FEDERATED HERMES, INC. (FHI): Results of Operations and Financial Condition
FEDERATED HERMES, INC. (FHI) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Federated Hermes, Inc. reports record assets under management with second quarter 2026 earnings • Total assets under management reach a record $911.6 billion • Equity assets reach a record $109.6 billion • Q2 2026 earnings per diluted share of $1.38 • Board declares
How this was made
The 30-second read
Why it matters
The most tradable elements are the newly reported Q2 EPS and net income, record AUM levels (including equity and money-market), the $0.38 dividend, and the incremental revenue/expense impacts tied to the FCP acquisition. The earnings call timing increases near-term decision relevance for positioning and volatility management.
Market read
A single-company earnings and capital-return update with record AUM and a fresh acquisition catalyst, likely to drive short-term repricing and earnings-call positioning.
What to watch
The filing highlights higher operating expenses and distribution costs tied to money-market assets, plus acquisition-related expenses; traders may focus on margin trajectory rather than AUM growth alone.
Federated Hermes, Inc. reports record assets under management with second quarter 2026 earnings
Q2 2026 earnings per diluted share increased to $1.38 from $1.16, net income increased to $104.3 million from $91.0 million, and total managed assets reached a record $911.6 billion. Revenue increased 18%, while operating expenses increased 20%, with FCP-acquisition-related costs contributing to the expense growth.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Earnings per diluted shareother | $1.38 | – | – |
| Net incomeother | $104.3 million | – | – |
| Total managed assetsother | $911.6 billion | – | 8% |
| Total average managed assetsother | $910.0 billion | 1% | 9% |
| Equity assetsother | $109.6 billion | 9% | 23% |
| Fixed-income assetsother | $100.5 billion | 1% | 2% |
| Alternative/private markets assetsother | $21.6 billion | 14% | 4% |
| Money market assetsother | $676.9 billion | 1% | 7% |
| Money market fund assetsother | $499.9 billion | 1% | 7% |
| Revenue increase, Q2 2026 vs. Q2 2025other | $77.9 million | – | 18% |
| Revenue increase, Q2 2026 vs. Q1 2026other | $23.8 million | 5% | – |
| Revenue increase, YTD 2026 vs. YTD 2025other | $133.3 million | – | 16% |
| Operating expenses increase, Q2 2026 vs. Q2 2025other | $62.1 million | – | 20% |
| Operating expenses increase, Q2 2026 vs. Q1 2026other | $17.3 million | 5% | – |
| Operating expenses increase, YTD 2026 vs. YTD 2025other | $123.0 million | – | 21% |
| Nonoperating income (expenses), net decrease, Q2 2026 vs. Q2 2025other | $2.6 million | – | 19% |
| Nonoperating income (expenses), net increase, Q2 2026 vs. Q1 2026other | $7.7 million | – | – |
Capital returns
- Federated Hermes' board of directors declared a dividend of $0.38 per share.
- The dividend is payable on Aug 14, 2026 to shareholders of record as of Aug 7, 2026.
- During Q2 2026, Federated Hermes purchased 1,119,805 shares of Federated Hermes class B common stock for $58.9 million.
What drove it
- Q2 2026 revenue increased $77.9 million or 18% primarily due to higher average equity and money market assets and the FCP acquisition in Q2 2026, which contributed $13.9 million.
- Q2 2026 revenue increased $23.8 million or 5% from Q1 2026 primarily due to the FCP acquisition in Q2 2026 and higher average equity assets.
- Equity assets reached a record $109.6 billion, with top-selling equity funds on a net basis including Federated Hermes MDT Large Cap Growth Fund, Federated Hermes MDT Mid Cap Growth Fund, Federated Hermes MDT US Equity Fund, Federated Hermes MDT All Cap Core Fund and Federated Hermes MDT Small Cap Core Fund.
- Alternative/private markets assets increased primarily due to $3.2 billion of assets acquired through the FCP Fund Manager, L.P. transaction.
- During Q2 2026, Federated Hermes derived 50% of revenue from money market assets, 48% from long-term assets and 2% from sources other than managed assets.
- For the first half of 2026, Federated Hermes derived 52% of revenue from money market assets, 47% from long-term assets and 1% from sources other than managed assets.
Concerns
- Operating expenses increased $62.1 million or 20% from Q2 2025, exceeding the reported 18% revenue increase.
- Operating expenses increased $17.3 million or 5% from Q1 2026, including higher compensation and related expense, professional service fees and intangible asset related expenses associated with the FCP acquisition.
- Money market assets decreased $7.8 billion from March 31, 2026, and money market fund assets decreased $2.9 billion from March 31, 2026.
- Nonoperating income (expenses), net decreased $2.6 million or 19% from Q2 2025, primarily due to lower interest and dividend income.
- Other expense increased $9.2 million from Q2 2025, primarily due to fluctuations in foreign currency exchange rates.
What to watch
- The durability of money market asset levels following the $7.8 billion decrease from March 31, 2026.
- The contribution of the FCP acquisition, which added $13.9 million to Q2 2026 revenue and $3.2 billion of acquired alternative/private markets assets.
- The level of acquisition-related compensation, professional service fees and amortization expenses.
- Whether MDT maintains net positive sales after the reported 14th consecutive quarter of net positive MDT sales.
- Future fee waivers and expenses, performance fees or carried interest, product sales and redemptions, and asset levels and mix.
Balance sheet and cash flow
- Total managed assets were a record $911.6 billion at June 30, 2026.
- Cash, debt, operating cash flow and free cash flow were not reported in the provided filing text.
Analysis
Federated Hermes reported Q2 2026 earnings per diluted share of $1.38, compared with $1.16 for Q2 2025, on net income of $104.3 million, compared with $91.0 million. Total managed assets reached a record $911.6 billion at June 30, 2026. Assets were up $65.9 billion or 8% from June 30, 2025 and up $4.5 billion from March 31, 2026. Total average managed assets were $910.0 billion, up $72.7 billion or 9% from Q2 2025 but down $5.6 billion or 1% from Q1 2026.
The asset mix showed particularly strong equity growth. Equity assets reached a record $109.6 billion, up $20.6 billion or 23% from June 30, 2025 and up $8.8 billion or 9% from March 31, 2026. Fixed-income assets were $100.5 billion, up $1.8 billion or 2% from a year earlier and up $0.7 billion or 1% sequentially. Alternative/private markets assets were $21.6 billion, up $2.6 billion or 14% from March 31, 2026, with the company attributing the increase primarily to $3.2 billion of assets acquired through the FCP transaction. Money market assets remained the largest asset category at $676.9 billion, although they declined $7.8 billion from March 31, 2026.
Revenue increased $77.9 million or 18% from Q2 2025, driven primarily by higher average equity and money market assets and $13.9 million from the FCP acquisition. Revenue increased $23.8 million or 5% from Q1 2026, again reflecting the FCP acquisition and higher average equity assets. The company derived 50% of Q2 revenue from money market assets and 48% from long-term assets, including 30% from equity, 10% from fixed-income, and 8% from alternative/private markets and multi-asset.
Expense growth was the principal offset to revenue growth. Operating expenses increased $62.1 million or 20% year over year, compared with the reported 18% increase in revenue. Distribution expenses increased $22.4 million, compensation and related expense increased $16.7 million, other expense increased $9.2 million, professional service fees increased $7.0 million, and intangible asset related expenses increased $2.9 million. FCP-acquisition-related costs included $6.5 million in compensation and related expense, $4.7 million in professional service fees and $3.0 million of intangible-asset amortization. Nonoperating income (expenses), net decreased $2.6 million or 19% from Q2 2025, primarily because of lower interest and dividend income.
Capital allocation included the purchase of 1,119,805 class B common shares for $58.9 million during Q2 2026 and a declared dividend of $0.38 per share. The filing did not provide forward financial guidance. The key operating items to follow are the trajectory of money market assets, the continuation of net positive MDT sales, the contribution from FCP, and the level of acquisition-related and foreign-currency-related expenses.
Management, verbatim
In addition to reaching record high equity assets in the second quarter, we achieved record gross sales across the range of our MDT suite of quantitative investment solutions, reaching all-time highs in MDT institutional separate accounts and SMAs (separately managed accounts). We also saw net positive MDT sales for the 14th consecutive quarter.
J. Christopher Donahue, president and chief executive officer
We continued to broaden our investment offerings by launching two new exchange-traded funds (ETFs) and introducing our first fund designed for use by participants in the blockchain ecosystem. We also expanded our private markets business by acquiring a majority interest in U.S. real estate manager FCP Fund Manager, L.P.
J. Christopher Donahue, president and chief executive officer
Not in the filing
stated, not guessed- Total revenue for Q2 2026, Q2 2025 and Q1 2026
- GAAP or non-GAAP basis designation for reported EPS and net income
- Gross profit and gross margin
- Operating income
- Total operating expenses for Q2 2026, Q2 2025 and Q1 2026
- Non-GAAP net income, non-GAAP EPS and other non-GAAP measures
- Income tax expense and tax rate
- Cash and cash equivalents
- Debt
- Operating cash flow
- Free cash flow
- Forward financial guidance
- Prior outlook or guidance comparison
- Revenue by reportable segment
- Prior-quarter net income and EPS
- Percentage changes for net income and EPS
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
This is an SEC 8-K with Exhibit 99.1 covering Federated Hermes’ Q2 2026 results, AUM changes, dividend declaration, and an acquisition of a majority interest in U.S. real estate manager FCP Fund Manager, L.P.
Ticker impact
Federated Hermes reported Q2 2026 EPS of $1.38, record AUM of $911.6B, and declared a $0.38 dividend, plus an FCP majority acquisition.
Moderately positive bias for the next session and into the earnings call, with volatility around any questions on acquisition integration and AUM sustainability.
New, specific Q2 financial results (EPS, net income), record AUM levels, and a declared dividend are direct fundamentals. The FCP majority-interest acquisition adds a fresh growth driver but also introduces execution uncertainty; the net effect is typically supportive unless guidance or margins disappoint, which is not provided here.
Market effects
Active asset managers may see read-through demand for money-market and quantitative/ETF solutions, but the key incremental signal is FHI’s AUM mix and acquisition-driven growth.
Limited; company-specific US-listed filing with no explicit regional macro linkage beyond investor flows.
Low; no international regulatory or cross-border deal terms beyond general foreign-currency expense fluctuations.
Counterpoint
Record AUM and money-market growth may not translate into durable fee revenue if yields or client risk appetite shift, and the FCP acquisition could pressure expenses during integration.
Key entities
- public_companyFederated Hermes, Inc.
NYSE-listed asset manager reporting Q2 2026 results, record AUM, and a declared dividend, alongside an FCP majority acquisition.
- private_companyFCP Fund Manager, L.P.
U.S. real estate manager acquired a majority interest by Federated Hermes, contributing to AUM and revenue/expense changes in Q2.
