international value and global opportunities, both of which have very strong long-term track records. Turning to Slide 4. Strong markets and investment performance drove our assets under management to $181.3 billion, an all-time high at quarter end. Firm-wide net outflows this year and in the third quarter are primarily a result of outflows from a handful of equity strategies that continue to experience rebalancing in up markets and to a lesser extent, client terminations. Those outflows mask a lot of very positive business development initiatives across the platform. Year-to-date, we have net inflows in 14 of our 26 investment strategies. Both Select Equity and International Explorer strategies funded large new mandates in the third quarter. Each strategy is now approaching $1 billion in AUM, 5 years from launch in 2020. We have continued our multiyear success in growing our credit business with $1.8 billion in year-to-date net inflows. The third quarter represents the 13th consecutive quarter of positive credit flows. In alternatives, we have raised $336 million this year for global unconstrained strategy, and we continue to build the pipeline for the credit opportunity strategy. Lastly, we have been executing a focused campaign to raise assets across our emerging market strategies. Each of sustainable emerging markets, developing world, emerging markets local opportunities and emerging markets debt opportunities has net inflows for the year, and demand continues to grow across these EM strategies. These positive areas validate our strategy and give us the conviction we are growing the platform in line with long-term demand from both institutional and intermediate wealth clients. Ultimately, though, we need to sell more and lose less. And we continue to develop and reorient our distribution function in order to do so. Slide 5 highlights our methodical approach to expanding our platform with new talent and investment capabilities. These efforts take shape internally through dialogue with existing investment teams to identify new areas for growth. Recent outcomes include the global special situation strategy within the International Value Group, custom credit solutions with the credit team and the franchise strategy we launched earlier this year with the growth team. We also maintain a regular dialogue with external talent interested in joining the Artisan platform to build differentiated and enduring investment franchises. Recent external engagement has focused on real estate, private credit and secondaries. We believe these capabilities would be a natural extension for our platform and are at the intersection of differentiated talent, large investment opportunity sets and long-term commercial demand. We are currently working on a number of internal and external opportunities and are excited to execute on some of these to further evolve and expand our multi-asset class platform. I will now turn it over to C.J. to review our recent financial results.

Thanks, Jason. Our complete GAAP and adjusted results are presented in our earnings release. We are pleased with our financial results for the third quarter. Revenue growth fueled by strong market conditions and lower fixed expenses led to margin expansion of 450 basis points and a 23% increase in earnings compared to the second quarter of 2025. Revenues for the quarter were up 7% compared to the June quarter and up 8% compared to the prior year of third quarter. Adjusted operating expenses for the quarter were down slightly from the second quarter of 2025, primarily from the absence of $2.4 million of costs associated with the closure of China Post-Venture strategy in the second quarter. Compared to the same quarter last year, adjusted operating costs were up 6%, primarily from higher variable incentive compensation expense due to increased revenues. Adjusted operating income increased 22% compared to the prior quarter and 12% compared to the same quarter last year. Adjusted net income per adjusted share was up 23% compared to last quarter and up 11% compared to the third quarter of 2024, consistent with operating income. Year-to-date, 2025 revenues were up 6% compared to the first 9 months of 2024 on higher average AUM. Year-to-date, adjusted operating expenses increased 5% from 2024, primarily from higher incentive compensation on elevated revenues and the impact of the addition of the January 2025 long-term incentive award. Calculating our non-GAAP measures, nonoperating income includes only interest expense and interest income. Although valuation changes on our seed investments impact shareholder economics, we fully exclude these valuation changes from our adjusted results to provide transparency into our core business operations. Turning to Slide 9. Our balance sheet remains strong with $300 million of cash on hand and $140 million of firm seed investments in emerging strategies and vehicles to support future growth. As strategies reach scale and our seed investments are redeemed, any redemption amounts realized are included in the cash available for corporate purposes, seed investments or as in addition to our year-end special dividend. During the quarter, we completed the closing of $50 million of new private placement debt on August 15, 2025. We used the proceeds from the new debt along with cash on hand to retire the $60 million of debt that matured in August 2025. In addition, our $100 million revolving credit facility remains unused. We continue to return capital to shareholders on a consistent and predictable basis. Consistent with our dividend policy, our Board of Directors declared a quarterly dividend of $0.88 per share with respect to the September 2025 quarter, a 21% increase over the prior quarter. Looking ahead, as a reminder, the fourth quarter includes the annual mutual fund distribution related to incoming capital gains. We anticipate approximately $900 million of those distributions will not be reinvested. Fourth quarter also represents the quarter in which we have the largest opportunity to realize performance fees. The measurement period for those fee opportunities is December 31. Approximately 3% of our AUM has a performance fee component. Last year's fourth quarter included approximately $17 million of performance fees. We are currently projecting total performance fees similar to what we generated in 2024, but all such fees will remain subject to market and performance conditions through the end of the year. That concludes my prepared remarks, and I will now turn the call back to the operator.

[Operator Instructions] And the first question comes from John Dunn with Evercore.

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

Yes. It's Jason. I can provide a little bit more flavor. I'd categorize it in 3 specific areas. The first one is in global mandates, and we're seeing that in both global value and to a lesser extent, in global opportunities, where we have large institutional clients across both European and U.S. markets that are interested in global, just gaining access through a slightly more asset allocated opportunity. The second is both in the intermediate wealth and in the institutional bucket for direct international equity exposure. We've seen a pretty meaningful uptick in the number of inquiries coming specifically in areas like our global equity franchise run by Mark Yockey. We're seeing really good interest there, largely because not only the asset allocation mismatch that I think we're seeing across asset allocations, but market has produced just phenomenal and outstanding results. For the year, I believe, is up about 900 basis points through Q3 and his international strategy. But if you look over the longer term, the numbers are quite compelling on both the benchmark relative as well as on a peer-relative basis. And we're also seeing a lot of interest from the emerging market side, both in credit as well as in equity. So our Developing World team and our Sustainable Emerging Markets team both had positive flows for the quarter and for the year. And there's just general broad renewed interest. Again, this is across both intermediate, wealth and institutional, where probably no less than 18 months ago, everybody was talking about the depth of emerging markets, there was cuts to asset allocations, and now we're just seeing that being revitalized. And you combine that with the fact that a couple of our large peers and competitors have made substantial portfolio management changes. So there's just a lot of money in motion. There's a lot of activity. And we think that we've got 2 world-class franchises that are able to capitalize that. And we're seeing the green shoots in terms of both flows, but importantly, their performance remains quite strong in both of those -- both of those areas.

Got you. And then maybe just on the M&A front. You mentioned the 3 areas you've been looking at recently. Could you maybe size kind of like how much you'd be able to allocate to something like that from a team [indiscernible] maybe something more substantial? How much could you perhaps put to work? And then just your philosophy on the consideration, would you do a stock deal? Or might you consider putting on some leverage to do that?

Yes. We're certainly very active in those 3 areas. And I'd highlight the slide, I believe it's Slide 5 in the material, where you can see we've taken about 400 meetings over the last 5 years. Our Investment Strategy group has been extremely busy. You can also see at the bottom, we haven't been terribly prolific. We've only added one team over that last 5-year period. But we have been very, very deep in the weeds with a number of really interesting opportunities. And I would say our pipeline has largely been homegrown. This isn't areas where we're seeing interesting things from bankers. We're really doing this on a bottom-up basis, which has always been the hallmark of how Artisan has identified great talent. And so when you think about those 3 areas, the one that probably comes most to mind in terms of our activity levels has been in the area of real estate. And I harken back to a call -- a quarterly call about 4 or 5 quarters ago, where we talked a little bit more about how close we were with one opportunity in particular. That clearly didn't come to fruition, but we're also back in at a point where we're seeing really good upside and opportunity from another opportunity, specifically in real estate. But I think it's also important to reinforce that what we did say and we will continue to say is that the M&A opportunities that we're going to look at are not going to be transformative. We're going to look at things that are going to keep us true to who we are, build around a really exciting and talented group or individual, resource them, make sure that we have an alignment from a business mindset, and grow it. And in alternatives, that's going to require from time to time, considering M&A and upfront consideration and then trying to align on the back end. We don't have a one size fits all. We obviously want to make sure that we look at talent first and then make the determination around what the consideration is going to look like. But I just really want to point out that it's -- none of these are going to be transformative at least the early ones, we really just want to stay true. And we think we can align the M&A model very much to how we think about lift-outs. And so you'll hear and you'll see that if we, in fact, do a transaction. We would consider any and all alternatives when it comes to M&A, whether it be stock, additional leverage or just cash. I think given the size of the opportunities that we're looking at, cash is probably the most prevalent source of opportunity when thinking about these.

Our next question comes from Bill Katz with TD Cowen.

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

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

Great. Just a follow-up, just to come back to your conversation, and I sort of appreciate Slide 5, so thank you for that. You sort of mentioned both internal and external opportunities. Could you bifurcate a little bit like where you see the internal opportunity set? Like when I think of real estate, secondaries and private credit, I don't automatically think of Artisan. So no offense intended by that. So I'm just trying to think about what your existing team could sort of transition into versus what you'd have to look out -- look for externally?

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

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

Just around the third quarter, you mentioned in the prepared remarks seeing some client rebalancing activity. I wonder if you could just give a little bit more color around that? What sort of trends are you seeing around that area?

Yes. We could just dive in a little bit. So in Q3, we had 3 pretty big rebalances within our intermediate wealth space, and these were -- they impacted a couple of teams, international value, international small mid in particular, where clearly, the performance remains quite strong. These were in no way, shape or form terminations. They were just reductions in the overall exposure. One of the things that we found and we're excited about is that within the intermediate wealth space, the folks that we're talking with are highly sophisticated, and they run very similar models to what you think of a very large pension or institution would be running. So there's pretty frequent rebalances. And given the size of the programs that we're in, the models that they're running, it's not to be unexpected. We're in a high-class problem environment when it comes to our equity business. They're producing phenomenal returns over a short, intermediate and long periods of time, which in and of itself means that we're going to be a right candidate for rebalancing. And certainly, Q3 was no different in that regard. And then the one area where we did see a termination was a relatively small one, but again, it's a little bit more idiosyncratic. It's more idiosyncratic due to the market. It was an Australian client. As we have talked about on past calls, the Australian market from a regulatory perspective has forced a lot of people to reevaluate their allocations to active management, ultimately favoring passive management and just in-house strategies. And so that was a bit of a continuation there, but nothing that we could say was specific to the Artisan platform.

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

Ken, it's C.J. I would just note that I think back in the beginning of the year, and I've confirmed, we thought we'd be around mid-single digits for fixed expense growth for the year. We're tracking there maybe slightly a little bit better. We're in the process of looking forward to 2026 budgeting. So I don't really have any updates there. But as we mentioned, we've been very disciplined on expenses in 2025 after a couple of years of -- strong years of headcount growth and building out distribution operations, adding capabilities to grow in the areas that Jason has spoken about. So I don't expect anything unusual moving forward and the guidance that we gave for 2025 still stands, might come in a tad better.