$FHI earnings report

Federated Hermes reported Q3 2026 revenue of $ 507,329 (in thousands), up 8% from Q3 2025 and 1% from Q2 2026. Investment advisory fees, net increased 12% from Q3 2025 and 3% sequentially. The company attributed the year-over-year revenue increase primarily to higher average equity assets and the FCP acquisition, while the sequential increase was primarily due to higher average equity assets. Q3 average managed assets were $ 897,695 (in millions), up 4% year over year but down 1% sequentially.

Expense growth trailed revenue growth year over year. Total operating expenses rose 4% from Q3 2025, producing an 18% increase in operating income to $ 153,307 (in thousands). Distribution expense increased 7% and compensation and related expense increased 5% from a year earlier. Sequentially, operating expenses declined 4%, including lower compensation and related expense and professional service fees after FCP acquisition-related expenses recorded in Q2 2026. Net income increased 7% to $ 111,885 (in thousands), and basic and diluted EPS increased 12% to $ 1.50.

Managed-asset mix showed strength in equity and alternative/private markets alongside lower money market balances. Equity assets reached $ 110,539 (in millions), up 17% year over year and 1% sequentially, while alternative/private markets assets were $ 21,734 (in millions), up 14% year over year. Long-term assets generated $ 2,424 (in millions) of net sales (redemptions), led by $ 1,903 (in millions) in equity and $ 700 (in millions) in fixed income. However, total managed assets fell 3% sequentially to $ 884,410 (in millions), driven by a 4% decline in money market assets, and long-term assets recorded $ (2,443) (in millions) of market gains and (losses).

Below operating income, investment income (loss), net decreased 86% from both comparison periods, and total nonoperating income (expenses), net was $ (1,241) (in thousands), versus positive amounts in Q3 2025 and Q2 2026. The board declared a $0.38 per share dividend, and the company repurchased 992,312 class B common shares for $57.4 million during Q3. Cash and other investments were $ 580,271 (in thousands) at Sept. 30, 2026, while long-term debt was $ 348,565 (in thousands). No forward guidance was provided in the filing.

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.