Q4 2024 Janus Henderson Group PLC Earnings Call
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Adam: Good morning, my name is Adam and I will be your conference facilitator today. Thank you for standing by and welcome to the Janus Henderson Group fourth quarter and full year 2024 results briefing.
Adam: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. In the interest of time, questions will be limited to one initial and one follow-up question each.
Adam: In today's conference call, certain matters discussed may constitute forward-looking statements.
Adam: Actual results could material differently from those projected in the forward-looking statements due to a number of factors, including, but not limited to, those described in the forward-looking statements and risk factors sections of the company's most recent Form 10-K and other more recent filings made with the SEC.
Speaker Change: Dennis Henderson assumes no obligation to update any forward-looking statements made during the call.
Speaker Change: Thank you. It is now my pleasure to introduce Ali Dibadj, Chief Executive Officer of Janus Edison. Mr. Dibadj, you may begin your conference.
Speaker Change: Welcome everyone and thank you for joining us today on Janice Henderson's fourth quarter and full year 2024 earnings call. I'm Ali Dibadj, I'm joined by our CFO Roger Thompson.
Speaker Change: In today's call, I'll start with some comments on the momentum being generated across the business. Roger will then go through the quarterly results, and after that, I'll provide an update on the strategic progress we made over the last 12 months.
After those prepared remarks, we'll take your questions.
Turning to slide two.
Speaker Change: 2024 demonstrated several signs of clear progress at Janus Henderson. This progress was the result of colleagues who locked arms collaboratively as one firm to continue building our momentum by accomplishing many new and major milestones that support our purpose of investing in a brighter future together and our strategy.
Speaker Change: We're encouraged that our net flows turn positive in 2024, finishing the year with $2.4 billion of net inflows. This is a tremendous accomplishment and has vastly improved from only two years ago, when we experienced $31 billion of net outflows.
Speaker Change: Delivering positive active flows is a key differentiator for Janus Henderson in an industry with well-documented active flow headwinds.
Speaker Change: The positive net inflows resulted from a diversified set of regions and investment strategies.
Speaker Change: In the intermediary channel, North America, EMEA Latin America, and Asia Pacific all delivered positive flows in 2024, and at the firm level, there were 29 investment strategies that produced greater than $100 million in net inflows, a roughly 40% increase compared to the prior year.
Speaker Change: In addition to the net inflows, Janice Henderson generated new net revenue in both the third and fourth quarters.
Speaker Change: Fee pressures are relentless in this industry and not all AUM is created equally, so we are pleased with that result. We're seeing success across a mix of capabilities and regions, including higher fee strategies such as hedge funds and thematics.
Speaker Change: This has enabled Janice Henderson to maintain a relatively resilient fee rate.
Speaker Change: Our 2024 net management fee rate of 48.6 basis points has decreased only one basis point over the last two years.
Speaker Change: Given feedback from shareholders, we are also happy bringing in a new business where the headline fee rate may deviate from our current blended fee rate, if and only if it has an attractive profitability profile. Our fee rate and profitability management are two of the key competitive differentiators for Janice Anderson.
Speaker Change: We are executing our strategic vision, which consists of three pillars, protect and grow our core businesses, amplify our strengths not fully leveraged, and diversify where clients give us the right to win.
Speaker Change: Under the Diversify pillar, we expanded into differentiated private market capabilities for clients with the acquisitions of NBK Capital Partners in September and Victory Park Capital in October. As I said before, both are skating to where the puck is going on behalf of clients.
Speaker Change: NBK allows Janice Henderson early entry into the rapidly expanding emerging markets private capital space and VPC specializes in asset-backed lending. Both have unique origination that is the envy of some of our larger alternative peers.
Speaker Change: Within the Amplify pillar, we acquired Tabula Investment Management in July and have moved quickly to begin leveraging the business with our first year PETF launches occurring in the fourth quarter with more to come in 2025.
Speaker Change: In September, we announced a unique and innovative Affinity Partnership with the American Cancer Society.
Speaker Change: Through this pioneering partnership, Janice Henderson is donating the equivalent of 50% of its management fee revenue from all AUM in our Government Money Market Fund.
Speaker Change: This partnership allows us to enter the undifferentiated six trillion dollar and growing money market category with a distinctive product that is extremely hard to replicate and benefits an incredible cause.
Speaker Change: We invested in our brand to strengthen our profile, drive our business forward, and communicate our purpose of investing in a brighter future together for the over 60 million people globally who directly or indirectly rely on Janus Henderson for their financial well-being.
Speaker Change: We are investing in technology, including AI, as part of our ongoing efforts to improve the ways we work by embracing innovative technologies. An example is leveraging AI and machine learning in our North American client group to deepen existing client relationships and establish new ones.
Speaker Change: We also launched a collaborative tool for our RFP team, which was the first generative AI tool developed internally and put into production by Dennis Henderson colleagues.
Speaker Change: Dennis Henderson is home to incredibly talented people and we believe we are becoming a destination of choice in the industry. Attracting and retaining the best talent enables us to deliver for clients and execute our strategy over the long term.
Speaker Change: Finally, our strong financial results and cash flow generation enable us to return $458 million of cash to shareholders in 2024 through the quarterly dividend and share repurchases, while maintaining the flexibility to invest in the business on behalf of clients.
Speaker Change: The 2024 results on slide four illustrate our tangible progress in the business.
Speaker Change: Long-term investment performance remains solid, with over half of our AUM out of the benchmark on a 3, 5, and 10-year basis.
Speaker Change: Total AUM increased 13% in 2024, mostly reflecting strong markets, alpha generation, and positive net flows.
Speaker Change: Ending AUM of $378.7 billion is 5% higher than the 2024 average AUM, providing a tailwind as we begin 2025.
Speaker Change: As I discussed earlier, net flows were positive, improving for the second consecutive year and resulting in a 1% organic growth rate.
Speaker Change: Financial results remain solid and our financial performance and strong balance sheet continue to provide us the ability to invest in the business organically and inorganically and return cash to shareholders.
Speaker Change: I'll now turn the call over to Roger to run you through the detail of the quarterly financial results.
Roger Thompson: Thanks Ali and thank you for joining us on today's call.
Roger Thompson: Starting on slide 5 and a look at our quarterly results.
Roger Thompson: As Ali has discussed our solid investment performance I'll touch briefly here on AEM, flows and EPS.
Our financial results are strong.
Roger Thompson: Better top-line revenue provided by positive markets, a stable net management fee rate, net inflows and outperformance delivered by investment teams coupled with operating leverage resulted in an adjusted diluted EPS of $1.07.
Roger Thompson: A 30% increase compared to the same period a year ago.
Roger Thompson: Our financial performance and strong balance sheet continue to give us the flexibility to invest in the business both organically and inorganically and return cash to shareholders.
Roger Thompson: On slide six, we'll look at the investment performance in more detail.
Roger Thompson: Investment performance versus benchmark remains solid with the majority of aggregate AUM beating their respective benchmarks over all time periods.
Roger Thompson: The lower five-year number, compared to the prior quarter, is primarily driven by the U.S. mid-cap growth strategy within our equities capability, and was impacted by the narrow leadership driving market gains in the U.S. for small and mid-cap growth stocks which weighed on relative returns to benchmark.
Roger Thompson: Performance for the strategy compared to peers remained solid and it's in the first or second Morningstar quartile over all time periods.
Roger Thompson: Overall investment performance compared to peers is very competitive with at least three quarters of AUM in the top two Morningstar quartiles over 1, 3, 5 and 10 year time periods.
Slide 7 shows total company flows by quarter.
Roger Thompson: Net inflows for the quarter were $3.3 billion compared to net inflows of $400 million last quarter and a significant improvement over net outflows of $3.1 billion a year ago.
Roger Thompson: The year-over-year improvement was primarily driven by a 42% increase in gross sales and marked the best quarterly gross sales result in almost three years.
Roger Thompson: The increase in gross sales compared to the prior year is across a broad range of regions and strategies including ETFs, balanced, global small cap, Australian fixed income, thematics such as life sciences and technology, hedge funds and global adaptive multi-asset.
Turning to slide 8, and flows by client type.
Roger Thompson: The positive trends in the intermediary channel continued with fourth quarter net flows of positive three and a half billion dollars
Roger Thompson: For the year, intermediary net inflows were $8.7 billion, a 5% annual organic growth rate.
Roger Thompson: In the fourth quarter, the US and Asia-Pacific regions experienced net inflows, with small outflows across EMEA and LATAM.
Roger Thompson: In the US, net flows were positive for the sixth consecutive quarter, with the last five quarters each delivering at least $1 billion in net inflows.
Roger Thompson: Several strategies delivered net inflows in the fourth quarter, including most of the active ETFs, multi-sector credit and hedge funds.
Roger Thompson: U.S. Intermediate is a key initiative under our Protect and Grow strategic pillar and we're pleased that we're gaining market share.
Roger Thompson: Under our Amplify strategic pillar we've talked about amplifying our investment and client service strengths using various means including vehicles in which to deliver our products.
Roger Thompson: In addition to ETFs, flows into CITs, SMAs and hedge funds in this channel were all positive in the fourth quarter and for the full year.
Moving to the EMEA and Latin American intermediary segments.
Here we've spoken previously about expanding our strategic efforts.
Roger Thompson: In APAC intermediary, net flows were positive for the second consecutive quarter and positive for the year. Within APAC, Asia had a particularly strong 2024 and is carrying momentum into 2025.
Roger Thompson: Institutional net flows were aided by 10 distinct fundings between $100 and $500 million.
We're working to create a sustainable pipeline.
Roger Thompson: We're pleased with the work our distribution team is doing and we're encouraged by the leading indicators and increasing number of opportunities across all of our regions.
Roger Thompson: Net outflows for the self-directed channel which includes direct and supermarket investors were 1.1 billion dollars flat to the same period a year ago.
Slide 9 is Flows in the Quarter by Capability.
Roger Thompson: Despite a challenging environment for active equities, the annualised growth sales rate for equities improved to 14% from 13% on a year-over-year basis.
Roger Thompson: Fourth quarter net inflows for fixed income were 5.2 billion dollars which is a 26% annualized organic growth rate.
Roger Thompson: Several strategies contributed to the positive fixed income flows. In the intermediary channel, fixed income active ETFs delivered strong positive flows of $4.9 billion in the quarter, led by flows in JAAA.
Roger Thompson: Other strategies contributing to the intermediary positive flows are multi-sector credit and Australian tactical income.
Roger Thompson: Net flows for the multi-asset capability were positive for the first time in three years at 100 million dollars, improving from net outflows of 400 million dollars and 1.4 billion dollars in the prior quarter and prior year.
Roger Thompson: The fourth quarter result was led by positive flows into the global adaptive multi-asset and the balance strategies.
Roger Thompson: Balanced, which is our largest strategy, had its first quarter of positive flows since Q4 of 2021.
Roger Thompson: And finally, net inflows in the alternatives capability were $500 million, driven primarily by pooled hedge funds.
Moving on to the financials
Roger Thompson: Before moving on to adjusted financial results, GAAP results this quarter include an expected $42.6 million non-cash, non-operating accounting release of accumulated foreign currency translation losses related to subsidiary entities liquidated this quarter. This amount is removed from adjusted results.
Roger Thompson: The improvement was primarily due to higher average AUM, good investment performance generating higher performance fees and operating leverage.
Roger Thompson: Adjusted Operating Income improved 20% and EPS improved 18% quarter over quarter.
Roger Thompson: Improvements over the fourth quarter of last year were even stronger with operating income and EPS up 31% and 30% respectively and year-on-year were up 31 and 34% showing the consistency of our improvement.
Roger Thompson: Adjusted revenue increased 16% compared to the prior quarter and 25% compared to the prior year, primarily due to higher management fees of higher average AUM and improved performance fees.
Roger Thompson: Net management fee margin was 48.6 basis points, a slight increase over the prior quarter.
Roger Thompson: Our full year net management fee margin of 48.6 basis points was down less than half a basis point compared to 2023 and only one basis point lower than 2022.
Roger Thompson: Janice Henderson's net management fee margin continues to be a differentiator compared to many of our peers given the fee pressure Hebwin's experienced in the asset management industry.
Roger Thompson: Fourth quarter performance fees of 68 million dollars included performance fees of 74 million dollars generated primarily from a number of funds and capabilities with December 31 crystallization dates.
Roger Thompson: Partially offsetting this revenue was negative six million dollars from US mutual fund performance fees.
Roger Thompson: Whilst negative, US mutual fund performance fees have improved significantly compared to the negative $17 million in the fourth quarter of 2023.
Continuing on to expenses.
Roger Thompson: Adjusted operating expenses in the fourth quarter increased 14% to $363 million, primarily reflecting higher incentive compensation and previously communicated expected increases in non-compensation expenses.
Roger Thompson: Adjusted employee compensation, which includes fixed and variable costs, was up 18% compared to the prior quarter, primarily from higher incentive costs on higher revenues and fixed costs related to the consolidation of acquisitions beginning in the fourth quarter.
Roger Thompson: Adjusted LTI decreased 6% compared to the prior quarter, largely due to mark-to-market on mutual fund share awards. In the appendix we've provided the usual table on the expected future amortisation of existing grants, along with an estimated range for 2025 grants.
Roger Thompson: The fourth quarter adjusted comp to revenue ratio was 42.4% and our full year comp ratio was 44% in line with previously provided expectations and improved from 2023.
Roger Thompson: Adjusted non-comp rating expenses increased 15% compared to the third quarter, primarily due to expected higher marketing and G&A expenses.
Roger Thompson: On a full year over year basis, adjusted non-comp expenses increased 9%, which is in line with our expectation of the percentage growth to be at the higher end of mid to high single digit growth.
Roger Thompson: As I mentioned on previous earnings calls, we anticipated adjusted non-compensation costs to accelerate in the second half of the year related to attractive ROI investments supporting areas of momentum in our business and the consolidation of VPC beginning in the fourth quarter and the full costs of NBK.
Roger Thompson: With respect to 2025 expense expectations, we expect a compensation ratio in the range of 43-44% in 2025 compared to 44% in 2024.
Roger Thompson: This range assumes AUM as of 31st December and zero market assumption in 2025.
Roger Thompson: For non-compensation, we expect mid- to high-single-digit percentage growth as a result of the investments supporting strategic initiatives and operational efficiencies, as well as inflation and the fullier impact of the consolidation of VPC, MBK and Tabula.
Roger Thompson: To offset where we can, we will continue to be mindful of our discretionary cost basis and be disciplined in our cost management.
Roger Thompson: Finally, we expect the firm's tax rate on adjusted net income attributable to JHG to be in the range of 23 to 25 percent.
Roger Thompson: Our fourth quarter adjusted operating margin was 36%, an increase of 180 basis points from a year ago.
Roger Thompson: Fully a 2024 Adjusted Operating Margin was 34.4% an increase of 350 basis points
Roger Thompson: Adjusted diluted EPS was $1.07, up 18% from the prior quarter and up 30% from the fourth quarter 2023.
Roger Thompson: Skipping over slide 12 and moving to slide 13 in the Liquitol Liquidity Profile.
Our capital position remains strong.
Roger Thompson: Cash and cash equivalents were $1.2 billion as at the 31st of December, which is roughly flat to the end of last year, as excess cash flow generation was used to support our inorganic investments, fund our quarterly dividend and to repurchase 6.1 million shares in 2024.
Roger Thompson: Our return of excess cash is consistent with our capital allocation framework. We'll look to return capital to shareholders where there isn't an immediately more compelling investment, either organically or inorganically, in the business.
Roger Thompson: In September 2024, we successfully completed a $400 billion issuance of senior unsecured notes at a coupon rate of 5.45% due in 2034.
Roger Thompson: In summary, we've maintained a strong liquidity position and we continue to balance the capital needs and the investment opportunities of the business with returning capital to shareholders.
Roger Thompson: Finally, slide 14 looks at our annual return of capital to shareholders.
Roger Thompson: We've been disciplined in consistently returning excess capital to shareholders as the historical data reflects.
Roger Thompson: Since 2018, we've returned 70% of our cash flow from operations, or $3 billion, to shareholders in the form of our quarterly dividend and accretive share buybacks.
Roger Thompson: Our dividends have increased 11% and we've reduced shares outstanding by 21.1% since our first accretive buyback programme commenced in the third quarter of 2018.
Roger Thompson: In 2024, we return 66% of our cash flow from operations to shareholders, including $250 million in dividends and $208 million in buybacks.
Roger Thompson: We then look to use cash for organic and inorganic reinvestment in the business, and then consider returning excess cash via dividends and sharing purchases.
Our return of capital reflects our positive financial outlook.
Roger Thompson: Our cash flow generation and a strong and stable balance sheet.
Roger Thompson: Our buybacks and stable dividends do not impair our ability to execute M&A, should the opportunity arise, and we continue to actively look to buy, build or partner to diversify where clients give us the right to win.
Roger Thompson: With that, I'd like to turn it back over to Ali to give an update on our strategic progress.
Thanks, Roger.
Ali Dibadj: Turn to slide 15 and a reminder of our three strategic pillars of protecting grow our core businesses, amplify our strengths not fully leveraged, and diversify where clients give us the right to win.
Ali Dibadj: We are in the execution phase, and we believe this strategic vision has us on the path to, over time, consistently deliver organic growth.
Ali Dibadj: Over the next few slides, I'll highlight several examples of the progress made in 2024 across the three pillars.
Ali Dibadj: Moving to slide 16, which details the improving business trends in the U.S. Intermediary Channel.
Ali Dibadj: Net flows were positive for this channel for the second consecutive year, resulting in a 7% organic growth rate compared to 1% growth in 2023. A tremendous result given industry headwinds. Very importantly, we're capturing market share in both gross sales and net flows.
Ali Dibadj: We've talked previously about our national brand campaign in the U.S., which was something new for Janice Henderson and a substantial change from what we've done in the past. The investment made has resulted in a strengthened brand profile that positions Janice Henderson as a trusted financial partner.
Ali Dibadj: As I mentioned earlier, we are investing in leveraging AI and machine learning to support the North America Client Group.
Ali Dibadj: We believe we are at the forefront of a technology, AI, which will fundamentally transform how we interact with and service our clients.
Ali Dibadj: The amount of data at our fingertips is immense, and the challenging opportunity is how to turn this data into powerful and actionable information and acumen that will help Janice Anderson drive and anticipate our clients' needs, deliver differentiated insights, and accelerate growth.
Ali Dibadj: Slide 17 highlights the meaningful progress made under the strategic pillar of Amplify.
Ali Dibadj: Our suite of active ETFs experienced another successful year. Net flows were positive $14 billion and AUM finished the year at $27 billion, more than doubling in 2024 and equating to an annual growth rate of 79% over the last five years.
Ali Dibadj: With this growth, Janice Henderson is now the 8th largest provider of active ETFs and 3rd largest provider of active fixed income ETFs in the world.
Ali Dibadj: We have momentum and active ETFs in the U.S. and aim to build upon this momentum outside the U.S. with the acquisition of Tabula in mid-2024.
Ali Dibadj: Janice Henderson quickly leveraged the expertise and technology of Tabula, launching our first active ETFs in Europe during the fourth quarter. We anticipate launching a range of active European ETFs across equities and fixed income strategies in 2025, including JCL0, a European version of JAAA, which launched earlier this month.
Ali Dibadj: These will take time to mature, but we are energized by their prospects.
Ali Dibadj: In September, Janice Henderson announced a partnership with Animoid and Centrifuge to manage Animoid's Liquid Treasury Fund, a fully on-chain, tokenized fund issued on Centrifuge's public blockchain that provides investors with direct access to short-term U.S. Treasury bills.
Speaker Change: Blockchain readiness and tokenization are key pillars underpinning Janus Anderson's innovation strategy and the decision to partner with Animoid Centrifuge in this way reflects the firm's commitment to digital assets and our desire to embrace disruptive financial technologies.
Speaker Change: In 2024, we established an effort to review our product set to identify and amplify opportunities for existing products that we overlooked, subscale products with strong investment performance and significant distribution potential.
Speaker Change: One such strategy is global small-cap equity. We have world-class regional small-cap investment capability and launched this strategy five years ago to utilize this regional investment acumen in a global strategy.
The strategy delivered strong investment performance, but limited growth.
Speaker Change: We developed a sales plan including infusing the strategy with additional seed capital to elevate its availability for platforms
Speaker Change: In 2024, this strategy had $700 million of net inflows from a $2 million starting point to begin the year.
Speaker Change: This is a great example of our teams working collaboratively to deliver for our clients and embodies two of the firm's core values of Together We Win and Clients Come First Always.
Speaker Change: In 2024, we established several new products and vehicles based on what our clients are telling us. We launched emerging markets debt, mid-cap growth alpha, and income ETFs in the U.S., and Japan high conviction equity and pan-European high conviction equity in Europe. Elsewhere, we launched additional SMAs, CITs, and hedge funds.
Speaker Change: Turning to slide 18 and our third pillar of diversify. We're expanding into differentiated private market capabilities for clients with the acquisitions of NVK Capital Partners and Victory Park Capital.
Speaker Change: NBK allows Janice Henderson early entry into the rapidly expanding emerging markets private capital space.
Speaker Change: In addition to enhancing product offerings for existing clients, the acquisition also provides Janice Anderson with the access to engage with new clients that include some of the largest and fastest growing pools of capital, such as the Middle East and Asian sovereign wealth funds and pensions, who want to actively invest globally, thereby expanding our footprint in the region.
Speaker Change: Victory Park Capital specializes in asset-backed lending, which has emerged as a significant and differentiated market opportunity within private credit, and we believe it will remain appealing to clients as they increasingly look to diversify their private credit exposure beyond direct lending with unique origination, and VPC has that origination.
Speaker Change: Our joint venture with Privacore has been ramping operations over the last 15 months.
Speaker Change: As a reminder, this was a de novo build and it took some time to get people hired and operationally set up, and we are beginning to see real progress. As a testament to the differentiated model being built, Perficor has had over 80 GP conversations in the first 15 months, showcasing demand from the private markets community for its solution.
Speaker Change: Privacore is selling on three wirehouse platforms and expects to add another this year.
They are also expanding into RIAs and broker-dealers.
Speaker Change: Privacore has more products coming online in the upcoming months, and they are working with VPC on innovative solutions for the wealth channel. We continue to look actively to buy, build, or partner to diversify where clients give us the right to win. The M&A pipeline is active, and we are going to be very disciplined in our approach.
Speaker Change: As we enter 2025, to be fair, we are not firing on all cylinders yet, as there are many more areas at Janus Henderson that we believe can support our strategic ambitions, not overnight, but over time. And slide 19 provides a few examples.
Speaker Change: Our ongoing strategic efforts and execution are clearly starting to be manifested in our results, and while we are squarely on the path to consistently delivering organic growth, we are not yet at our destination.
Speaker Change: There are still several strategic ambitions across the business that we believe can contribute to future growth. In Protect and Grow, we have been realigning resources in our legacy channels and repositioning these businesses. Two examples are the UK Intermediary and US Direct channels, which combined represent over 20% of firm-wide AUM.
Speaker Change: Under Amplify, there are several examples of strengths we have yet to fully leverage. In Institutional, we've talked publicly about the need to build a sustainable pipeline. The APAC region, which is 10% of AUM, is relatively small. However, Janice Henderson is recognized as a key player with many clients.
Speaker Change: We're in the nascent stages of leveraging Tabula and launching ETFs in Europe. In diversified alternatives, we are under-penetrated and we believe we can increase market share. Lastly, we can continue to broaden our vehicle lineup where clients want us to do so, including SMAs and CITs.
Speaker Change: In our third strategic pillar of Diversify, our focus is to leverage our recent acquisitions in private credit, VPC, and NBK, and to provide alternatives to private wealth clients via Privacore. We also remain active in looking at M&A opportunities to diversify where clients give us the right to win.
Speaker Change: Moving to slide 20, which is an illustrative view of our strategy and where we believe it can take us.
Speaker Change: We are executing on our strategic plan and believe our strategy has us on the path to deliver organic revenue growth consistently.
Speaker Change: There is real progress in all three pillars of our strategic framework as evidenced by U.S. Intermediary in Protect and Grow, Product Development, Expansion, and Amplify, and VPC, NBK, and Privacore in Diversify.
Speaker Change: In addition to the tangible strategic progress, there are several areas of our business that we believe could help to drive future growth.
Wrapping up on slide 21.
Speaker Change: I'm proud of the progress made in 2024, and I want to thank each and every one of my colleagues at Janus Henderson for their hard work and dedication.
Speaker Change: and thank our clients, who entrust us with their capital, a responsibility we take humbly and seriously as we continue to show real progress on our strategic path to deliver consistent organic growth. We are not at our destination yet, but we are clearly on our way.
Speaker Change: Net inflows for the year were $2.4 billion and are positive and aggregate over the past two years.
Speaker Change: Net new revenue was positive in the second half of the year and we maintained a resilient net management fee margin We amplified and diversified our businesses through inorganic opportunities Entering the European active ETF through tabula and expanded into private markets with NBK and VPC
Speaker Change: Our brand positioning strengthened globally. We have a strong balance sheet and good free cash flow generation, which enables us to return cash to shareholders and reinvest in the business. And looking ahead, we believe we are squarely on the path to deliver consistent results for our clients, shareholders, employees, and all our stakeholders.
Speaker Change: Let me turn the call back over to the operator to take your questions.
Speaker Change: Thank you. As a reminder, if you would like to ask a question on today's call, please press star followed by one on your telephone keypad now. Participants are asked to limit themselves to one question and one follow-up per person so we can get through the queue in good time.
Speaker Change: And our first question comes from Brennan Hawken from UBS. Brennan, your line is open, please go ahead.
Good morning. Thanks for taking my questions.
Speaker Change: So could you maybe give us an idea about how you're thinking about bringing equity products? We've seen a few filings and heard of a few filings, but what are the plans for 2025 and how big do you think that offering can get?
Sure, happy to start, Brennan. Thanks for the question.
Speaker Change: You're right, we're pretty proud of what the team has done with the ETF franchise. We're now the eighth largest provider of active ETFs in the world, period, and the third largest provider of active fixed income ETFs by Asset Hunter Management, and that's now close to 30 billion dollars.
Speaker Change: We see enormous opportunity in the ETF landscape as a wrapper.
Speaker Change: and you mentioned the fixed income landscape in particular, it's a perfect example.
We have now four fixed income ETFs.
that are above a billion dollars each.
Speaker Change: And that's not because of the wrapper only, that's because we had really great investment performance, really great portfolio managers, really great research, really great teams.
Speaker Change: who, if you look at the performance numbers, delivered really a solid performance for our clients, but they weren't in the decision set, so to speak, of our client base. It's just not something we had gone after in a very heavy manner. And the ETS allowed us to unlock that.
Speaker Change: and in fact unlock it pretty well. So we think that we have the opportunity to build on the fixed income side on ETS for sure. To your point though, that's allowed us to then enter the mindset of ETS more broadly on the active side for equities too.
Speaker Change: So, to what you noted, we've launched a couple on the equity side. There will be more launched on the equity side, because again, we're taking
Speaker Change: things that are unique and differentiated from a performance perspective, not clones, but unique and different from an investment perspective and bringing that to clients in a form factor that clients appreciate.
Speaker Change: Now a lot of that discussion is around the U.S. Now outside the U.S. you'll note the tabula acquisition that we made That's been very very
helpful and a great integration for us to work together.
Speaker Change: And we're finding that there's enormous opportunity in Europe to drive ETF growth as well. And you may have heard this on other calls, but just bear repetition. The patterns we're seeing in the European markets on ETFs is similar to what we would have seen in the U.S., call it seven or eight years ago.
Similar
Speaker Change: patterns in terms of growth, and we want to be part of the leadership there. And with Tabula, we think we can do that. We launched Japan High Conviction. We launched European High Conviction.
Speaker Change: NCF forums and most recently we launched the European version of JAAA so JCL zero. Again we think there's enormous opportunity here we want to be part of the leadership and so far we have been.
Speaker Change: Thanks for that color. It's helpful. Roger, my follow-up, I'd love to ask you about the...
Speaker Change: 2025 Outlook for expenses. So you mentioned that assumes flat markets.
Speaker Change: So, curious if you could please let us know what kind of operating leverage you'd expect in both comp ratio and on the sensitivity for non-comp to upside from market beta. Thanks.
Speaker Change: Yeah, hi Brendan. Yeah I mean you've seen that over the last two years and you know that should that would continue if markets do it to go up so our comp ratio
and it has come down.
by 1.8% over the last year.
Speaker Change: We've signalled it should go down a little bit more with flat markets, and that will continue. And the same thing in our up margin. Our up margin is up pretty significantly in percentage terms year on year. And positive markets, there is leverage in this business. We will continue to invest in the business. We've given guidance on costs.
that is
Speaker Change: positive markets and positive sentiment, it may mean you do a little bit more on cost, but there's definitely leverage in the business. So if markets were to rise, then you would expect to see leverage both on the comp ratio coming down and the op margin going up.
Speaker Change: Right, but is there any rule of thumb where, you know, 100 basis points in markets translates to blank leverage or is it not that simple?
Speaker Change: It's not quite that simple, it depends where from etc. So we'll see it as it will come.
Okay, thanks for taking my questions.
Speaker Change: The next question comes from Craig Sigintala from Bank of America. Craig, your line is open, please go ahead.
Good morning, Ali. Hope everyone's doing well.
Thanks and you too.
Speaker Change: So I don't normally say these things, but I did want to congratulate you on the successful turnaround in place, which we know is very hard in asset management. I think this actually was Janus's first positive flow year since 2009 for legacy Janus, even then it was fairly positive.
Speaker Change: Thanks, it's a team effort. We're, you know, putting one foot in front of the other and hopefully the results continue to be okay.
So, Ali, my question is on fixed income.
So investment performance currently very strong.
I think the timing's pretty perfect for duration extensions.
We're already seeing a nice lift in your flows there.
Speaker Change: We know there's many funds inside of that business and we know there's a big one driving that, but I'm curious in terms of performance, what factors and themes do you attribute the strong performance to besides just security selection?
Speaker Change: So, we are very pleased with the light that is being shone on the fixed income business.
Speaker Change: These teams, to your point, have performed extraordinarily well across many, many different strategies.
Speaker Change: 1, 3, 5, 10 year beating benchmark, 91%, 84%, 86%, 94%.
Speaker Change: Top two Morningstar quartiles, same time frames, 84%, 74%, 71%, 75%.
Speaker Change: I wish I could have gotten those types of scores in school. I mean, these are really strong.
Speaker Change: And we see it very broad. So areas like multi-asset credit, multi-sector income are there for investors who want things that are more income related, obviously.
Speaker Change: We have, obviously, to your point, the suite of fixed income ETFs, the JAAs, but also JBBs.
and others that allow institutional access.
to, well, retail access to institutional type investments.
We have very strong regional strategies.
Speaker Change: A little bit to your question, very strong in Australia, very strong in some parts of Europe. We have the emerging market debt strategy and really good high yield in other strategies let alone some of the private credit stuff that we're doing. So it's fairly broad based.
Speaker Change: It does come certainly from security selection, but also allocation depending on the strategy between asset classes, between regions. Certainly, if you've read our themes for 2025, we believe, for example, that
Speaker Change: going to the Securitize marketplace still sees a lot of opportunity for investors as opposed to kind of a typical corporate IG.
Speaker Change: So, we still see opportunities in a lot of our fixed income portfolio, and we're again very pleased that people are paying attention to it, are willing to invest, and we are, and we want to grow that business quite substantially.
Ali Dibadj: Thank you, Ali. And just sticking with fixed income, but flipping the conversation from performance to flows. What is the outlook for 2025, just given the likely better industry flow outlook? You're very good performance. You have money in motion from a very large competitor. And you also ended the year with a lot of momentum heading into the fourth quarter.
Ali Dibadj: Well, we're going to continue to, as I said before, put one foot in front of the other and try and deliver on flows. And the pride that we have on delivering on flows isn't just for these types of calls, right? It's most importantly, because that allows us to deliver for more clients and more end clients.
to add to the 60 million clients.
that we have around the world.
Ali Dibadj: but also obviously for our clients in the institutional world, whether they be insurance clients, as we're trying to grow those, or others. So, look, we're going to control, we can control and put one foot in front of the other, but hopefully the momentum, as you suggested in your question, continues for us.
Thank you.
Speaker Change: Next question comes from Bill Katz at TD Cowan. Bill, your line is open, please go ahead.
Bill Katz: Thank you very much, and I appreciate the update and the guidance. Just thinking about the development you've seen in the protect and grow side, particularly on the intermediary, which is the biggest swing factor for your business.
Speaker Change: and then on the institutional side, the incremental opportunity. I was wondering if you could just unpack and maybe click in one more layer deeper.
Speaker Change: In terms of what you're hearing from either gatekeepers or sort of on-the-ground financial advisors that is allowing the acceleration of growth and sales, both net and gross.
Speaker Change: Is it just the Brand Act campaign, is it the efficacy, is it the marketing, all of the above, the data?
Ali Dibadj
Speaker Change: Thanks Bill. So let me tackle that in two buckets and Roger can jump in and redirect anywhere.
Speaker Change: First from the intermediary side, you're right. We're very pleased about the momentum the partnership we've built
Speaker Change: with our clients and quote unquote gatekeepers, but really we see them as clients.
And I think that the U.S. is the first.
Speaker Change: Place, as you know that we've really implemented some of the changes, and we're trying to broaden that out.
Speaker Change: and just a double click to your words what we did in the U.S.
Speaker Change: is we first and foremost made sure that we had the right people in the right seats. There were a lot of changes in the management teams that we put in place there.
Speaker Change: was step one. We then want to make sure that, you know, production levels were high and production levels were high not just in terms of people running around and making every single call but making sure that the data was supportive.
Speaker Change: of whom they were calling, how often, with what information. So there's a real big data exercise that I mentioned earlier on, I think will continue and help there. So the productivity was much higher.
Speaker Change: Yes, the promotional element or the marketing element helped quite a bit putting us on people's radar screens, but also we have to tie a compensation to growth.
Speaker Change: for our new batch of people or somewhat changed batch of people. And then of course, we have to make sure the product was right. And that's not just product in terms of
Speaker Change: you know, the investment strategy, that's also in terms of communication, that's also in terms of the client service, that's also in terms of being there when a client wants to talk to us, a portfolio manager, me, whoever.
Speaker Change: So it's the compounding effect of all of that that we've put together that we started in the U.S. And clearly you've seen what's happened in the U.S. there, six consecutive quarters of positive flows now.
Speaker Change: You know, the 2024 gross sales was up 36 percent, organic growth was up 7 percent.
Speaker Change: But to your point, it's more broad on intermediary than just the U.S. now. EMEA and LATAM intermediary channels are improving quite a bit. LATAM was positive for 2024. The EMEA region was positive flows for the second half of the year.
Speaker Change: So we're starting to see this this brew and I think it's all of those things To answer your questions directly all of those things together that we certainly hope Coupled always always with performance that are helping us do well in intermediary channels really around the world
on the institutional side.
Thank you.
Speaker Change: We are encouraged by what we've seen from Afloat's perspective in this past quarter and a couple quarters ago. We are continuing to try to build a pipeline, in particular for Q4. As Roger mentioned, there are 10 distinct fundings between $100 million and $500 million.
Speaker Change: that continue to support our efforts of getting out there and finding new institutional clients and also importantly as you mentioned partnering with consultants.
Speaker Change: who see the stability that we've brought to to the firm and our investment teams as well as
Speaker Change: the lack of stagnation or ability to change and be innovative in the areas as well. And that success has been across regions, across asset classes so far.
Speaker Change: So if you think about positive flows in the fourth quarter, Asia ex-Japan, Japan, Australia, Latin, Middle East, North America, also positive flows on the institutional channel.
Speaker Change: Now, I'm not saying our pipeline is always going to be perfect and we're always going to be positive flows institutional But certainly the the leading indicators are positive from RFP perspective as well and look
Speaker Change: Could we chase AUM? We could. Not all AUM is created equally.
We want to be mindful of a fee rate.
Speaker Change: but but fee rate is really just a proxy of profitability. So if there are mandates in the institutional world
Speaker Change: that have lower fee rates but are more profitable, those are things we will look at as well. And now we have the data to be able to make sure that's the case. So on the institutional side, we'll continue to fill you in on more details as we progress through the year.
Speaker Change: Okay, just as a follow-up, you mentioned the M&A story a little bit. I was just sort of wondering...
Speaker Change: A couple of deals you are integrating into the new year that seems to be going on very well. You are generating a ton of free cash flow. Your payout rate is only about 70%.
Speaker Change: So how do we think about the opportunity on the inorganic side, and I'm wondering if you could also talk about the possibility of beefing up your ownership of Privacore, which could then potentially increase your flow profile. Thank you.
Speaker Change: So let me start with the first one and I'll hand over on Privacore to Roger. The M&A pipeline is is very robust, I think for everybody in the industry, frankly. We will continue to buy, build, or partner to support our strategy to
Speaker Change: support protect and grow to support amplify and certainly to support diversify and we've shown that but we're going to be very client led
Speaker Change: and all the M&A that we do. We do a lot of diligence on the companies and it's not just dollars and cents and numbers on spreadsheets. It's a lot of time with the management teams and making sure they're cultural fit as well.
Speaker Change: is there. That's one of the things that's been very important with the acquisitions and the partnerships we've built so far. We got what we expected from a cultural perspective, which, knock on wood, is very strong, let alone from a dollars and cents perspective. So we're going to be very, very disciplined there.
Speaker Change: I don't have a sense of timing kind of underlying the spirit of the question of when M&A happens. I do know we're integrating these businesses now and we're quite busy doing that.
Speaker Change: But over time, if we see things that are opportune for us, we're going to partner with folks who want to grow with us and partner with folks that think that we're a better home for them.
Speaker Change: Some great relationships being built now in the warehouses and the broker dealers and the RIAs.
Speaker Change: So as you say, we own 49%. We're in active dialogue about the strategic options for that.
Speaker Change: That may include potentially extending the exercise window to by the remaining 51 percent but again we'll talk about that over time but we remain very excited about
Ali Dibadj: The privates that we're doing in a number of ways, obviously the acquisitions that Ali's talked about, but also Privacore.
Speaker Change: The next question comes from Ken Worthington at JP Morgan. Ken, your line is open, please go ahead.
Ken Worthington: Hi, good morning. Thanks for taking the question. First, I'll start.
Ken Worthington: The presentation you guys have put together is very helpful, so thank you for that. In terms of questions, maybe starting with fee rate, you've been able to maintain and improve the fee rate for the last seven quarters, so almost two years. If I look at mix, I assume strong equity markets over the last two years.
Ken Worthington: have had some positive contribution to that fee rate. I'll call it complementing, I think, your commitment to being disciplined about pricing. If 2025 experiences more normal equity and fixed income market returns,
Ken Worthington: What do you expect the fee rate to do? And I know there's a ton of puts and takes, which is why I asked the question. You've got new products, you've got transactions, you've got certain ramps. What is your sense? Does it continue to stay flat here, or does it edge one direction or the other?
Speaker Change: Yeah, thanks, Ken. And you're quite right, you know, a positive equity market does help the fee rate.
Speaker Change: You know, by asset class, fee rates aren't moving that much. You know, obviously we have had significant growth in securitized, and the fixed income average rate would have come down a little bit.
Speaker Change: but from here it will depend on the growth from here and as Ali's talked about we've got a range of things we're selling.
So it is active product we're selling at active prices.
Speaker Change: the right active prices for the right product. But that ranges from, you know, enhanced index through to hedge funds. So it will depend on the mix.
Speaker Change: And obviously we're also selling things now more in the alternative space. So you've started to see.
the VPC fee rate come in.
Speaker Change: Obviously, as we look to grow that over time, that will increase the fee rate. But, yeah, broadly, you know, the fee rates come off one percent, sorry, one basis point over two years. Yeah, broadly flattish.
Speaker Change: Okay, so, okay, thank you. I'll try some phishing here on Animoy. You're managing their tokenized fund through, I assume, a sub-advised relationship. You called this out.
Speaker Change: This seems like it could be interesting. I guess the question is, why take on this business?
Speaker Change: It's hard to think that this is a a big money generator. So I look to blockchain and tokenization. Do you have more interest in that sort of technology? Like is there something underlying your willingness to kind of take on this business?
Thanks for the question and for noticing it.
Speaker Change: Let me start with what this is and then expanding to the last part of your question.
So, so just for everybody's
knowledge.
Speaker Change: Animoid is effectively an asset manager that is very much in the tokenized world, and Centrifuge is the sort of platform that does the tokenization underneath it for asset managers. It digitizes, manages, and distributes funds.
that are chain focused.
Speaker Change: And the need that has become present is many institutional companies have on their balance sheet tokenized, you know, coins or currencies. And most of what's happened is people have used stablecoin to do that.
Speaker Change: And stablecoin doesn't have a yield, and that's okay when there is no yield, but now that there is a yield, many of these institutional players, and some of them have very, very large balance sheets, as it sounds like, Ken, you may know, are looking for other ways in the tokenized landscape to get yield. Stablecoins don't give them that.
Speaker Change: So they've looked for an opportunity, and Animoy is providing that opportunity with the centrifuge backbone to provide, for example, treasuries.
Speaker Change: which have yield. And guess what? We know how to purchase and manage those.
And so you're exactly right, we're in that ecosystem.
Speaker Change: And when they're in that ecosystem, because there's a need for a tokenized asset manager or tokenized fund for us to be supporting a client, a client view and a client need to have it. Now, let me take a little bit of a step back to your point of why we are in this. And I don't want to say this.
Speaker Change: Too loudly, I guess but but innovation is actually at the core of of our corporate strategy
blockchain readiness and tokenization are ways for us to amplify
Speaker Change: protect and grow and also diversify our businesses. And we do think.
Speaker Change: This collaboration is critical for us to be in the distributed ledger technology world, to learn about it, and to bring it perhaps forward for asset managers.
Speaker Change: I think if you take a step way back in our philosophy, we do think
Speaker Change: to the last part of your question, that eventually there will be complete fungibility between private and public, liquid and illiquid assets, hard and soft assets. And if we can learn about that in this manner with two fantastic partners, we're willing to do that.
Speaker Change: and we want to be in fact one of the leaders and at the forefront of this. To your point, it's not a huge tax on our system, it's not a huge cost to us, but it's a lot of learning that we can bring to bear and hopefully be able to bring that for a broader set of clients.
Okay, awesome. Thank you so much for taking the questions.
Speaker Change: The next question comes from Alex Blowstein from Goldman Sachs. Alex, your line is open, please go ahead.
Alex Blowstein: Hey, good morning. Thank you. Just hoping to double-click into a couple of strategic areas you guys talked about. I guess one being European ETF marketplace, clearly nice developments there. Could you spend a minute on sort of the economics in that market relative to the U.S. market with respect to things like distribution costs and fee-sharing arrangements, etc.?
Alex Blowstein: Sure, it's a very nascent market and so the pool is quite small, but it's expected to grow quite significantly.
Roger Thompson: huge economic differentiation between the U.S. and Europe from an ETF distribution perspective at all because these are, as Roger was saying a second ago to the fee rate question, active.
strategies within these ETF wrappers.
Roger Thompson: Part of the reason we brought Tabula on board and are partnering with them is because they're already very well established.
in the marketplace.
Roger Thompson: you know, 10 plus regions, 10 plus exchanges. And that is an important part of the ecosystem that we as Janice Henderson did not have.
Roger Thompson: organic opportunities to get into unless we were going to take a lot of time. So Tableau is helping us with that. We're not seeing real big economic differences on a per unit cost perspective, but of course, of course, maybe it's your question, the market is a smaller market.
Speaker Change: Yeah, I got you. That makes sense. On your point about acquisition pipeline, and you sounded obviously like it's quite busy. It's busy for a lot of folks. You remain disciplined, but what are the areas that you feel are more likely to materialize in an actual transaction, either in terms of geography or product base?
Speaker Change: wise across asset classes. There's a lot of interesting opportunities out there, but again, we want to make sure that they're right opportunities and that we can digest them appropriately and that they have the right culture.
Speaker Change: We can always support across Protect & Grow, across Amplify, and across Diversify in businesses that we currently have, but also businesses that we're looking to get into. Clearly in the past, we've talked about privates, we've talked about geographic expansions, we've talked about ETFs.
Speaker Change: The next question is from Dan Fallon at Jefferies. Dan, please go ahead, your line is open.
Thanks. Good morning.
Dan Fallon: I wanted to follow up, Roger, on your guidance. Obviously, flat AUM and flat markets I get, but performance fees are another attribute that, you know, as we think about 2025, have the potential to improve given some of the performance as well as it looks like.
Speaker Change: Above high watermarks on some of the other strategies, so how should we think about performance fees into 2025 given what you know today and how that might translate into the expense profile and guidance you've given?
Speaker Change: I guess the only thing that we obviously know is what's rolling off so the US fulcrum fees you know if you if you trailed off the three years and you added you added average performance for the last three years
then the U.S. Mutual Fund Performance Fees.
would be sort of negative high single digits.
Thank you very much.
Speaker Change: Now that would be a meaningful improvement from the negative $39 million.
Speaker Change: In in 24, so that's one piece of performance feed on the other side. We obviously have a range of things
of both Long Only Funds and Absolute and Hedge Funds.
Speaker Change: that are one year performance and can be it can be zero or can be big as we as we know. I guess the thing I would say in those is it is a range, it is a portfolio.
We have about
Speaker Change: But I can't tell you what it will be because I can't tell you what performance is. Relating to what that does for margin, they obviously have comp associated with them but they are accretive, performance fees are accretive to our margin.
Speaker Change: Okay. And in the, I guess, just following up on what's embedded in your guidance, is the, any improvement in the mutual fund side and kind of embedded, implied in the guidance you've given for the ranges for 2025?
Speaker Change: Yes, that's right. So yeah, we model out as you do the US mutual funds, and we make a reasonable assumption as to what might happen elsewhere. But as I say, I don't know what future performance will be.
Speaker Change: The next question comes from Mike Brown at Wells Fargo. Mike, your line is open, please go ahead.
Great. Good morning.
Speaker Change: The flow story at JAAA and the tangential products have been very, very strong.
Speaker Change: I just wanted to ask a little bit about the broadening out by client type. So, Ali, you alluded to the fact that you're seeing kind of broader institutional use of the product. I want to just ask about kind of what inning that's in, in your view, and then are you seeing any increasing competitive pressure just given the success of the product and some of the new product launches that have come to market?
Hey Mike, thanks for the question.
Speaker Change: from a percentage growth perspective, you know, across the board, for us, at least, it's up quite significantly, 30, 40.
Speaker Change: high 40s type percent around the world on average. So we see that. We see consultants giving us more and more upgrades and more and more positive momentum.
Speaker Change: I think when we're looking at it, we've never had as many.
positive buy ratings or whatever the equivalent is.
Speaker Change: on our strategies at the firm. So things are just starting, I would say. And and look, we we certainly hope we can deliver.
Speaker Change: and they're starting to vote with their feet. But I think it's very, very early days on that.
on that front.
From a competitive perspective.
Speaker Change: We're not really seeing a lot of pressure from a competitive perspective.
Speaker Change: on fees or anything like that. Look, this is a very competitive environment. We have very able competitors. Everybody's scrapping in a business that isn't growing very well, right? We're all very proud of our organic growth rate, but remember, it's still in the very, very low single-digit numbers. So it's a fight. And we certainly want to deliver the best we can for our clients to get there.
Speaker Change: I will give you the example very specifically around some of the ETF launches that we've had.
Speaker Change: You know, we continue to deliver on what our clients' needs are and, you know, this industry is like any other industry, like your industry, like any industry, if you deliver on what your clients want, they will pay fair and reasonable prices for it. If you're delivering something that they don't want or you fail, then you have pressure.
Speaker Change: And so it's again, the whole team effort for us to come together and deliver for our clients and in that manner, hopefully keep them happy and and keep our rates there.
Speaker Change: Our final question today comes from Michael Cypress from Morgan Stanley. Michael, your line is open, please go ahead.
Michael Cypress: Great, thanks. Good morning. Thanks for squeezing me in here. I just wanted to come back.
Michael Cypress: to a comment, Ali, you made about innovation at the core of Janice Henderson's corporate strategy. I was hoping maybe you could talk about how you're thinking about and investing in technology to enhance your investment engines and support alpha generation. How do you see that evolving in the near term versus looking out more longer term?
Michael Cypress: So thanks for the question. We, as we've mentioned before, and you saw some of the results in Q4, continue to invest in the business, both from a technology perspective, but also from a people perspective, from a capital perspective, and otherwise. When it comes to specifically on technology, we have a team.
Michael Cypress: They have day jobs, but we have a team that comes together and thinks about disruptive financial technologies or DFT. Shout out to them.
Michael Cypress: if they're listening to this call. Really thoughtful group of folks who keep an eye on what's going on externally, not just in our industry, but in other industries, and bring that to bear within our organization.
Michael Cypress: And they bring it to bear really in three big buckets. One, exactly as you described it, is how can we make more efficient, make more productive, deliver better results for clients on the investment side.
process side of things.
Michael Cypress: ingesting a lot of data or getting quicker access to information, etc.
Michael Cypress: The second piece that we have is investing on how to best serve our clients.
Michael Cypress: , . . . . . . . . . . . .
Michael Cypress: How do we 10 times our people? We firmly believe that technologies like AI will help our people to do better and be more efficient and human plus AI is better than AI alone.
Michael Cypress: and so that's somewhere we're investing as well. So across the board, not just AI, but broad technology, those are the areas we're investing in. And look, you've seen that in our P&L. When Roger releases the purse strings a little bit, he looks for ROI, but the ROI is there and we continue to deliver on that.
Speaker Change: And maybe just on that latter point on AI, maybe we could just double click on that for just a moment. Maybe you could talk a little bit about how you're using and thinking about using generative AI and LLM tools.
Speaker Change: across the organization. I think you mentioned an RFP use case broadly. You know, how many use cases have you guys identified? How do you see that evolving in terms of putting them into production over the next year or two?
Speaker Change: and as you think about, you know, over the near or medium term, you know, what, how meaningful could this be to top versus bottom line results?
Speaker Change: So, we're early days, less than a handful of things that are actually in production or being used right now, I would say.
Speaker Change: We clearly like, frankly, everybody else has their own version of a chat GPT or we call it chat JHI. We have those types of tools that are there for sure. So, I don't really count that, but things like the RFP tool and that team has worked tirelessly in improving that. I mean, the good news.
Speaker Change: is that we have capacity constraints on our RFP team and so if we can give them tools to improve the speed and accuracy at least of the first cut of RFPs that's something that has been quite meaningful and so that is something thanks for noting it in the prepared remarks that we mentioned we think that has a lot of opportunity to help you know ten times our people.
Speaker Change: But I mentioned also work that's going on, for example, in the intermediary world. So we have an AI powered distribution intelligence platform, which which looks at taking insights.
Ali Dibadj
Speaker Change: dollars and cents wise how impactful it's going to be. What I do know is that there's a
Speaker Change: a clear need for extra productivity and capacity within our organization, and we're trying to provide that with some of these AI tools. AI tools, that's something we're building internally, but a lot of them we're partnering externally with as well. I think everybody in the industry is probably thinking about this, and if not, they probably should.
Speaker Change: We have no further questions, so I'll hand the call back to Ali Dibadj for some concluding remarks.
Thanks Adam.
Ali Dibadj: I just wanted to end by thanking our clients for trusting us with their capital and the capital of these 60 million end clients that directly or indirectly rely on Janus Henderson. I wanted to thank everybody at Janus Henderson across the organization, whether you're in IT and Ops working on AI or support functions or client groups or investments.
Ali Dibadj: These are a strong set of results. We're putting one foot in front of the others I've said a couple times internally and externally and we want to deliver for our clients, our shareholders, and all of our stakeholders. So bye for now and talk to you next time.
Ali Dibadj: This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.
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