Victory Capital Holdings, Inc. (VCTR) Q2 2026 Earnings Report, Transcript and Summary

Good morning, and welcome to the Victory Capital Second Quarter 2026 Earnings Conference Call. [Operator Instructions] I will now turn the call over to Ms. Carly Thomas, Director of Investor Relations and Responsible Business. Please go ahead, Ms. Thomas.

Thank you, operator, and good morning, everyone. Before I turn the call over to Chairman and CEO, David Brown, I would like to remind you that during today's conference call, we may make several forward-looking statements. Victory Capital's actual results may differ materially from these statements. Please refer to our SEC filings for a list of some of the risk factors that may cause actual results to differ materially from those expressed on today's call. Victory Capital assumes no duty and does not undertake any obligation to update any forward-looking statements. Our press release, which was issued after the market closed yesterday disclosed both GAAP and non-GAAP financial results. We believe the non-GAAP measures enhance the understanding of our business and our performance. Reconciliations between these non-GAAP measures and the most comparable GAAP measures are available in the tables that can be found in our earnings press release and in the slides accompanying this call, both of which are available on the Investor Relations section of our website at ir.vcm.com. It is now my pleasure to turn the call over to David Brown, Chairman and CEO. David?

Thanks, Carly. Good morning, everyone, and welcome to Victory Capital's Second Quarter 2026 Earnings Call. I'm also joined today by Michael Policarpo, our President, Chief Financial and Administrative Officer. I will start with an overview of our second quarter results, which I am pleased to say were exceptional, setting new records across multiple dimensions of our business. After that, I will turn the call over to Mike to review the financial results in greater detail. Following our prepared remarks, we will be available to answer your questions. On Slide 5, you will see that Q2 2026 was the strongest quarter in our history. Total client assets reached $346 billion, up 11% from Q1 and 15% higher than at the end of the same period last year. Long-term gross flows of $22 billion were up 17% quarter-over-quarter and 43% versus the same quarter last year. We generated record net long-term inflows of $4.2 billion, reflecting the strategic investments we have made, the momentum we have built across all our distribution channels and the strength of our investment performance by our investment franchises and our solutions platform. From a financial perspective, adjusted EBITDA reached $243 million, and our adjusted EBITDA margin expanded to 55.8%. Adjusted earnings per share was $2.21, up 21% from last quarter and 41% higher than Q2 of last year, all were records for our company. Moreover, the Pioneer integration is now complete and the full $110 million in net run rate expense synergies have been fully realized. Turning to Slide 6. Investment performance remains a source of great pride for our organization, and it continues to be the foundation of what we do. Strong investment performance is not incidental to what we do. It is the reason clients hire us and the reason they stay with us. In an industry where trust is earned through long-term investment results, we believe our track record speaks for itself. As of June 30, 2026, 57 of our mutual funds and ETFs earned 4- or 5-star overall ratings from Morningstar, which is 60% of our rated AUM. This represents over half of our Morningstar-rated funds. By comparison, only about 1/3 of Morningstar-rated funds industry-wide carry a 4- or 5-star rating. When we look at performance against benchmarks, the picture is equally compelling. 71% of our AUM outperformed over the 1-year period, 68% over 3 years, 65% over 5 years and an impressive 81% over the 10-year period. On a strategy count basis, 66%, 64%, 67% and 69% of strategies outperformed their benchmarks over those same time horizons. This breadth of outperformance across time periods, asset classes and investment styles reflects the talent and discipline of our investment professionals across our platform. We remain deeply committed to delivering excellent investment outcomes for our clients. Slide 7 is the one that I find particularly compelling when you step back and look at how far we have come as a company. When we completed our MBO in 2013, Victory Capital was at its core, a U.S. equity manager with $18 billion in AUM. At the time, approximately 80% of our AUM was in U.S. equity strategies with fixed income and global equity each making up about 10%. We were excellent at what we did, but we were highly concentrated in U.S. equities. That picture had already begun to evolve by our IPO in 2018 when we had grown to over $60 billion in AUM. U.S. equity had moved to about 73% of AUM with fixed income at 12%, global equity at 7% and solutions at 5%, which included the ETF business in its infancy through a small acquisition. The seeds of diversification had been planted, but the transformation was still in its early stages. Fast forward to today, and that story is almost unrecognizable in the best possible way. U.S. equity now represents just 31% of our $346 billion in total client assets. Our solutions business, which now includes over $23 billion in ETFs, represents 32%. Fixed income has grown to 24% and global and non-U.S. equity stands at 11%. This did not happen by accident as we have been very purposeful and strategic in the growth of our business. Before every acquisition we've made over the past 13 years, we asked ourselves a simple question beyond the stand-alone financial merits. Will this make our company better, more competitive, more resilient and more capable of servicing clients across different market cycles? Our answer has been yes, in every case, an intentional approach to building our exceptional platform into what it is today. We also recognize that self-reflection and our relentless willingness to make our company better is essential to our continued growth. We are constantly reassessing areas of potential growth, guided by our disciplined approach to strengthening our entire business from strategically refining our already diverse product mix, expanding our distribution capabilities to enabling our investment professionals with best-in-class tools and resources. Turning to Slide 8. Our ETF platform continues to be one of the most exciting and consequential growth stories in our business. ETF AUM ended the quarter at $23.2 billion, up 24% year-to-date and 54% year-over-year. Net flows of $1.2 billion in Q2 bring our year-to-date total to $2.5 billion, representing an annualized organic growth rate of 27%. The momentum here is sustained, broad-based and is accelerating as we move through the back half of this year and look forward into the future. I want to spend a moment on how we think about this business because I think it is important context. Back in 2015, we made a deliberate forward-looking decision to acquire the ETF capabilities and infrastructure that form the foundation of what VictoryShares is today. The acquisition included just a few hundred million dollars of ETF assets. But the real story of this business has been what we have built from there. We have never treated this as a static platform. The growth of VictoryShares has been driven by a consistent commitment to product innovation and a disciplined ongoing evaluation of our investment capabilities relative to what we have heard from clients around what they want and need. What distinguishes us in the marketplace is that we are not in the race to 0. Our average fee rate of 34 basis points reflects the fact that we have built a diversified ETF platform, featuring active and rules-based strategies that are organized around innovative investment themes, not a passive product suite competing on price. Importantly, the margins of our ETF business adhere to our firm-wide standards. Our free cash flow ETF series continues to generate strong and consistent inflows. Our flagship free cash flow ETF, VFLO, closed the quarter at $7.8 billion in AUM. In its 3 years since launch, VFLO has outperformed the S&P 500 Russell 1000 Growth and Russell 1000 Value, all with 0 MAG 7 exposure and has earned a Morningstar 5-star overall rating, and we are seeing strong demand from financial advisers throughout our intermediary channel. Across the product suite, we are winning new home office recommendations, deepening relationships with key platform partners and are continuing to add dedicated ETF distribution resources to support that momentum. In addition, our ETFs are now available for sale across Asia and as of this quarter, in Latin America, a new geography that we believe represents a significant long-term growth opportunity. We will continue to leverage our partnership with Amundi and expand our ETF distribution globally. Slide 9 covers our international business, which continues to gain real and meaningful traction. The Amundi partnership is performing exactly as expected and trending above our initial financial expectations. At quarter end, we had $62.6 billion in AUM from clients outside the United States across 61 countries, with 35 of those countries now having more than $100 million in Victory Capital AUM. Importantly, our international business was net flow positive again in the quarter and is year-to-date and has been net flow positive cumulatively since we closed the Pioneer acquisition. Year-to-date, a vast majority of Amundi's client roadshows have been focused on Victory Capital products, a clear reflection of the priority they have placed on bringing our capabilities to their global client base. Amundi has also maintained several Victory Capital strategies on their concentrated focus list across client segments and geographies, providing important structural support for flows. We now sub-advised 23 UCITS spanning equities, fixed income and global multi-asset strategies. Additional UCITS launches are planned in 2026, driven by bottom-up demand signals from Amundi's local distribution teams. The product set is continuing to expand. The sales teams are becoming more familiarized with our product set and the momentum in this channel is increasing materially. Turning to Slide 10. I want to highlight our growth strategy since it is central to how we think about creating long-term value for our shareholders. Since our management buyout in 2013, we have grown AUM by 1,834% from $17.9 billion to $346.1 billion. Every step of that journey has been intentional, a deliberate disciplined decision to build something bigger and better than what existed before. That is what this slide shows. We set out from day 1 with a clear thesis, that the asset management industry was ripe for consolidation, that the right acquirer with the right model could create extraordinary value and that we had both the capability and the conviction to execute on that thesis to create a unique platform. I want to be very clear about one point. This growth did not come from a single deal. It came from building a repeatable institutional quality capability, a model that works, that scales and that we now have executed across multiple transactions of varying size, complexity and in different periods within a market cycle. We know how to identify the right opportunities. We know how to integrate them, and we know how to make the whole organizational platform stronger as a result. We are often asked whether there are enough acquisition targets out there to sustain our strategy. The answer is yes. There are more than 110 investment firms managing between $50 billion and $200 billion in assets and more than 35 firms in the $200 billion to $500 billion range. That is a deep and fragmented opportunity set. The structural forces driving consolidation, regulatory complexity, technology requirements, distribution scale and the economics of running a competitive investment platform are only intensifying. That creates a compelling environment for a proven acquirer like Victory Capital. Our balance sheet is strong, and our execution track record gives me great confidence in our ability to continue delivering transformational growth as we work toward our goal of $1 trillion in assets under management. We remain extremely active from an acquisition perspective, evaluating potential significant opportunities. These kinds of opportunities are never done until they are done, but this is the right time for our company given the strength of our balance sheet and the completion of the Pioneer integration. Slide 11 outlines our capital allocation framework. Strategic acquisitions are and will remain our primary and best use of capital. Over the last 13 years, we have successfully closed 8 acquisitions. Our inorganic growth strategy has helped us deliver over 800% of total shareholder returns since our IPO in 2018. This has also enabled us to grow earnings per share at a 23% compound annual growth rate. This track record is in part a result of a disciplined, consistent approach to inorganic growth that has guided us since the day we started. Second to strategic acquisitions, our commitment to returning capital to shareholders is real and ongoing. Since our IPO, we have returned $1.6 billion in capital to shareholders with $1 billion in shares repurchased. Year-to-date, we have repurchased 3.2 million shares, which is more than we repurchased in all of 2025. This is a meaningful statement about both our conviction in the value of our stock and the strength of our free cash flow generation. In addition, our dividend provides a consistent and reliable return to shareholders. Looking ahead, I am as excited about the future of this company today as I ever have been. We have the people, the platform and the strategy, and in many ways, we are just getting started. I will now turn the call over to Mike to walk through the financial results in more detail. Mike?

Thanks, Dave, and good morning, everyone. The financial results review begins on Slide 13. This was a record quarter across the board. Revenue came in at $435 million, up 12% from Q1 and 24% higher than Q2 of last year. Adjusted EBITDA reached $243 million, and our adjusted EBITDA margin was 55.8%. Adjusted net income with tax benefit was $183 million or $2.21 per diluted share, up 21% from last quarter and 41% versus Q2 2025. To put that EPS figure in context, since our IPO in February 2018, our adjusted earnings per diluted share with tax benefit has grown at a compound annual rate of approximately 23%. And on a quarterly basis, EPS is up more than 450% since Q1 2018. That is a remarkable track record of value creation and it reflects the earnings power of our platform. I also would like to take this opportunity to update our long-term adjusted EBITDA margin guidance. Given the demonstrated earnings power of our platform and the completion of the Pioneer integration, we are updating long-term adjusted EBITDA margin guidance from 49% to 50%. This reflects our view of an appropriate normalized margin for this business through a full market cycle, one that accounts for the inherent variability in certain revenue items while reflecting the structural efficiency gains we have made. Importantly, this level also preserves our ability to continue investing in the business and our people, our platform and the future growth initiatives that will drive continued long-term value. We believe 50% is the right anchor for how investors should think about this business over time with a conservative tilt. We repurchased 1.1 million shares during the quarter and returned $138 million to shareholders in total. Our net leverage ratio was 1.0x adjusted EBITDA. On Slide 14, total client assets at quarter end were $346 billion, well diversified across our U.S. retail, U.S. institutional, U.S. direct and international channels, with clients in 62 countries in total. Slide 15 shows our long-term AUM flows. This is a slide we're spending some time on because what we are seeing here is not a 1-quarter phenomenon. We have real and sustained flow momentum in our business. Record long-term gross flows of $22.1 billion were up 43% from Q2 '25, the first quarter post the close of the Pioneer transaction. Net long-term flows of $4.2 billion were also a record, representing a positive swing of nearly $5 billion from the same quarter last year. We were also net flow positive for the full first half of this year, and that momentum has carried into the third quarter. I would describe it as a convergence point. The purposeful investments we have made over the past several years in technology, data, distribution, marketing, product and people are now working together in a way that is showing up in these results. Our U.S. intermediary, U.S. institutional and international channels all contributed during the quarter. Multiple investment franchises generated positive long-term net inflows, including Pioneer Investments, RS Global, RS Value and VictoryShares ETFs. In addition, our one but not yet funded pipeline remains significant across multiple franchises and channels. We expect it to continue to support our positive flow profile as those mandates fund over the coming quarters. Moving to Slide 16. Revenue of $435.4 million was a record, up 12% from Q1 and 24% versus Q2 of last year. This was driven by record average AUM of $331 billion and an average fee rate of 47.9 basis points, which was at the high end of our guidance range. We continue to expect the fee rate to remain in the 46 to 47 basis point range going forward, reflecting the mix of our diversified business. I also want to note that as our platform continues to scale, we are beginning to see the revenue synergies of our expanded organization come through in these results. This represents the next phase of our integration story, where scale begins to support revenue growth. Turning to expenses on Slide 17. Total operating expenses were $241.6 million in Q2. Cash compensation as a percentage of revenue was 22.9%, which is back at normalized levels following the seasonal payroll dynamics in Q1. On a normalized basis, we continue to expect cash compensation to run in the low to mid-20s as a percentage of revenue. Our variable cost structure remains a key feature of our business. More than 2/3 of our total operating expenses are variable, which provides meaningful cushion and flexibility through different market environments. I am pleased to report that the full $110 million of net run rate expense synergies associated with the Pioneer Investments acquisition have now been fully recognized. Our integration is complete. We acquired a business that significantly increased the size and scale of our company, materially expanded our product set and opened our international distribution channel, and we have fully integrated it in 5 quarters. We did all of this while also launching new products and investing in the future growth of the entire platform. On Slide 18, the non-GAAP metrics reflect what this business is capable of delivering. Adjusted EBITDA of $242.7 million and an adjusted EBITDA margin of 55.8% are both records for the company. Adjusted net income with tax benefit of $182.9 million or $2.21 per diluted share was up 21% from Q1 and 41% from Q2 of last year. The consistency of our margins over time speaks for itself, above 49% every single quarter since 2020 and above 50% in the majority of them. This is the result of a purposefully designed, highly efficient, scalable platform and the relentless efforts of the exceptional people who run it day in and day out. Finally, Slide 19 covers our balance sheet and capital management. We ended the quarter with $70 million in cash. We took advantage of a strong market dynamic and repriced our Term Loan B during the quarter, reducing annual interest expense by approximately $2.5 million going forward. And our $100 million revolver remains undrawn. We returned $138 million to shareholders in Q2, including the repurchase of 1.1 million shares of VCTR common stock. Today, the Board declared a regular quarterly cash dividend of $0.50 per share, which will be paid on September 25 to shareholders of record at the close of business on September 10. The balance sheet is in excellent shape, and our strong free cash flow generation gives us the flexibility to pursue all of our capital allocation objectives, strategic acquisitions, investments in our business for long-term growth as well as shareholder returns through both share repurchases and dividends simultaneously. With that, I will turn the call back to the operator for questions.

[Operator Instructions] Your first question comes from the line of Craig Siegenthaler with Bank of America.

My question is on the Amundi distribution agreement. How is your net flow outlook from this agreement changed since inception? And are you seeing nice net flow breadth? Or is it concentrated in 1 or 2 larger European markets? I think Amundi distributes to more than 60 countries, so there could be some breadth there.

A couple of points there. One is the -- it is coming really through 3 primary regions. If we look at Asia, that has been a really good flow area for us. Europe has been really good. And then, there are some emerging parts in the Middle East that we're hopeful given some of the distribution agreements that Amundi has just recently entered into. So those are the 3 regions, and we're seeing a lot of activity from meetings to actual fundings and opportunities as we look forward. From a product perspective, we think fixed income has done really well. Global is another area that we are really excited about and then the multi-asset side. So it's not really coming from one product or one area. It's pretty deep and wide, and it's accelerating.

Thanks, Dave, and flipping the conversation to the other side of the deal, how has Victory helped Amundi sell its product in the U.S. to date? Can you provide color on the 2Q flow trends from that? And also, can you just remind us the underlying economics to Victory on AUM that's distributed in the United States?

Craig, it's Mike. The efforts with respect to distributing the Amundi products have continued. I would say they have been focused on UCITS offerings predominantly in Latin America, where we've been able to use our U.S. intermediary contacts to be able to drive some flow. That has been a little bit less than what we've seen for the Amundi distribution of Victory product. And the economics really are similar to that of the distribution of Amundi's products here in the U.S. with that of us -- them distributing our products outside the U.S. We have a revenue share that we split that provides the proper incentive to align the interest both on the investment side and the distribution side. But that component pales in comparison from a size perspective. As we said, there's $62 billion of assets that are outside the U.S. through the Amundi distribution channel of Victory products. Our distribution of their offerings based on the makeup of their offerings is smaller than that.

Your next question comes from the line of Ben Budish with Barclays.

Maybe first on the results for the quarter. We sort of have this aggregate investment management fee line. I guess maybe a 2-parter. First, can you maybe talk about what may else be in there this quarter? I know in the past, you talked about periodic performance fees and fulcrum fees and things like that. And then maybe at a higher level, when we look at performance fees, it looks like in '23, '24, pretty consistently around $11 million a year. That stepped up quite a bit in '25, but obviously an outsized Q2. And now it looks like we may have 2 outsized quarters in a row. So it does seem like that line item is structurally stepping up. And if you can maybe talk about how we should think about that going forward separate from sort of the core investment management fee rate? Are there more opportunities? Is performance picking up in a way that's driving better performance fees for the firm? Any details there would be helpful.

Sure. Ben, the fees that you see the increase, so we posted a 47.9 basis point quarter. As you know, our guidance long term, which we're comfortable with is 46 to 47 basis points. What you referenced is really some annual fees that from a GAAP perspective, we recorded in Q2. And those are kind of crystallized based on different metrics that really get us back to or slightly above kind of our wrap rates. And so we don't consider them pure performance fees in the standpoint of an alternative type business. And so they are a little bit episodic. But again, that's where I would guide back to the 46 to 47 basis points long term over a full cycle is really how we're looking at the revenue realization of the business. That will tend to fluctuate, of course, based on asset mix, client mix, distribution channel mix. But as we sit here today, that 46% to 47% is really the way to think about it long term.

All right. Helpful. And then maybe just on the flows in the quarter and maybe what you're seeing into Q3. I think fixed income, in particular, flipped to be a very nice inflow quarter. Anything in particular to call out there, any outsized mandates? And then any color on what you've been seeing in July and maybe into August? It sounds like you're quite confident on the flow trajectory going forward, so anything that you can share would be great.

Well, let me start with the third quarter. We've actually seen an acceleration of flows into the third quarter. So it is not something that, as Mike said in his prepared remarks, it's not a 1-quarter phenomenon. It's not one client. It's not an outsized mandate. It's pretty broad and diverse. Really, we think of it as a convergence of all of the investments we have made over the last few years, the integration of the sales forces, the opening up of the distribution outside the U.S. coming together. And we're pretty excited about what the future holds from an organic growth perspective. We now have, I think, the size and the scale and the product depth and the breadth and some of the partnerships we have invested in all coming together. From a fixed income perspective, we're seeing really good activity with some of our shorter -- like some of our shorter-term fixed income type products. Our ETFs, our active fixed income ETFs are doing very well. It's pretty broad-based, and it's also through both 2 franchises, the Victory Income Investors and also through Pioneer. And I think that's just a product of where the client demand is. And then outside the U.S., there is demand for U.S. fixed income as well.

Your next question comes from the line of Michael Cho with JPMorgan.

I'd like to start just big picture, Dave, you gave some thoughts around the trajectory of Victory over the last dozen years. And as you noted, from an M&A perspective, there's still a lot to do, a lot of consolidation. But it also feels like there is not many that are completely additive to Victory's competitiveness in terms of what you've already built. So I know you gave some comments in the past, but can you just talk through how or where Victory may want to increase its competitiveness and in what kind of channels or client segments you'd like to be -- you'd like Victory to be more top of mind?

Yes. Thank you for the question. We approach acquisitions, I think, a little bit differently than others. We don't specifically target asset classes or go after certain areas I think we start off, and I think we articulated in the script, we start off as, does it make our company better? Can we service our clients? Does it make us more competitive? And I think there are lots of areas that we can add to that answer those questions for us, size and scale, product diversification, distribution enhancement. There's a number of different areas that we look at. And from an acquisition standpoint on where we are today and what the opportunity set is, we couldn't be more excited. We have a lot of opportunity and have evaluated organizations where we look at them and look at them being added to our platform would enhance our business, enhance our competitiveness and move us forward. We have $1 trillion assets under management goal that we are striving for that I think we will hit as we look to the future. And I think there's lots of opportunity in the industry from a consolidation perspective, but specifically to us to allow us to be more competitive than we are. And you can see in the results this quarter where we have fully integrated the Pioneer acquisition. And now we're really in the second piece of that through growth on a flow perspective, from a revenue perspective, I think we're able to service our clients with more products, more attention to their needs. And so there's a lot of areas where acquisitions would really, really help our platform.

Great. If I could just follow up on the expense side, Mike, you upped the guide or the long-term guide. But just one on G&A. If we just look -- and G&A remains about $20 million, $22 million a quarter. I guess this is post Pioneer despite revenues that are maybe almost $100 million higher per quarter. I recognize Victory has got a unique model with investment franchises. But can you just flesh out trends in terms of G&A and the leverage that you're able to drive in that line? And any thoughts on kind of incremental areas of focus or investments as Victory's scale continues to expand with more clients, more channels and more assets?

Sure. I think as you think about the platform that we built, it has been built to scale. We talk about greater than 2/3 of our expenses being variable from compensation to distribution-related fees to a number of our back-office service providers that we outsource. So that really then leaves, if you will, kind of the G&A as more controllable or a little bit more from a fixed perspective where we're making some investments. That number, to your point, has been $21 million to $23 million a quarter. We're comfortable with that at this time. It does include, and I think Dave made reference to it, we've continued to invest in the business through the Pioneer integration, the opportunity set for us to get more scale distribution to make investments in technology, in AI, to bring new products to market. All of that has kind of been over the last several years. So that was really our impetus now with the Pioneer integration complete to change the long-term margin guidance from 49% to 50%. As you look at the trajectory that we're on, we're comfortable that we can operate the business at least 50% margins, inclusive of the investments that we've made and that we plan to make. We made a number of investments in U.S. intermediary to really bring forth more partnerships, more data usage, more sponsorships. And I think that, as Dave mentioned earlier, is bringing forth the net flows and the organic growth convergence point that we expected. So I think going forward, we'll continue to monitor it, but we're comfortable at that level from a G&A perspective, with the majority of the expenses really being variable with the AUM and revenue of the business.

Your next question comes from the line of Michael Cyprys with Morgan Stanley.

Maybe just coming back to your $1 trillion target and some of the M&A that you're thinking about in the years ahead. Maybe if you could just help unpack how those conversations are progressing, what that pipeline looks like, the types of properties that you're thinking about, how you think about all of that progressing?

Yes. Our conversations are going very well. We are making good progress in our process. And then I would also note that, as we said in our prepared remarks, we're done the Pioneer integration. This is the right time for our organization. Our balance sheet is as healthy as it's ever been with our leverage at 1.0. And so this is the right time for our organization. I think we've proven over our history as a public company, even before that as a private company that we have been able to buy businesses that looked very different, were very different sizes, had very different owners and really integrate all of them with great success. We have a unique capability for this industry to evaluate businesses, to buy the business in a smart way to add lots of value for our shareholders and to better our platform. And I think there is a ton of opportunity going forward to repeat that many times. We're in no rush, but this is the right time for our organization. And I also think that given what's happening in the industry, some of the pressures for firms that are staring down technology investments, regulatory issues, the need for size and scale on the distribution side, this is a really, really great time for firms like us that can add a lot of value to firms that maybe need something that they're unable to provide for themselves. So we're really encouraged, and we have a track record over a long period of time of identifying and then executing on them.

Great. And just on the margin, quite an impressive output in the quarter here. Just curious as you think about that, how do you know you're investing enough in the business to drive growth ahead in the coming years? And maybe you could speak to some of the top areas of investment that you're going to be looking to make over the next 12 to 24 months?

Yes. I think our results really answer the question of, are we investing enough to drive growth given our results around gross and net flows and kind of what our guide is going forward. And I think about where we're investing, we're investing in product development. We're investing in AI and technology. We're investing a lot in our distribution with our distribution partners. I think something that separates us from many others is I think we're good investors when we think about investing our money in getting return. And so we have industry-leading margins. And I think you can have industry-leading margins and also have organic growth. And I think that comes down to is, where you're investing, how you're investing. And I think we're set up very nicely to continue to provide our shareholders with industry-leading margins and also with growth.

[Operator Instructions] Your next question comes from Alex Blostein with Goldman Sachs Group.

I wanted to go back, Dave, to a comment you made in your prepared remarks when you talked about a significant pipeline, and I think Mike referenced that as well. Can you help us maybe size the won-but-unfunded pipeline and flows that you see sources, strategies and kind of maybe how that compares to prior periods just to kind of help better frame the forward flow outlook?

Alex, it's one of the larger kind of won but not yet funded pipelines that we've had. The areas and then the asset classes. From an asset class perspective, again, fixed income, our ETF platform, our global and our multi-asset are areas where we're seeing a lot of strength coming from outside the U.S. through our intermediary channel and then also through our institutional channel. So it's really through all of the distribution channels that we're present in. And all of that is supported by really good investment performance. And so part of the formula is I think we have really expanded our distribution reach, but we also have now a wider product set and that wider product set is performing really well, which is the formula to have a really nice and kind of deep and broad, won but not yet funded. We don't size it from a dollar perspective, but what I can tell you is it's probably one of the larger ones we've had organizationally.

Okay. Great. Helpful. And then from the capital management perspective, the balance sheet is in a really good place. You talked about refining the loan, which is great. How -- in the absence of, I guess, M&A or just rather keeping that aside, how should we think about the trajectory of share repurchases from these levels?

Yes. I mean our #1 priority with our balance sheet is to do strategic acquisitions. Everything else is second to that. But given where we are with our business and the size of our cash flow, we can do both. And we have said that we'll be opportunistic, and it will be around buying our shares. And I think we bought more shares in the first half of this year than we bought all of last year. So we'll be opportunistic about that. I think that's a -- that is part of the way we're going to allocate our capital. I wouldn't necessarily run rate every quarter forward. Some of it's going to be opportunistic. Some of it's going to be around strategic acquisitions. But I would say buying shares back is our second, and then the dividend is an ancillary piece of it.

There are no further questions at this time. I will now turn the call back to David Brown for closing remarks.

Thank you. Before we close, a few items to note. We will be publishing our July monthly AUM data before the market opens on August 12. I also want to invite continued engagement with our team. We have a very busy conference and roadshow schedule in September and October, and we look forward to seeing many of you along the way. In the meantime, we welcome your questions and are happy to connect ahead of those events. We thank you for your continued support of Victory Capital, and we look forward to speaking with you again soon.

This concludes today's call. Thank you for attending. You may now disconnect.