Westwood Holdings Group Reports 9% Revenue Growth, Decline in Profitability in Q3 2024

Westwood Holdings Group, Inc. reported its financial results for the third quarter and the nine months ended September 30, 2024, showing notable changes in revenue, profitability, and strategic developments compared to the previous fiscal period.

For the three months ended September 30, 2024, total revenues increased to $23.7 million from $21.9 million in the same period of 2023. For the nine months, revenues rose to $69.1 million from $66.6 million year-over-year. This growth was primarily attributed to higher average Assets Under Management (AUM), which reached $16.8 billion as of September 30, 2024, up from $14.4 billion a year earlier. The increase in AUM was driven by market appreciation, despite net outflows of $976 million in the third quarter.

However, profitability faced significant challenges. The company reported a net income of $159,000 for Q3 2024, a sharp decline from $4.4 million in Q3 2023. For the nine-month period, net income fell to $112,000 from $8 million in the prior year. Comprehensive income also decreased substantially, with Q3 2024 reporting $105,000 compared to $3.4 million in Q3 2023. The decline in profitability was influenced by increased employee compensation and benefits, which rose by $0.9 million due to higher incentive compensation and additional headcount, as well as a $1.8 million loss from changes in the fair value of contingent consideration related to the Salient Acquisition.

Westwood's total expenses for the three months ended September 30, 2024, increased to $24.2 million from $23.3 million in the prior year, and for the nine months, expenses rose to $70.9 million from $63.4 million. The increase in expenses was largely due to higher professional services costs and employee compensation.

Strategically, Westwood completed the acquisition of a controlling interest in Broadmark Asset Management LLC in January 2023, increasing its ownership to approximately 80%. This acquisition contributed $0.8 million in revenue and a net loss of $0.2 million for the nine months ended September 30, 2024. The company also made a strategic investment of $4.4 million in InvestCloud, which is reflected in its balance sheet.

As of September 30, 2024, Westwood's total assets were $151.5 million, down from $155.2 million at the end of 2023, while total stockholders' equity decreased to $120.4 million from $122.4 million. The company declared a quarterly cash dividend of $0.15 per share on October 30, 2024, payable on January 3, 2025.