Artisan Partners (APAM)

Asset management firm Artisan Partners (NYSE:APAM) fell short of the market’s revenue expectations in Q3 CY2025, but sales rose 7.8% year on year to $301.3 million. Its non-GAAP profit of $1.02 per share was 5.2% above analysts’ consensus estimates.

Company Overview

Founded in 1994 with a focus on autonomous investment teams and a "high-value-added" approach, Artisan Partners (NYSE:APAM) is an investment management firm that offers actively managed equity and fixed income strategies to institutional and individual investors.

Asset management firms oversee investment portfolios for institutions and individuals. The industry benefits from the growing global wealth pool, retirement savings needs, and expansion into alternative investments (private equity, real estate, etc.). However, firms face significant pressure from the shift to lower-cost passive investment products, regulatory requirements for fee transparency, and increasing technology costs to stay competitive in portfolio management and client service.

Artisan Partners competes with other publicly traded asset managers such as T. Rowe Price (NASDAQ:TROW), BlackRock (NYSE:BLK), Franklin Resources (NYSE:BEN), and Invesco (NYSE:IVZ), as well as privately held firms like Fidelity Investments and Capital Group.

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Unfortunately, Artisan Partners’s 6.5% annualized revenue growth over the last five years was mediocre. This was below our standard for the financials sector and is a poor baseline for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Artisan Partners’s annualized revenue growth of 10.3% over the last two years is above its five-year trend, suggesting some bright spots. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Artisan Partners’s revenue grew by 7.8% year on year to $301.3 million, missing Wall Street’s estimates.

Assets Under Management (AUM) represents the total value of investments that a financial institution manages for its clients. These assets generate steady income through management fees, creating predictable revenue streams that remain stable so long as clients remain invested with the firm.

Artisan Partners’s AUM was flat over the last four years, much worse than the broader financials industry. When analyzing Artisan Partners’s AUM over the last two years, we can see that growth accelerated to 11.3% annually. Fundraising or short-term investment performance were net contributors for the company over this shorter period since assets grew faster than total revenue. Keep in mind that asset growth can be erratic and seasonal, so we don't rely on it too heavily for our business quality analysis.

In Q3, Artisan Partners’s AUM was $177.4 billion, falling 1.2% short of analysts’ expectations. This print was 5.7% higher than the same quarter last year.

ANI per share is the key metric asset managers use to report their earnings, representing adjusted net income on a per-share basis. In practice, it’s the same as adjusted EPS used by companies in other sectors.

ANI per share allows us to determine whether growth was profitable, excluding unrealized investment gains and losses as well as non-recurring items like deal-related expenses. It also factors in share issuance or buybacks, too, which is informative because shareholders own shares, not the entire company.

Over the last five years, Artisan Partners’s annual ANI per share growth of 4.3% was weak. It also diluted shareholders across this stretch, a headwind for its results.

On a two-year basis, Artisan Partners’s annualized ANI per share growth accelerated to 16.5%. We note the company continued diluting shareholders during this timeframe, suppressing its ANI per share.

In Q3, Artisan Partners reported ANI per share of $1.02, up from $0.92 in the same quarter last year. This print beat analysts’ estimates by 5.2%.

You may wonder when we will analyze book value and return on equity (ROE) since Artisan Partners is a financials company. We pay less attention to these metrics for asset managers because they are not great measures of business quality.

Asset managers are fee-based, capital light firms that manage client capital rather than their own, so they are not balance sheet businesses. Additionally, book value fails to capture the value of brands, investment track records, and other intangibles, thus understating intrinsic value, while ROE can look artificially high due to the relatively smaller bases of equity capital needed to operate the business compared to banks and insurers.

It was good to see Artisan Partners beat analysts’ EPS expectations this quarter. On the other hand, its revenue missed Wall Street’s estimates due to worse-than-anticipated AUM growth. Zooming out, we think this was a mixed quarter. The stock traded up 3% to $45.50 immediately after reporting.

Updated: December 4, 2025 at 11:06 PM EST

Are you wondering whether to buy Artisan Partners or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

Artisan Partners’s business quality ultimately falls short of our standards. To begin with, its revenue growth was mediocre over the last five years. Plus, Artisan Partners’s weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders.

Artisan Partners’s P/E ratio based on the next 12 months is 10.5x. While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $45.25 on the company (compared to the current share price of $42.41).