Acadian Asset Management Inc

Previous wording

Unless we state otherwise or the context otherwise requires, references in this Quarterly Report on Form 10-Q to the “Company”, “BrightSphere” or “BSIG” refer to BrightSphere Investment Group Inc., and references to “we,” “our” and “us” refer to BSIG and its consolidated subsidiaries, excluding discontinued operations. References to the holding company or “Center” excluding our Affiliate refers to BrightSphere Inc., or “BSUS,” a Delaware corporation and wholly owned subsidiary of BSIG. Unless we state otherwise or the context otherwise requires, references in this Quarterly Report on Form 10-Q to “Affiliates” or an “Affiliate” refer to the asset management firms in which we have or previously had an ownership interest. References in this Quarterly Report on Form 10-Q to “Acadian” refer to Acadian Asset Management LLC, our sole Affiliate. References in this Quarterly Report on Form 10-Q to “OM plc” refer to Old Mutual plc, our former parent. None of the information in this Quarterly Report on Form 10-Q constitutes either an offer or a solicitation to buy or sell Acadian’s products or services, nor is any such information a recommendation for Acadian’s products or services.

Current wording

Unless we state otherwise or the context otherwise requires, references in this Quarterly Report on Form 10-Q to the “Company”, “Acadian Asset Management”, “Acadian” or “AAMI” refer to Acadian Asset Management Inc., and references to “we,” “our” and “us” refer to AAMI and its consolidated subsidiaries. References to Hold Co refer to AAMI and its subsidiaries excluding Acadian Asset Management LLC (“Acadian LLC”). Unless we state otherwise or the context otherwise requires, references in this Quarterly Report on Form 10-Q to “OM plc” refer to Old Mutual plc, our former parent. None of the information in this Quarterly Report on Form 10-Q constitutes either an offer or a solicitation to buy or sell Acadian LLC’s products or services, nor is any such information a recommendation for Acadian LLC’s products or services.

Previous wording

•Overview provides a brief description of our business. It includes information on our reporting segment and underlying Affiliate, a summary of The Economics of Our Business and an explanation of How We Measure Performance using a non-GAAP measure which we refer to as economic net income, or ENI. This section also provides a Summary Results of Operations and information regarding our Assets Under Management by strategy, client type and client location, and net flows by segment, client type and client location.

Current wording

•Overview provides a brief description of our business. It includes information on our reporting segment, a summary of The Economics of Our Business and an explanation of How We Measure Performance using a non-GAAP measure which we refer to as economic net income, or ENI. This section also provides a Summary Results of Operations and information regarding our Assets Under Management by strategy, client type and client location, and net flows by segment, client type and client location.

Previous wording

•U.S. GAAP Results of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 includes an explanation of changes in our U.S. GAAP revenue, expense and other items for the three and nine months ended September 30, 2024 and 2023, as well as key U.S. GAAP operating metrics.

Current wording

•U.S. GAAP Results of Operations for the Three Months Ended March 31, 2025 and 2024 includes an explanation of changes in our U.S. GAAP revenue, expense and other items for the three months ended March 31, 2025 and 2024, as well as key U.S. GAAP operating metrics.

Previous wording

•Non-GAAP Supplemental Performance Measure — Economic Net Income and Segment Analysis includes an explanation of the key differences between U.S. GAAP net income and ENI, the key measure management uses to evaluate our performance. This section also provides a reconciliation between U.S. GAAP net income attributable to controlling interests and ENI for the three and nine months ended September 30, 2024 and 2023, as well as a reconciliation of key ENI operating items including ENI revenue and ENI operating expenses. This section also provides key non-GAAP operating metrics. In addition, this section provides segment analysis for our business segment.

Current wording

•Non-GAAP Supplemental Performance Measure — Economic Net Income and Segment Analysis includes an explanation of the key differences between U.S. GAAP net income and ENI, the key measure management uses to evaluate our performance. This section also provides a reconciliation between U.S. GAAP net income attributable to controlling interests and ENI for the three months ended March 31, 2025 and 2024, as well as a reconciliation of key ENI operating items including ENI revenue and ENI operating expenses. This section also provides key non-GAAP operating metrics. In addition, this section provides segment analysis for our business segment.

Previous wording

Under U.S. GAAP, Acadian is consolidated into our financial statements. We may also be required to consolidate Acadian’s sponsored investment entities, or Funds, due to the nature of our decision-making rights, our economic interests in these Funds or the rights of third party clients in those Funds.

Current wording

Under U.S. GAAP, Acadian LLC is consolidated into our financial statements. We may also be required to consolidate Acadian LLC’s sponsored investment entities, or Funds, due to the nature of our decision-making rights, our economic interests in these Funds or the rights of third-party clients in those Funds.

Previous wording

Our profitability is affected by a variety of factors including the level and composition of our average assets under management, or AUM, fee rates charged on AUM and our expense structure. We earn management fees based on assets under management. Approximately 80% of our management fees for the three months ended September 30, 2024 were calculated based on average AUM (calculated on either a daily or monthly basis) with the remainder of our management fees calculated based on period-end AUM. Changes in the levels of our AUM are driven by market investment performance and net client cash flows. We may also earn performance fees when certain accounts differ in relation to relevant benchmarks or exceed or fail to exceed required returns. Approximately $20 billion, or 16%, of our AUM are in accounts with incentive fee features in which we participate in the performance fee. The majority of these performance fees are calculated based on value added over the relevant benchmarks on a rolling one-year basis.

Current wording

Our profitability is affected by a variety of factors including the level and composition of our average assets under management, or AUM, fee rates charged on AUM and our expense structure. We earn management fees based on assets under management. The majority of our management fees are calculated based on average AUM (calculated on either a daily or monthly basis) with the remainder of our management fees calculated based on period-end AUM. Changes in the levels of our AUM are driven by market investment performance and net client cash flows. We may also earn performance fees when certain accounts differ in relation to relevant benchmarks or exceed required returns. Approximately $20 billion, or 16%, of our AUM are in accounts with incentive fee features in which we participate in the performance fee. The majority of these performance fees are calculated based on value added over the relevant benchmarks on a rolling one-year basis.

Previous wording

Our largest expense item is compensation and benefits paid to our employees, which consists of both fixed and variable components. Fixed compensation and benefits represents base salaries and wages, payroll taxes and the costs of our employee benefit programs. Variable compensation, calculated as described below, may be awarded in cash, equity, or profit interests.

Current wording

Our largest expense item is compensation and benefits paid to our employees, which consists of both fixed and variable components. Fixed compensation and benefits represents base salaries and wages, payroll taxes and the costs of our employee benefit programs. Variable compensation is comprised of variable compensation at both Hold Co and Acadian LLC. Hold Co variable compensation includes discretionary annual bonuses and may be paid in the form of cash or AAMI equity. Acadian LLC variable compensation, calculated as described below, may be awarded in cash, equity, or profit interests.

Previous wording

The arrangement in place with Acadian results in the sharing of economics between BSUS and Acadian’s key management personnel using a profit-sharing model. Profit sharing affects two elements within our earnings: (i) the calculation of variable compensation and (ii) the level of Acadian’s equity or profit interests distribution to its employees.

Current wording

The arrangement in place with Acadian LLC results in the sharing of economics between us and key management personnel using a profit-sharing model. Profit sharing affects two elements within our earnings: (i) the calculation of variable compensation and (ii) the level of Acadian LLC’s equity or profit interests distribution to its employees.

Previous wording

Variable compensation is the portion of earnings that is contractually allocated to Acadian employees as a bonus pool, typically representing a percentage of earnings before variable compensation, which is measured as revenues less fixed compensation and benefits and other operating and administrative expenses. Profits after variable compensation are shared between us and Acadian key employee equity holders according to our respective equity or profit interests ownership. The sharing of profits in this manner ensures that the economic interests of Acadian key employees and those of BSUS are aligned, both in terms of generating strong annual earnings as well as investing those earnings back into the business in order to generate growth over the long term. We view profit sharing as an attractive operating model, as it allows us to share in the benefits of operating leverage as the business grows, and ensures all equity and profit interests holders are incentivized to achieve that growth.

Current wording

Variable compensation includes the portion of earnings that is contractually allocated to Acadian LLC employees as a bonus pool, typically representing a percentage of earnings before variable compensation, which is measured as revenues less fixed compensation and benefits and other operating and administrative expenses. Profits after variable compensation are shared between us and Acadian LLC key employee equity holders according to our respective equity or profit interests ownership. The sharing of profits in this manner ensures that the economic interests of Acadian LLC key employees and ours are aligned, both in terms of generating strong annual earnings as well as investing those earnings back into the business in order to generate growth over the long term. We view profit sharing as an attractive operating model, as it allows us to share in the benefits of operating leverage as the business grows, and ensures all equity and profit interests holders are incentivized to achieve that growth.

Previous wording

Equity or profit interests owned by Acadian key employees are awarded as part of their variable compensation arrangement. Over time, Acadian key employee-owned equity or profit interests are recycled from one generation of employee-owners to the next, either by the next generation purchasing equity or profit interests directly from retiring principals, or by Acadian key employees forgoing cash bonuses in exchange for the equivalent value in Acadian equity or profit interests. The recycling of equity or profit interests is often facilitated by BSUS; see “—U.S. GAAP Results of Operations—U.S. GAAP Expenses—Compensation and Benefits Expense” for a further discussion.

Current wording

Equity or profit interests owned by Acadian LLC key employees are awarded as part of their variable compensation arrangement. Over time, Acadian LLC key employee-owned equity or profit interests are recycled from one generation of employee-owners to the next, either by the next generation purchasing equity or profit interests directly from retiring principals, or by key employees forgoing cash bonuses in exchange for the equivalent value in Acadian LLC equity or profit interests. The recycling of equity or profit interests is often facilitated by Hold Co; see “—U.S. GAAP Results of Operations—U.S. GAAP Expenses—Compensation and Benefits Expense” for a further discussion.

Previous wording

In measuring and monitoring the key components of our earnings, our management uses a non-GAAP financial measure, ENI, to evaluate the financial performance of, and to make operational decisions for, our business. We also use ENI to make resource allocation decisions, determine appropriate levels of investment or dividend payout, manage balance sheet leverage, determine variable compensation and Affiliate equity distributions, and incentivize management. It is an important measure in evaluating our financial performance because we believe it most accurately represents our operating performance and cash generation capability.

Current wording

In measuring and monitoring the key components of our earnings, our management uses a non-GAAP financial measure, ENI, to evaluate the financial performance of, and to make operational decisions for, our business. We also use ENI to make resource allocation decisions, determine appropriate levels of investment or dividend payout, manage balance sheet leverage, determine variable compensation and Acadian LLC equity distributions, and incentivize management. It is an important measure in evaluating our financial performance because we believe it most accurately represents our operating performance and cash generation capability.

Previous wording

ENI differs from net income determined in accordance with U.S. GAAP as a result of both the reclassification of certain income statement items and the exclusion of certain non-cash or non-recurring income statement items. In particular, ENI excludes non-cash charges representing the changes in the value of Affiliate equity and profit interests held by Affiliate key employees, the results of discontinued operations which are no longer part of our business, restructuring costs, capital transaction costs, seed capital and co-investment gains, losses and related financing costs and that portion of consolidated Funds which are not attributable to our stockholders.

Current wording

ENI differs from net income determined in accordance with U.S. GAAP as a result of both the reclassification of certain income statement items and the exclusion of certain non-cash or non-recurring income statement items. In particular, ENI excludes non-cash charges representing the changes in the value of Acadian LLC equity and profit interests held by key employees, the results of discontinued operations which are no longer part of our business, restructuring costs, capital transaction costs, seed capital and co-investment gains, losses and related financing costs and that portion of consolidated Funds which are not attributable to our stockholders.

Previous wording

ENI expenses are calculated to reflect all usual expenses from ongoing continuing operations attributable to our stockholders. Expenses included within ENI differ from U.S. GAAP expenses in that they exclude amounts from consolidated Funds which are not attributable to our stockholders, revaluations of Affiliate key employee owned equity and profit interests, amortization and impairment of acquired intangibles and other acquisition-related items, and certain other non-cash expenses.

Current wording

ENI expenses are calculated to reflect all usual expenses from ongoing continuing operations attributable to our stockholders. Expenses included within ENI differ from U.S. GAAP expenses in that they exclude amounts from consolidated Funds which are not attributable to our stockholders, revaluations of Acadian LLC key employee owned equity and profit interests, amortization and impairment of acquired intangibles and other acquisition-related items, and certain other non-cash expenses.

Previous wording

The following table summarizes our unaudited results of operations for the three and nine months ended September 30, 2024 and 2023:

Current wording

The following table summarizes our unaudited results of operations for the three months ended March 31, 2025 and 2024:

Previous wording

Net client cash flows and revenue impact of net client cash flows for all periods include reinvested income and distributions. Reinvested income and distributions represent investment yield that is reinvested back into the portfolios as opposed to distributed as cash.

Current wording

Net client cash flows for all periods include reinvested income and distributions. Reinvested income and distributions represent investment yield that is reinvested back into the portfolios as opposed to distributed as cash.

Previous wording

i. Sub-advisory, which includes assets managed for underlying mutual fund and variable insurance products which are sponsored by insurance companies and mutual fund platforms, where the end client is typically retail;

Current wording

i. Sub-advisory, which includes assets managed for third-party mutual funds sponsored by platforms in the U.S. or abroad, where the end client is typically retail;

Previous wording

ii. Institutional, which includes assets managed for public/government pension funds, including U.S. state and local government funds and non-U.S. sovereign wealth, local government and national pension funds; also includes corporate and union-sponsored pension plans; and

Current wording

ii. Institutional, which includes assets managed for public/government pension funds and other investments, including U.S. state and local government funds and non-U.S. sovereign wealth, local government and national investments; also includes corporate and union-sponsored pension plans and other investments; and

Previous wording

At September 30, 2024, our total assets under management were $120.3 billion, an increase of $7.7 billion, or 6.8%, compared to $112.6 billion at June 30, 2024 and an increase of $22.9 billion, or 23.5%, compared to $97.4 billion at September 30, 2023. The increase in assets under management compared to September 30, 2023 was driven by the equity market appreciation in the last twelve months. The change in assets under management during the three months ended September 30, 2024 reflects net market appreciation of $7.2 billion, and net inflows of $0.5 billion. The change in assets under management during the nine months ended September 30, 2024 reflects net market appreciation of $15.7 billion and net inflows of $0.9 billion. Market appreciation or depreciation reported in current and prior periods includes changes in equity prices, as well as the impact from exchange rate fluctuations on our foreign-denominated AUM. Given a substantial portion of our AUM is denominated in foreign currencies, foreign exchange rate movements during the period can impact AUM when the strength of the U.S. dollar changes relative to other currencies.

Current wording

At March 31, 2025, our total assets under management were $121.9 billion, an increase of $4.6 billion, or 3.9%, compared to $117.3 billion at December 31, 2024 and an increase of $11.5 billion, or 10.4%, compared to $110.4 billion at March 31, 2024. The increase in assets under management compared to March 31, 2024 was driven by the equity market appreciation and positive NCCF in the last twelve months. The change in assets under management during the three months ended March 31, 2025 reflects net market appreciation of $0.8 billion, and net inflows of $3.8 billion. Market appreciation or depreciation reported in current and prior periods includes changes in equity prices, as well as the impact from exchange rate fluctuations on our foreign-denominated AUM. Given a substantial portion of our AUM is denominated in foreign currencies, foreign exchange rate movements during the period can impact AUM when the strength of the U.S. dollar changes relative to other currencies.

Previous wording

For the three months ended September 30, 2024, our net flows were $0.5 billion compared to $(0.5) billion for the three months ended September 30, 2023. Reinvested income and distributions of $0.9 billion and $0.9 billion are reflected in the net flows for the three months ended September 30, 2024 and September 30, 2023, respectively. For the three months ended September 30, 2024, the annualized revenue impact of the net flows was $6.9 million compared to $(0.3) million for the three months ended September 30, 2023. Gross inflows of $3.1 billion in the three months ended September 30, 2024 yielded approximately 57 bps compared to $2.5 billion yielding approximately 51 bps in the year-ago period. Gross outflows of $(3.5) billion yielded approximately 40 bps in the three months ended September 30, 2024 compared to $(3.9) billion yielding approximately 42 bps in the year-ago period.

Current wording

For the three months ended March 31, 2025, our net inflows were $3.8 billion compared to $0.4 billion for the three months ended March 31, 2024. The change in net flows during the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily driven by strong gross sales, which increased to $8.8 billion in the three months ended March 31, 2025. Reinvested income and distributions of $0.8 billion and $0.8 billion are reflected in the net inflows for the three months ended March 31, 2025 and March 31, 2024, respectively.

Previous wording

Our U.S. GAAP results of operations were as follows for the three and nine months ended September 30, 2024 and 2023:

Current wording

Our U.S. GAAP results of operations were as follows for the three months ended March 31, 2025 and 2024:

Previous wording

ii. performance fees earned when our Affiliate’s investment performance over agreed time periods for certain clients has differed from pre-determined hurdles; and

Current wording

ii. performance fees earned when our investment performance over agreed time periods for certain clients has differed from pre-determined hurdles; and

Previous wording

Average basis points earned on average assets under management were 38.3 bps and 38.4 bps for the three and nine months ended September 30, 2024, respectively, and 37.6 bps and 37.9 bps for the three and nine months ended September 30, 2023. The overall weighted average fee rate increase for the three and nine months ended September 30, 2024 is the result of changes in the mix of assets under management caused by market movements and client flows.

Current wording

Average basis points earned on average assets under management were 37.9 bps for the three months ended March 31, 2025, and 38.2 bps for the three months ended March 31, 2024. The overall weighted average fee rate decrease for the three months ended March 31, 2025 is the result of changes in the mix of assets under management caused by market movements and client flows.

Previous wording

Three months ended September 30, 2024 compared to three months ended September 30, 2023: Management fees increased $16.8 million, or 17.6%, from $95.3 million for the three months ended September 30, 2023 to $112.1 million for the three months ended September 30, 2024. The increase was mainly driven by higher levels of average assets under management. Average assets under management increased 15.8%, from $100.5 billion for the three months ended September 30, 2023 to $116.4 billion for the three months ended September 30, 2024, mainly due to the positive equity market impact in the past twelve months.

Current wording

Three months ended March 31, 2025 compared to three months ended March 31, 2024: Management fees increased $10.7 million, or 10.5%, from $102.2 million for the three months ended March 31, 2024 to $112.9 million for the three months ended March 31, 2025. The increase was primarily driven by higher levels of average assets under management. Average assets under management increased 12.2%, from $107.6 billion for the three months ended March 31, 2024 to $120.7 billion for the three months ended March 31, 2025, mainly due to the positive equity market and positive net flows in the past twelve months.

Previous wording

Approximately $20 billion, or 16% of our AUM, were in accounts with performance fee features in which we participate. Performance fees are typically shared with our Affiliate key employees through various contractual compensation and profit-sharing arrangements.

Current wording

Approximately $20 billion, or 16% of our AUM, were in accounts with performance fee features in which we participate. Performance fees are typically shared with key employees through various contractual compensation and profit-sharing arrangements.

Previous wording

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023: Performance fees increased $2.1 million, from $13.9 million for the nine months ended September 30, 2023 to $16.0 million for the nine months ended September 30, 2024, primarily due to strong performance relative to benchmarks in certain strategies. Performance fees are variable and are contractually triggered based on investment performance results over agreed upon time periods.

Current wording

Three months ended March 31, 2025 compared to three months ended March 31, 2024: Performance fees increased $2.2 million, or 71.0%, from $3.1 million for the three months ended March 31, 2024 to $5.3 million for the three months ended March 31, 2025, primarily due to strong performance relative to benchmarks in certain strategies. Performance fees are variable and are contractually triggered based on investment performance results over agreed upon time periods.

Previous wording

i. compensation paid to our investment professionals and other employees, including base salary, benefits, sales-based compensation, variable compensation, Affiliate distributions, and revaluation of key employee owned Affiliate equity and profit interests;

Current wording

i. compensation paid to our investment professionals and other employees, including base salary, benefits, sales-based compensation, variable compensation, Acadian LLC key employee distributions, and revaluation of key employee-owned Acadian LLC equity and profit interests;

Previous wording

Our most significant category of expense is compensation and benefits awarded to our and our Affiliate’s employees. The following table presents the components of U.S. GAAP compensation expense for the three and nine months ended September 30, 2024 and 2023:

Current wording

Our most significant category of expense is compensation and benefits awarded to our employees. The following table presents the components of U.S. GAAP compensation expense for the three months ended March 31, 2025 and 2024:

Previous wording

(2)Sales-based compensation is paid to our Affiliate’s sales and distribution teams and represents compensation earned by our sales professionals, paid over a multi-year period, related to revenue earned on new sales. Its variability is based upon the structure of sales-based compensation due on inflows of assets under management and market-based movement in both current and prior periods.

Current wording

(2)Sales-based compensation is paid to our sales and distribution teams and represents compensation earned by our sales professionals, paid over a multi-year period, related to revenue earned on new sales. Its variability is based upon the structure of sales-based compensation due on inflows of assets under management and market-based movement in both current and prior periods.

Previous wording

(3)Variable compensation is contractually set and calculated individually for our Affiliate, plus Center bonuses. Variable compensation is usually awarded based on a contractual percentage of Affiliate ENI profits before variable compensation and may be paid in the form of cash or non-cash Affiliate equity or profit interests. With our Affiliate, we have a contractual split of performance fees between Affiliate employees and BSUS. The Affiliate’s share of performance fees, which ranges between 60%-75% of the total, is allocated entirely to variable compensation. The variable compensation earned on performance fees vests over three-years and compensation expense is recognized over that service period. Center variable compensation includes cash and our equity. Non-cash variable compensation awards typically vest over several years and are recognized as compensation expense over that service period.

Current wording

(3)Variable compensation includes the portion of earnings that is contractually allocated to Acadian LLC employees as a bonus pool, plus Hold Co bonuses. Variable compensation may be paid in the form of cash or non-cash equity or profit interests awards. We have a contractual split of performance fees between Acadian LLC employees and AAMI. Acadian LLC’s share of performance fees, which ranges between 60%-75% of the total, is allocated entirely to variable compensation. The variable compensation earned on performance fees vests over three-years and compensation expense is recognized over that service period. Hold Co variable compensation includes cash and our equity. Non-cash variable compensation awards typically vest over several years and are recognized as compensation expense over that service period.

Previous wording

(4)Affiliate key employee distributions represent the share of Affiliate profits after variable compensation that is attributable to Affiliate key employee equity and profit interests holders, according to their ownership interests. The Affiliate key employee distribution ratio at our Affiliate is calculated as Affiliate key employee distributions divided by ENI operating earnings at the Affiliate. Within our Affiliate we have a tiered equity structure, where BSUS and other classes of employee equity holders are entitled to an initial proportionate preference over profits after variable compensation, structured such that before a preference threshold is reached, there would be no required key employee distributions to the tiered equity holders, whereas for profits above the threshold, the key employee distribution amount to the tiered equity holders would be calculated based on the tiered key employee ownership percentages.

Current wording

(4)Acadian LLC key employee distributions represent the share of Acadian LLC profits after variable compensation that is attributable to key employee equity and profit interests holders, according to their ownership interests. Acadian LLC key employee distribution ratio is calculated as Acadian LLC key employee distributions divided by ENI operating earnings. Within Acadian LLC we have a tiered equity structure, where AAMI and other classes of employee equity holders are entitled to an initial proportionate preference over profits after variable compensation, structured such that before a preference threshold is reached, there would be no required key employee distributions to the tiered equity holders, whereas for profits above the threshold, the key employee distribution amount to the tiered equity holders would be calculated based on the tiered key employee ownership percentages.

Previous wording

(5)Non-cash Affiliate key employee equity revaluations represent changes in the value of Affiliate equity and profit interests held by Affiliate key employees. These ownership interests may in certain circumstances be repurchased by BSUS at a value based on a pre-determined fixed multiple of twelve-month earnings and as such a liability is carried on our balance sheet based on the expected cash to be paid. However, any equity or profit interests repurchased by BSUS can be used to fund a portion of future variable compensation awards, resulting in savings in cash variable compensation that offset the negative cash effect of repurchasing the equity. Our Affiliate equity and profit interest plans have been designed to ensure BSUS is not required to repurchase more equity than we can reasonably recycle through variable compensation awards in any given twelve-month period.

Current wording

(5)Non-cash Acadian LLC key employee equity revaluations represent changes in the value of Acadian LLC equity and profit interests held by key employees. These ownership interests may in certain circumstances be repurchased by Hold Co at a value based on a pre-determined fixed multiple of twelve-month earnings and as such a liability is carried on our balance sheet based on the expected cash to be paid. However, any equity or profit interests repurchased by Hold Co can be used to fund a portion of future variable compensation awards, resulting in savings in cash variable compensation that offset the negative cash effect of repurchasing the equity. The Acadian LLC equity and profit interest plans have been designed to ensure Hold Co is not required to repurchase more equity than we can reasonably recycle through variable compensation awards in any given twelve-month period.

Previous wording

Three months ended September 30, 2024 compared to three months ended September 30, 2023: Compensation and benefits expense increased $16.6 million, or 31.3%, from $53.0 million for the three months ended September 30, 2023 to $69.6 million for the three months ended September 30, 2024. Fixed compensation and benefits increased $1.4 million, or 6.1%, from $23.1 million for the three months ended September 30, 2023 to $24.5 million for the three months ended September 30, 2024, primarily reflecting the cost of new hires supporting our growth initiatives, and cost of living increases, partially offset by cost savings realized from restructuring at our Affiliate in late 2023. Variable compensation increased $0.9 million, or 3.2%, from $28.5 million for the three months ended September 30, 2023 to $29.4 million for the three months ended September 30, 2024. The increase was primarily attributable to higher pre-bonus profits in the three months ended September 30, 2024 at our Affiliate, partially offset by changes in deferred compensation expense earned on current and prior year performance fee revenues, of which the Affiliate’s share is determined by a contractual split and recognized as compensation expense over a vesting period. The deferred nature of the bonus earned on performance fee revenues can result in compensation expense variability that is uncorrelated to current period earnings. Sales-based compensation increased $2.1 million, or 175.0%, from $1.2 million for the three months ended September 30, 2023 to $3.3 million for the three months ended September 30, 2024, as a result of the structure of sales-based compensation programs, driven by the timing of asset inflows which trigger sales-based compensation in both current and prior periods. Affiliate key employee distributions increased $1.6 million, or 106.7%, from $1.5 million for the three months ended September 30, 2023 to $3.1 million for the three months ended September 30, 2024. Affiliate key employee distributions for certain tiers of equity are calculated after an earnings threshold is met, whereby no distributions are made to these equity holders when earnings are below the threshold. The change in Affiliate key employee distributions during the current period is driven by higher operating earnings in the current period and the leveraged nature of this distribution share. Revaluations of Affiliate equity changed by $10.6 million, reflecting fluctuations in the value of key employee ownership interests at our consolidated Affiliate, as the value of Affiliate equity decreased $(1.3) million for the three months ended September 30, 2023 and increased $9.3 million for the three months ended September 30, 2024. For certain tiers of Affiliate equity, revaluations are calculated based on earnings above a threshold. The change in the revaluation in the current period is driven by higher earnings period over period, including earnings over the threshold for certain Affiliate equity.

Current wording

Three months ended March 31, 2025 compared to three months ended March 31, 2024: Compensation and benefits expense increased $2.7 million, or 4.6%, from $58.1 million for the three months ended March 31, 2024 to $60.8 million for the three months ended March 31, 2025. Fixed compensation and benefits increased $0.8 million, or 3.4%, from $23.5 million for the three months ended March 31, 2024 to $24.3 million for the three months ended March 31, 2025, primarily reflecting cost of living increases and the cost of new hires supporting our growth initiatives. Variable compensation increased $3.8 million, or 14.4%, from $26.4 million for the three months ended March 31, 2024 to $30.2 million for the three months ended March 31, 2025. The increase was primarily attributable to higher pre-bonus profits in the three months ended March 31, 2025. The deferred nature of the bonus earned on performance fee revenues can result in compensation expense variability that is uncorrelated to current period earnings. Sales-based compensation increased $1.9 million or 118.8% from $1.6 million for the three months ended March 31, 2024 to $3.5 million for the three months ended March 31, 2025, as a result of the structure of sales-based compensation programs, driven by the timing of asset inflows which trigger sales-based compensation in both current and prior periods. Acadian LLC key employee distributions increased $0.9 million, or 40.9%, from $2.2 million for the three months ended March 31, 2024 to $3.1 million for the three months ended March 31, 2025. Acadian LLC key employee distributions for certain tiers of equity are calculated after an earnings threshold is met, whereby no distributions are made to these equity holders when earnings are below the threshold. The change in Acadian LLC key employee distributions during the three months ended March 31, 2025 is driven by higher operating earnings and the leveraged nature of this distribution share. Revaluations of Acadian LLC equity changed $(4.7) million, reflecting fluctuations in the value of key employee ownership interests at Acadian LLC, as the value of the equity plan liability increased $4.4 million for the three months ended March 31, 2024 and decreased $(0.3) million for the three months ended March 31, 2025. For certain tiers of Acadian LLC equity, revaluations are calculated based on earnings above a threshold. The change in the revaluation in the three months ended March 31, 2025 reflect changes in earnings, as well as changes in inputs used in the valuation model, including market risk assumptions and discount rates.

Previous wording

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023: General and administrative expense increased $3.9 million, or 6.6%, from $59.0 million for the nine months ended September 30, 2023 to $62.9 million for the nine months ended September 30, 2024. The increase was primarily due to higher systems, outside services and portfolio administrative costs, and our continued investment in growth initiatives and capabilities, partially offset by lower consultant costs.

Current wording

Three months ended March 31, 2025 compared to three months ended March 31, 2024: General and administrative expense increased $2.3 million, or 11.5%, from $20.0 million for the three months ended March 31, 2024 to $22.3 million for the three months ended March 31, 2025. The increase was primarily due to higher systems, outside services and portfolio administrative costs, reflecting our continued investment in growth initiatives and capabilities, foreign currency loss, partially offset by lower consultant costs.

Previous wording

Three months ended September 30, 2024 compared to three months ended September 30, 2023: Depreciation and amortization expense was flat at $4.5 million for each of the three months ended September 30, 2023 and 2024.

Current wording

Three months ended March 31, 2025 compared to three months ended March 31, 2024: Depreciation and amortization expense decreased $(0.4) million, or (8.7)%, from $4.6 million for the three months ended March 31, 2024 to $4.2 million for the three months ended March 31, 2025. The decrease was primarily attributable to the effect of certain software becoming fully depreciated.

Previous wording

Three months ended September 30, 2024 compared to three months ended September 30, 2023: Investment income (loss) changed $1.8 million, from $(0.3) million for the three months ended September 30, 2023 to $1.5 million for the three months ended September 30, 2024, reflecting the change in returns generated by seed capital investments.

Current wording

Three months ended March 31, 2025 compared to three months ended March 31, 2024: Investment income decreased $(0.6) million, or (66.7)%, from $0.9 million for the three months ended March 31, 2024 to $0.3 million for the three months ended March 31, 2025, reflecting a decrease in returns generated by seed capital investments due to market depreciation in the three months ended March 31, 2025.

Previous wording

Three months ended September 30, 2024 compared to three months ended September 30, 2023: Interest income decreased $(1.1) million, or (64.7)% from $1.7 million for the three months ended September 30, 2023 compared to $0.6 million for the three months ended September 30, 2024. The decrease was due to lower average cash balances and decreases in short-term investment returns in the three months ended September 30, 2024.

Current wording

Three months ended March 31, 2025 compared to three months ended March 31, 2024: Interest income decreased $(0.2) million, or (15.4)%, from $1.3 million for the three months ended March 31, 2024 compared to $1.1 million for the three months ended March 31, 2025. The decrease was due to lower average cash balances and decreases in short-term investment returns in the three months ended March 31, 2025.

Previous wording

Three months ended September 30, 2024 compared to three months ended September 30, 2023: Interest expense decreased $(0.1) million, or (2.1)%, from $4.8 million for the three months ended September 30, 2023 to $4.7 million for the three months ended September 30, 2024, reflecting a lower balance drawn on the revolving credit facility in the three months ended September 30, 2024.

Current wording

Three months ended March 31, 2025 compared to three months ended March 31, 2024: Interest expense decreased $(0.2) million, or (4.0)%, from $5.0 million for the three months ended March 31, 2024 compared to $4.8 million for the three months ended March 31, 2025, reflecting a decrease in interest rates on the revolving credit facility in the three months ended March 31, 2025.

Previous wording

Three months ended September 30, 2024 compared to three months ended September 30, 2023: Income tax expense increased $1.7 million, from $7.7 million for the three months ended September 30, 2023 to $9.4 million for the three months ended September 30, 2024. The increase in income tax expense primarily relates to an increase in the disallowance of executive compensation deduction in the three months ended September 30, 2024.

Current wording

Three months ended March 31, 2025 compared to three months ended March 31, 2024: Income tax expense increased $2.2 million, from $6.1 million for the three months ended March 31, 2024 to $8.3 million for the three months ended March 31, 2025. The increase in income tax expense primarily relates to an increase in pretax income attributable to controlling interest in the three months ended March 31, 2025.

Previous wording

Three months ended September 30, 2024 compared to three months ended September 30, 2023: Consolidated Funds’ revenue increased $0.1 million, from $0.8 million for the three months ended September 30, 2023 to $0.9 million for the three months ended September 30, 2024. Consolidated Funds’ expense decreased $(0.6) million, from $0.8 million for the three months ended September 30, 2023 to $0.2 million for the three months ended September 30, 2024. Net consolidated Funds’ investment gain increased $3.3 million from $0.7 million for the three months ended September 30, 2023 to $4.0 million for the three months ended September 30, 2024. These movements relate to the underlying activity of our consolidated Funds.

Current wording

Three months ended March 31, 2025 compared to three months ended March 31, 2024: Consolidated Funds’ revenue increased $1.3 million, from $0.4 million for the three months ended March 31, 2024 to $1.7 million for the three months ended March 31, 2025. Consolidated Funds’ expense increased $0.6 million, from $0.1 million for the three months ended March 31, 2024 to $0.7 million for the three months ended March 31, 2025. Net consolidated Funds’ investment gain increased $1.9 million from $1.7 million for the three months ended March 31, 2024 to $3.6 million for the three months ended March 31, 2025. These movements relate to the underlying activity of our consolidated Funds.

Previous wording

The following table shows our key U.S. GAAP operating metrics for the three and nine months ended September 30, 2024 and 2023.

Current wording

The following table shows our key U.S. GAAP operating metrics for the three months ended March 31, 2025 and 2024.