VIRTUS INVESTMENT PARTNERS, INC. 10-Q

Item 1. Financial Statements Virtus Investment Partners, Inc. Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except share data) March 31, 2025 December 31, 2024 Assets: Cash and cash equivalents $ 135,380 $ 265,888 Investments 119,942 119,216 Accounts receivable, net 112,875 117,207 Assets of consolidated investment products ("CIP") Cash and cash equivalents of CIP 83,474 133,694 Cash pledged or on deposit of CIP 732 727 Investments of CIP 2,277,633 2,270,717 Other assets of CIP 56,981 174,371 Furniture, equipment and leasehold improvements, net 23,591 22,718 Operating lease right-of-use assets 57,499 57,131 Intangible assets, net 365,285 378,229 Goodwill 397,098 397,098 Deferred taxes, net 21,871 23,206 Other assets 35,328 34,292 Total assets $ 3,687,689 $ 3,994,494 Liabilities and Equity Liabilities: Accrued compensation and benefits $ 92,988 $ 224,501 Accounts payable and accrued liabilities 56,699 49,492 Contingent consideration 40,365 63,505 Debt 231,705 232,130 Operating lease liabilities 72,120 70,037 Other liabilities 17,968 15,932 Liabilities of CIP Notes payable of CIP 2,037,390 2,171,946 Securities purchased payable and other liabilities of CIP 121,627 158,033 Total liabilities 2,670,862 2,985,576 Commitments and Contingencies (Note 12) Redeemable noncontrolling interests 120,579 107,282 Equity: Equity attributable to Virtus Investment Partners, Inc.: Common stock, $ 0.01 par value, 1,000,000,000 shares authorized; 12,298,949 shares issued and 6,911,016 shares outstanding at March 31, 2025; and 12,243,880 shares issued and 6,967,147 shares outstanding at December 31, 2024 123 122 Additional paid-in capital 1,322,280 1,319,108 Retained earnings (accumulated deficit) 280,979 268,221 Accumulated other comprehensive income (loss) ( 72 ) ( 364 ) Treasury stock, at cost, 5,387,933 and 5,276,733 shares at March 31, 2025 and December 31, 2024, respectively ( 709,594 ) ( 689,594 ) Total equity attributable to Virtus Investment Partners, Inc. 893,716 897,493 Noncontrolling interests 2,532 4,143 Total equity 896,248 901,636 Total liabilities and equity $ 3,687,689 $ 3,994,494 The accompanying notes are an integral part of these condensed consolidated financial statements. 1 Table of Contents Virtus Investment Partners, Inc. Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended March 31, (in thousands, except per share data) 2025 2024 Revenues Investment management fees $ 186,091 $ 188,360 Distribution and service fees 12,753 14,030 Administration and shareholder service fees 18,007 18,678 Other income and fees 1,081 974 Total revenues 217,932 222,042 Operating Expenses Employment expenses 109,093 115,163 Distribution and other asset-based expenses 22,896 24,348 Other operating expenses 33,059 31,375 Other operating expenses of consolidated investment products ("CIP") 1,000 690 Restructuring expense — 797 Depreciation expense 2,345 2,028 Amortization expense 12,944 15,335 Total operating expenses 181,337 189,736 Operating Income (Loss) 36,595 32,306 Other Income (Expense) Realized and unrealized gain (loss) on investments, net ( 991 ) 3,416 Realized and unrealized gain (loss) of CIP, net ( 7,649 ) 1,535 Other income (expense), net 998 550 Total other income (expense), net ( 7,642 ) 5,501 Interest Income (Expense) Interest expense ( 4,561 ) ( 5,681 ) Interest and dividend income 3,016 3,469 Interest and dividend income of investments of CIP 47,553 51,115 Interest expense of CIP ( 34,559 ) ( 40,012 ) Total interest income (expense), net 11,449 8,891 Income (Loss) Before Income Taxes 40,402 46,698 Income tax expense (benefit) 12,350 8,831 Net Income (Loss) 28,052 37,867 Noncontrolling interests 595 ( 8,009 ) Net Income (Loss) Attributable to Virtus Investment Partners, Inc. $ 28,647 $ 29,858 Earnings (Loss) per Share—Basic $ 4.12 $ 4.19 Earnings (Loss) per Share—Diluted $ 4.05 $ 4.10 Weighted Average Shares Outstanding—Basic 6,955 7,119 Weighted Average Shares Outstanding—Diluted 7,073 7,287 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 Table of Contents Virtus Investment Partners, Inc. Condensed Consolidated Statements of Comprehensive Income (Unaudited) Three Months Ended March 31, (in thousands) 2025 2024 Net Income (Loss) $ 28,052 $ 37,867 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment, net of tax of $( 100 ) and $ 36 for the three months ended March 31, 2025 and 2024, respectively 292 ( 100 ) Other comprehensive income (loss) 292 ( 100 ) Comprehensive income (loss) 28,344 37,767 Comprehensive (income) loss attributable to noncontrolling interests 595 ( 8,009 ) Comprehensive Income (Loss) Attributable to Virtus Investment Partners, Inc. $ 28,939 $ 29,758 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Table of Contents Virtus Investment Partners, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31, (in thousands) 2025 2024 Cash Flows from Operating Activities: Net income (loss) $ 28,052 $ 37,867 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation expense, intangible asset and other amortization 16,121 18,164 Stock-based compensation 6,734 6,831 Equity in earnings of equity method investments ( 980 ) ( 498 ) Realized and unrealized (gains) losses on investments, net 957 ( 3,393 ) Deferred taxes, net 1,440 1,086 Changes in operating assets and liabilities: Sales (purchases) of investments, net 552 5,987 Accounts receivable, net and other assets 10,917 ( 341 ) Accrued compensation and benefits, accounts payable, accrued liabilities and other liabilities ( 121,449 ) ( 120,631 ) Operating activities of consolidated investment products ("CIP"): Realized and unrealized (gains) losses on investments of CIP, net 4,039 ( 3,732 ) Purchases of investments by CIP ( 327,705 ) ( 304,516 ) Sales of investments by CIP 375,074 323,720 Net proceeds (purchases) of short-term investments and securities sold short by CIP ( 72 ) 206 Change in other assets and liabilities of CIP 2,533 4,722 Net cash provided by (used in) operating activities ( 3,787 ) ( 34,528 ) Cash Flows from Investing Activities: Capital expenditures ( 2,984 ) ( 1,923 ) Change in cash and cash equivalents of CIP due to consolidation (deconsolidation), net — ( 537 ) Net cash provided by (used in) investing activities ( 2,984 ) ( 2,460 ) Cash Flows from Financing Activities: Repayments on credit agreement ( 687 ) ( 688 ) Common stock dividends paid ( 17,146 ) ( 14,929 ) Repurchase of common shares ( 20,000 ) ( 5,000 ) Payment of contingent consideration ( 23,140 ) ( 24,234 ) Taxes paid related to net share settlement of restricted stock units ( 6,109 ) ( 9,854 ) Investment management subsidiary equity sales (purchases) ( 1,053 ) ( 419 ) Net contributions from (distributions to) noncontrolling interests 17,264 16,772 Payments on borrowings by CIP ( 123,590 ) ( 17,794 ) Net cash provided by (used in) financing activities ( 174,461 ) ( 56,146 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 509 ( 203 ) Net increase (decrease) in cash, cash equivalents and restricted cash ( 180,723 ) ( 93,337 ) Cash, cash equivalents and restricted cash, beginning of period 400,309 341,014 Cash, cash equivalents and restricted cash, end of period $ 219,586 $ 247,677 Non-Cash Financing Activities: Increase (decrease) to noncontrolling interests due to consolidation (deconsolidation) of CIP, net $ ( 3,749 ) $ ( 13,624 ) Common stock dividends payable $ 15,550 $ 13,467 (in thousands) March 31, 2025 December 31, 2024 Reconciliation of cash, cash equivalents and restricted cash Cash and cash equivalents $ 135,380 $ 265,888 Cash and cash equivalents of CIP 83,474 133,694 Cash pledged or on deposit of CIP 732 727 Cash, cash equivalents and restricted cash at end of period $ 219,586 $ 400,309 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents Virtus Investment Partners, Inc. Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) Permanent Equity Temporary Equity Common Stock Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Attributed To Virtus Investment Partners, Inc. Non- controlling Interests Total Equity Redeemable Non- controlling Interests (in thousands, except per share data) Shares Par Value Shares Amount Balances at December 31, 2023 7,087,728 $ 122 $ 1,300,999 $ 207,356 $ ( 87 ) 5,075,500 $ ( 644,464 ) $ 863,926 $ 4,363 $ 868,289 $ 104,869 Net income (loss) — — — 29,858 — — — 29,858 391 30,249 7,618 Foreign currency translation adjustments — — — — ( 100 ) — — ( 100 ) — ( 100 ) — Net subscriptions (redemptions) and other — — — — — — — — ( 403 ) ( 403 ) 2,698 Cash dividends declared ($ 1.90 per common share) — — — ( 14,191 ) — — — ( 14,191 ) — ( 14,191 ) — Repurchases of common shares ( 21,108 ) — — — — 21,108 ( 4,999 ) ( 4,999 ) — ( 4,999 ) — Issuance of common shares related to employee stock transactions 61,261 — — — — — — — — — — Taxes paid on stock-based compensation — — ( 9,852 ) — — — — ( 9,852 ) — ( 9,852 ) — Stock-based compensation — — 7,010 — — — — 7,010 — 7,010 — Balances at March 31, 2024 7,127,881 $ 122 $ 1,298,157 $ 223,023 $ ( 187 ) 5,096,608 $ ( 649,463 ) $ 871,652 $ 4,351 $ 876,003 $ 115,185 Balances at December 31, 2024 6,967,147 $ 122 $ 1,319,108 $ 268,221 $ ( 364 ) 5,276,733 $ ( 689,594 ) $ 897,493 $ 4,143 $ 901,636 $ 107,282 Net income (loss) — — — 28,647 — — — 28,647 ( 52 ) 28,595 ( 543 ) Foreign currency translation adjustments — — — — 292 — — 292 — 292 — Net subscriptions (redemptions) and other — — 195 — — — — 195 ( 1,559 ) ( 1,364 ) 13,840 Cash dividends declared ($ 2.25 per common share) — — — ( 15,889 ) — — — ( 15,889 ) — ( 15,889 ) — Repurchases of common shares ( 111,200 ) — — — — 111,200 ( 20,000 ) ( 20,000 ) — ( 20,000 ) — Issuance of common shares related to employee stock transactions 55,069 1 ( 1 ) — — — — — — — — Taxes paid on stock-based compensation — — ( 6,109 ) — — — — ( 6,109 ) — ( 6,109 ) — Stock-based compensation — — 9,087 — — — — 9,087 — 9,087 — Balances at March 31, 2025 6,911,016 $ 123 $ 1,322,280 $ 280,979 $ ( 72 ) 5,387,933 $ ( 709,594 ) $ 893,716 $ 2,532 $ 896,248 $ 120,579 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents Virtus Investment Partners, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Organization and Business Virtus Investment Partners, Inc. (the "Company," "we," "us," "our" or "Virtus"), a Delaware corporation, operates in the investment management industry through its subsidiaries. The Company provides investment management and related services to institutions and individuals. The Company's investment strategies are offered to institutional clients through institutional separate and commingled accounts, including subadvisory services to other investment advisers and Company sponsored structured products. The Company’s retail investment management services are provided to individuals through products consisting of: mutual funds registered pursuant to the Investment Company Act of 1940, as amended that include U.S. retail funds, exchange-traded funds ("ETFs"); Undertaking for Collective Investment in Transferable Securities and Qualifying Investor Funds ("global funds" and collectively with U.S. retail funds and ETFs the "open-end funds"); closed-end funds (collectively with open-end funds, the "funds"); retail separate accounts sold through intermediaries and wealth advisory services to high net worth clients through our wealth management business. 2. Basis of Presentation and Significant Accounting Policies Basis of Presentation The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, these financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the Company’s financial condition and results of operations. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Annual Report on Form 10-K") filed with the Securities and Exchange Commission (the "SEC"). The Company’s significant accounting policies, which have been consistently applied, are summarized in its 2024 Annual Report on Form 10-K. Recent Accounting Pronouncements New Accounting Standards Implemented In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) . This standard updates reportable segment disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss and provides new segment disclosure requirements for entities with a single reportable segment. The Company adopted this standard in its 2024 Annual Report on Form 10-K . See Note 15 for a discussion of the Company's segment information. In March 2024, the FASB issued ASU 2024-01, Compensation - Stock Compensation (Topic 718), Scope Application of Profits Interest and Similar Awards. This standard provides clarity regarding whether profits interest and similar awards are within the scope of Topic 718 of the Accounting Standards Codification. The Company adopted this standard in its 2024 Annual Report on Form 10-K. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740). This standard updates income tax disclosure requirements by requiring disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. The Company adopted this standard on January 1, 2025. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements. New Accounting Standards Not Yet Implemented In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) . The standard requires enhanced disclosures of certain expense captions presented on the face of the Consolidated Income Statement. In January 2025, the FASB issued ASU 2025-01 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) - Clarifying the Effective 6 Table of Contents Date which clarifies that the standard is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted with amendments to be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is in the process of evaluating the impact of adopting this standard and, at this time, does not anticipate it will have a material impact on its consolidated financial statements. 3. Revenues The Company's revenues are recognized when a performance obligation is satisfied, which occurs when control of the services is transferred to clients. Investment management fees, distribution and service fees, and administration and shareholder service fees are generally calculated as a percentage of average net assets of the investment portfolios managed. The net asset values from which these fees are calculated are variable in nature and subject to factors outside of the Company's control, such as additional investments, withdrawals and market performance. Because of this, these fees are considered constrained until the end of the contractual measurement period (monthly or quarterly), which is when asset values are generally determinable. Investment Management Fees by Source The following table summarizes investment management fees by source: Three Months Ended March 31, (in thousands) 2025 2024 Investment management fees Open-end funds $ 74,037 $ 78,680 Closed-end funds 14,853 14,394 Retail separate accounts 54,272 48,981 Institutional accounts 42,929 46,305 Total investment management fees $ 186,091 $ 188,360 4. Intangible Assets, Net Below is a summary of intangible assets, net: Definite-Lived Indefinite-Lived Total (in thousands) Gross Book Value Accumulated Amortization Net Book Value Net Book Value Net Book Value Balances at December 31, 2024 $ 809,064 $ ( 473,133 ) $ 335,931 $ 42,298 $ 378,229 Intangible amortization — ( 12,944 ) ( 12,944 ) — ( 12,944 ) Balances at March 31, 2025 $ 809,064 $ ( 486,077 ) $ 322,987 $ 42,298 $ 365,285 Definite-lived intangible asset amortization for the remainder of fiscal year 2025 and succeeding fiscal years is estimated as follows: Fiscal Year Amount (in thousands) Remainder of 2025 $ 38,833 2026 50,797 2027 47,695 2028 42,033 2029 36,440 2030 and thereafter 107,189 Total $ 322,987 7 Table of Contents 5. Investments Investments consist primarily of investments in the Company's sponsored products. The Company's investments, excluding the assets of consolidated investment products ("CIP") discussed in Note 14, at March 31, 2025 and December 31, 2024 were as follows: (in thousands) March 31, 2025 December 31, 2024 Investment securities - fair value $ 81,512 $ 83,771 Equity method investments (1) 21,266 20,286 Nonqualified retirement plan assets 17,164 15,159 Total investments $ 119,942 $ 119,216 (1) The Company's equity method investments are valued on a three-month lag based upon the availability of financial information. Investment Securities - fair value Investment securities - fair value consist of investments in the Company's sponsored funds and in separate accounts. The composition of the Company’s investment securities - fair value was as follows: March 31, 2025 December 31, 2024 (in thousands) Cost Fair Value Cost Fair Value Investment Securities - fair value Sponsored funds $ 60,687 $ 60,247 $ 63,220 $ 63,296 Equity securities 18,227 19,197 17,406 19,019 Debt securities 2,087 2,068 1,457 1,456 Total investment securities - fair value $ 81,001 $ 81,512 $ 82,083 $ 83,771 For the three months ended March 31, 2025, the Company recognized net realized gains of $ 0.2 million related to its investment securities - fair value. For the three months ended March 31, 2024, the Company recognized net realized losses of $ 0.4 million related to its investment securities - fair value. 6. Fair Value Measurements The Company’s assets and liabilities measured at fair value on a recurring basis, excluding the assets and liabilities of CIP discussed in Note 14, as of March 31, 2025 and December 31, 2024 by fair value hierarchy level were as follows: March 31, 2025 (in thousands) Level 1 Level 2 Level 3 Total Assets Cash equivalents $ 101,092 $ — $ — $ 101,092 Investment securities - fair value Sponsored funds 60,247 — — 60,247 Equity securities 19,197 — — 19,197 Debt securities — 2,068 — 2,068 Nonqualified retirement plan assets 17,164 — — 17,164 Total assets measured at fair value $ 197,700 $ 2,068 $ — $ 199,768 Liabilities Contingent consideration $ — $ — $ 23,014 $ 23,014 Total liabilities measured at fair value $ — $ — $ 23,014 $ 23,014 8 Table of Contents December 31, 2024 (in thousands) Level 1 Level 2 Level 3 Total Assets Cash equivalents $ 225,736 $ — $ — $ 225,736 Investment securities - fair value Sponsored funds 63,296 — — 63,296 Equity securities 19,019 — — 19,019 Debt securities — 1,456 — 1,456 Nonqualified retirement plan assets 15,159 — — 15,159 Total assets measured at fair value $ 323,210 $ 1,456 $ — $ 324,666 Liabilities Contingent consideration $ — $ — $ 36,100 $ 36,100 Total liabilities measured at fair value $ — $ — $ 36,100 $ 36,100 The following is a discussion of the valuation methodologies used for the Company’s assets measured at fair value: Cash equivalents represent investments in money market funds. Cash investments in money market funds are valued using published net asset values and are classified as Level 1. Sponsored funds represent investments in funds for which the Company acts as the investment manager. The fair values of U.S. retail funds and global funds are determined based on their published net asset values and are categorized as Level 1. The fair value of closed-end funds and ETFs is determined based on the official closing price on the exchange on which they are traded and are categorized as Level 1. Equity securities represent securities traded on active markets, are valued at the official closing price (typically the last sale or bid) on the exchange on which the securities are primarily traded and are categorized as Level 1. Debt securities represent investments in corporate and government bonds. The fair values of corporate and government bonds traded on active markets are valued at the official closing price on the exchange on which the securities are primarily traded and are categorized as Level 1. Debt securities for which closing prices are not readily available or are deemed to not reflect readily available market prices, and are valued using an independent pricing service, are categorized as Level 2. Nonqualified retirement plan assets represent U.S. retail funds within the Company's nonqualified retirement plan whose fair value is determined based on their published net asset value and are categorized as Level 1. Contingent consideration represents liabilities associated with contingent payment arrangements made in connection with the Company's business combinations. In these contingent payment arrangements, the Company agrees to pay additional transaction consideration to the seller based on future performance. Contingent consideration is remeasured at fair value each reporting date using a simulation model with the assistance of an independent valuation firm and approved by management and are categorized as Level 3. The following table presents a reconciliation of beginning and ending balances of the Company's contingent consideration liabilities: Three Months Ended March 31, (in thousands) 2025 2024 Contingent consideration, beginning of period $ 36,100 $ 56,200 Reduction for payments made ( 13,086 ) ( 14,492 ) Contingent consideration, end of period $ 23,014 $ 41,708 The contingent consideration related to the Westchester Capital Management transaction as of March 31, 2025 was $ 1.9 million, measured using an options pricing model valuation technique. The most significant unobservable inputs used relate to revenue growth rates, discount rates (range of 6.3 %- 6.4 %) and the market price of risk adjustment ( 7.3 %). The NFJ Investment Group contingent consideration liability as of March 31, 2025 was $ 21.1 million, measured using an options pricing 9 Table of Contents model valuation technique. The most significant unobservable inputs used relate to the revenue growth rates, discount rates (range of 6.3 % - 6.4 %) and the market price of risk adjustment ( 6.5 %). Cash, accounts receivable, accounts payable and accrued liabilities equal or approximate fair value based on the short-term nature of these instruments. 7. Equity Transactions Dividends Declared On February 26, 2025, the Company declared a quarterly cash dividend of $ 2.25 per common share to be paid on May 14, 2025 to shareholders of record at the close of business on April 30, 2025. Common Stock Repurchases During the three months ended March 31, 2025, the Company repurchased 111,200 common shares under its share repurchase program at a weighted average price of $ 179.83 per share, for a total cost, including fees and expenses, of $ 20.0 million. As of March 31, 2025, 292,112 shares remained available for repurchase. Under the terms of the program, the Company may repurchase shares of its common stock from time to time at its discretion through open market repurchases, privately negotiated transactions and/or other mechanisms, depending on price and prevailing market and business conditions. The program, which has no specified term, may be suspended or terminated at any time. 8. Stock-Based Compensation Equity-based awards, including restricted stock units ("RSUs"), performance stock units ("PSUs"), stock options and unrestricted shares of common stock, may be granted to officers, employees and directors of the Company pursuant to the Company's Amended and Restated Omnibus Incentive and Equity Plan (the "Omnibus Plan"). At March 31, 2025, 697,306 shares of common stock remained available for issuance of the 3,825,000 shares that are authorized for issuance under the Omnibus Plan. Stock-based compensation expense is summarized as follows: Three Months Ended March 31, (in thousands) 2025 2024 Stock-based compensation expense $ 6,734 $ 6,831 Restricted Stock Units Each RSU entitles the holder to one share of common stock when the restriction expires. RSUs may be time-vested or performance-contingent PSUs that convert into RSUs after performance measurement is complete and generally vest in one to three years . Shares that are issued upon vesting are newly issued shares from the Omnibus Plan and are not issued from treasury stock. RSU activity, inclusive of PSUs, for the three months ended March 31, 2025 is summarized as follows: Number of Shares Weighted Average Grant Date Fair Value Outstanding at December 31, 2024 317,489 $ 205.86 Granted 158,012 $ 173.57 Forfeited ( 26,436 ) $ 224.22 Settled ( 90,247 ) $ 205.49 Outstanding at March 31, 2025 358,818 $ 190.38 For the three months ended March 31, 2025 and 2024, a total of 35,178 and 42,588 RSUs, respectively, were withheld by the Company as a result of net share settlements to settle minimum employee tax withholding obligations and for which the Company paid $ 6.1 million and $ 9.9 million, respectively, in minimum employee tax withholding obligations. These net share 10 Table of Contents settlements had the effect of share repurchases by the Company as they reduced the number of shares that would have otherwise been issued as a result of the vesting. During the three months ended March 31, 2025 and 2024, the Company granted 37,777 and 26,733 PSUs, respectively, that contain performance-based metrics in addition to a service condition. Compensation expense for PSUs is generally recognized over a three-year service period based upon the value determined using a combination of (i) the intrinsic value method for awards that contain a performance metric that represents a "performance condition" in accordance with ASC 718, Stock Compensation ("ASC 718") and (ii) the Monte Carlo simulation valuation model for awards that contain a "market condition" performance metric under ASC 718. Compensation expense for PSU awards that contain a market condition is fixed at the date of grant and will not be adjusted in future periods based upon the achievement of the market condition. Compensation expense for PSU awards with a performance condition is recorded each period based upon a probability assessment of the expected outcome of the performance metric with a final adjustment upon measurement at the end of the performance period. As of March 31, 2025, unamortized stock-based compensation expense for unvested RSUs and PSUs was $ 45.1 million with a weighted-average remaining contractual life of 1.7 years. 9. Earnings (Loss) Per Share Earnings (loss) per share ("EPS") is calculated in accordance with ASC 260, Earnings per Share . Basic EPS is computed by dividing net income (loss) attributable to Virtus Investment Partners, Inc. by the weighted-average number of common shares outstanding for the period, excluding dilution for potential common stock issuances. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, including shares issuable upon the vesting of RSUs and stock option exercises using the treasury stock method, as determined under the if-converted method. The computation of basic and diluted EPS is as follows: Three Months Ended March 31, (in thousands, except per share amounts) 2025 2024 Net Income (Loss) $ 28,052 $ 37,867 Noncontrolling interests 595 ( 8,009 ) Net Income (Loss) Attributable to Virtus Investment Partners, Inc. $ 28,647 $ 29,858 Shares: Basic: Weighted-average number of shares outstanding 6,955 7,119 Plus: Incremental shares from assumed conversion of dilutive instruments 118 168 Diluted: Weighted-average number of shares outstanding 7,073 7,287 Earnings (Loss) per Share—Basic $ 4.12 $ 4.19 Earnings (Loss) per Share—Diluted $ 4.05 $ 4.10 The following table details the securities that have been excluded from the above computation of weighted-average number of shares for diluted EPS, because the effect would be anti-dilutive. Three Months Ended March 31, (in thousands) 2025 2024 Restricted stock units 22 1 Total anti-dilutive securities 22 1 11 Table of Contents 10. Income Taxes In calculating the provision for income taxes, the Company uses an estimate of the annual effective tax rate based upon the facts and circumstances at each interim period. On a quarterly basis, the estimated annual effective tax rate is adjusted, as appropriate, based upon changes in facts and circumstances, if any, compared to those forecasted at the beginning of the fiscal year and at each interim period thereafter. The provision for income taxes reflected U.S. federal, state and local taxes at an estimated effective tax rate of 30.6 % and 18.9 % for the three months ended March 31, 2025 and 2024, respectively. The higher estimated effective tax rate for the three months ended March 31, 2025 was primarily due to a change in valuation allowances in the current year related to the tax effects of realized and unrealized losses on Company investments compared to realized and unrealized gains in the prior year. 11. Debt Credit Agreement The Company's credit agreement, as amended (the "Credit Agreement"), comprises (i) a $ 275.0 million term loan with a seven-year term (the "Term Loan") expiring in September 2028, and (ii) a $ 175.0 million revolving credit facility with a five-year term expiring in September 2026. The Company repaid $ 0.7 million outstanding under the Term Loan during the three months ended March 31, 2025 and had $ 235.4 million outstanding under the Term Loan at March 31, 2025. In accordance with ASC 835, Interest , the amounts outstanding under the Company's Term Loan are presented on the Condensed Consolidated Balance Sheets net of related debt issuance costs, which were $ 3.7 million as of March 31, 2025. 12. Commitments and Contingencies Legal Matters The Company is involved from time to time in litigation and arbitration, as well as examinations, inquiries and investigations by various regulatory bodies, involving its compliance with, among other things, securities laws, client investment guidelines, laws governing the activities of broker-dealers and other laws and regulations affecting its products and other activities. The Company records a liability when it believes that it is both probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. Based on information currently available, available insurance coverage, indemnities and established reserves, the Company believes that the outcomes of its legal and regulatory proceedings are not likely, either individually or in the aggregate, to have a material adverse effect on the Company's results of operations, cash flows or consolidated financial condition. However, in the event of unexpected subsequent developments, and given the inherent unpredictability of these legal and regulatory matters, the Company can provide no assurance that its assessment of any legal matter will reflect the ultimate outcome, and an adverse outcome in certain matters could have a material adverse effect on the Company's results of operations or cash flows in particular quarterly or annual periods. 13. Redeemable Noncontrolling Interests Redeemable noncontrolling interests Minority interests held in a majority-owned investment management subsidiary are subject to holder put rights and Company call rights at pre-established multiples of earnings before interest, taxes, depreciation and amortization and, as such, are considered redeemable at other than fair value. The rights are exercisable at pre-established intervals or upon certain conditions, such as retirement. The put and call rights are not legally detachable or separately exercisable and are deemed to be embedded in the related noncontrolling interests. The Company, in purchasing equity of the investment management subsidiary, has the option to settle in cash or shares of the Company's common stock and is entitled to the cash flow associated with any purchased equity. The minority interests are recorded at estimated redemption value within redeemable noncontrolling interests on the Company's Condensed Consolidated Balance Sheets, and any changes in the estimated redemption value are recorded on the Condensed Consolidated Statements of Operations within noncontrolling interests. 12 Table of Contents Redeemable noncontrolling interests for the three months ended March 31, 2025 included the following amounts: (in thousands) CIP Noncontrolling Interests Investment Manager Total Balances at December 31, 2024 $ 45,667 $ 61,615 $ 107,282 Net income (loss) attributable to noncontrolling interests 70 1,674 1,744 Changes in redemption value (1) — ( 2,287 ) ( 2,287 ) Total net income (loss) attributable to noncontrolling interests 70 ( 613 ) ( 543 ) Investment management subsidiary equity sales (purchases) — ( 1,053 ) ( 1,053 ) Net subscriptions (redemptions) and other 15,866 ( 973 ) 14,893 Balances at March 31, 2025 $ 61,603 $ 58,976 $ 120,579 (1) Relates to noncontrolling interests redeemable at other than fair value. Equity awards of majority owned investment management subsidiary The Company also issues equity-based profit-interest awards of a majority owned investment manager to certain of its employees, with certain awards having up to a three-year vesting period when issued. These profit-interest awards are subject to holder put rights and Company call rights at established multiples of earnings before interest, taxes, depreciation and amortization, with certain awards also subject to pre-established thresholds. The awards are accounted for as cash-settled liability awards under ASC 718, with changes in value at each reporting date recognized as compensation expense over the requisite service period, if any, in the Company’s Consolidated Statements of Operations. The awards are classified as a liability within accrued compensation and benefits on the Consolidated Balance Sheets until the awards are settled. Additionally, these awards have a right to participate in distributions of the investment manager which are recorded as employment expense in the Company’s Condensed Consolidated Statements of Operations. Accrued compensation associated with these awards was $ 19.0 million and $ 19.4 million at March 31, 2025 and December 31, 2024, respectively. Compensation expense related to these awards totaled $( 0.6 ) million and $ 1.4 million for the three months ended March 31, 2025 and 2024, respectively. 14. Consolidation The condensed consolidated financial statements include the accounts of the Company, its subsidiaries and investment products that are consolidated. A voting interest entity ("VOE") is consolidated when the Company is considered to have a controlling financial interest, which is typically present when the Company owns a majority of the voting interest in an entity or otherwise has the power to govern the financial and operating policies of the entity. The Company evaluates any variable interest entity ("VIE") in which the Company has a variable interest for consolidation. A VIE is an entity in which either (i) the equity investment at risk is not sufficient to permit the entity to finance its own activities without additional financial support, or (ii) where, as a group, the holders of the equity investment at risk do not possess any one of the following: (a) the power through voting or similar rights to direct the activities that most significantly impact the entity's economic performance, (b) the obligation to absorb expected losses or the right to receive expected residual returns of the entity, or (c) proportionate voting and economic interests and where substantially all of the entity's activities either involve or are conducted on behalf of an investor with disproportionately fewer voting rights. If an entity has any of these characteristics, it is considered a VIE and is required to be consolidated by its primary beneficiary. The primary beneficiary is the entity that has both the power to direct the activities that most significantly impact the VIE's economic performance and has the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE. In the normal course of its business, the Company sponsors various investment products, some of which are consolidated by the Company. CIP includes both VOEs, made up primarily of U.S. retail funds and ETFs in which the Company holds a controlling financial interest, and VIEs, which consist of collateralized loan obligations ("CLO") and certain global and private funds ("GF") of which the Company is considered the primary beneficiary. The consolidation and deconsolidation of these investment products have no impact on the Company's net income (loss). The Company's risk with respect to these investment products is limited to its beneficial interests in these products. The Company has no right to the benefits from, and does not bear the risks associated with, these investment products beyond the Company's investments in, and fees generated from, these products. 13 Table of Contents The following table presents the balances of CIP that, after intercompany eliminations, were reflected on the Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024: As of March 31, 2025 December 31, 2024 VOEs VIEs VOEs VIEs (in thousands) CLOs GFs CLOs GFs Cash and cash equivalents $ 637 $ 78,882 $ 4,687 $ 5,179 $ 125,995 $ 3,247 Investments 47,636 2,129,750 100,247 40,678 2,141,626 88,413 Other assets 892 54,594 1,495 403 172,707 1,261 Notes payable — ( 2,037,390 ) — — ( 2,171,946 ) — Securities purchased payable and other liabilities ( 432 ) ( 116,948 ) ( 4,247 ) ( 4,271 ) ( 151,922 ) ( 1,840 ) Noncontrolling interests ( 12,238 ) ( 2,532 ) ( 49,365 ) ( 12,452 ) ( 4,143 ) ( 33,215 ) Net interests in CIP $ 36,495 $ 106,356 $ 52,817 $ 29,537 $ 112,317 $ 57,866 Consolidated CLOs The majority of the Company's CIP that are VIEs are CLOs. A majority-owned consolidated private fund, whose primary purpose is to invest in CLOs for which the Company serves as the collateral manager, is also included. At March 31, 2025, the Company consolidated seven CLOs. The financial information of CLOs is included on the Company's condensed consolidated financial statements on a one-month lag based upon the availability of their financial information. Investments of CLOs The CLOs held investments of $ 2.1 billion at March 31, 2025, consisting of bank loan investments that comprise the majority of the CLOs' portfolio asset collateral and are senior secured corporate loans across a variety of industries. These bank loan investments mature at various dates between 2025 and 2033 and generally pay interest at SOFR plus a spread. Notes Payable of CLOs The CLOs held notes payable with a total value, at par, of $ 2.3 billion at March 31, 2025, consisting of senior secured floating rate notes payable with a par value of $ 2.0 billion and subordinated notes with a par value of $ 240.5 million. These note obligations bear interest at variable rates based on SOFR plus a pre-defined spread. The Company's beneficial interests and maximum exposure to loss related to these consolidated CLOs is limited to (i) ownership in the subordinated notes and (ii) accrued management fees. The secured notes of the consolidated CLOs have contractual recourse only to the related assets of the CLO and are classified as financial liabilities. Although these beneficial interests are eliminated upon consolidation, the application of the measurement alternative prescribed by ASU 2014-13, Consolidation (Topic 810) ("ASU 2014-13"), results in the net assets of the consolidated CLOs shown above to be equivalent to the beneficial interests retained by the Company at March 31, 2025, as shown in the table below: (in thousands) Subordinated notes $ 104,859 Accrued investment management fees 1,497 Total Beneficial Interests $ 106,356 14 Table of Contents The following table represents income and expenses of the consolidated CLOs included on the Company’s Condensed Consolidated Statements of Operations for the period indicated: Three Months Ended March 31, 2025 (in thousands) Income: Realized and unrealized gain (loss), net $ ( 6,872 ) Interest income 45,677 Total Income 38,805 Expenses: Other operating expenses 699 Interest expense 34,559 Total Expense 35,258 Noncontrolling interests 52 Net Income (Loss) Attributable to CLOs $ 3,599 The following table represents the Company’s own economic interests in the consolidated CLOs, which are eliminated upon consolidation: Three Months Ended March 31, 2025 (in thousands) Distributions received and unrealized gains (losses) on the subordinated notes held by the Company $ 1,062 Investment management fees 2,537 Total Economic Interests $ 3,599 Fair Value Measurements of CIP The assets and liabilities of CIP measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024 by fair value hierarchy level were as follows: As of March 31, 2025 (in thousands) Level 1 Level 2 Level 3 Total Assets Cash equivalents $ 78,882 $ — $ — $ 78,882 Debt investments 4,525 2,219,835 18,727 2,243,087 Equity investments 32,346 2,159 41 34,546 Total assets measured at fair value $ 115,753 $ 2,221,994 $ 18,768 $ 2,356,515 Liabilities Notes payable $ — $ 2,037,390 $ — $ 2,037,390 Short sales 307 — — 307 Total liabilities measured at fair value $ 307 $ 2,037,390 $ — $ 2,037,697 15 Table of Contents As of December 31, 2024 (in thousands) Level 1 Level 2 Level 3 Total Assets Cash equivalents $ 127,695 $ — $ — $ 127,695 Debt investments — 2,239,924 6,676 2,246,600 Equity investments 22,993 111 1,013 24,117 Total assets measured at fair value $ 150,688 $ 2,240,035 $ 7,689 $ 2,398,412 Liabilities Notes payable $ — $ 2,171,946 $ — $ 2,171,946 Short sales 356 — — 356 Total liabilities measured at fair value $ 356 $ 2,171,946 $ — $ 2,172,302 The following is a discussion of the valuation methodologies used for the assets and liabilities of the Company’s CIP measured at fair value: Level 1 assets represent cash investments in money market funds and debt and equity investments that are valued using published net asset values or the official closing price on the exchange on which the securities are traded. Level 2 assets represent most debt securities (including bank loans) and certain equity securities (including non-U.S. securities), for which closing prices are not readily available or are deemed to not reflect readily available market prices, and are valued using an independent pricing service. Debt investments, other than bank loans, are valued based on quotations received from independent pricing services or from dealers who make markets in such securities. Bank loan investments, which are included as debt investments, are generally priced at the average mid-point of bid and ask quotations obtained from a third-party pricing service. Fair value may also be based upon valuations obtained from independent third-party brokers or dealers utilizing matrix pricing models that consider information regarding securities with similar characteristics. Level 3 assets include debt and equity securities that are not widely traded, are illiquid or are priced by dealers based on pricing models used by market makers in the security. These securities are valued using unadjusted prices from an independent pricing service. Level 1 liabilities consist of short sales transactions in which a security is sold that is not owned or is owned but there is no intention to deliver, in anticipation that the price of the security will decline. Short sales are recorded on the Condensed Consolidated Balance Sheets within other liabilities of CIP and are classified as Level 1 based on the underlying equity security. Level 2 liabilities consist of notes payable issued by CLOs and are measured using the measurement alternative in ASU 2014-13. Accordingly, the fair value of CLO liabilities was measured as the fair value of CLO assets less the sum of (i) the fair value of the beneficial interests held by the Company, and (ii) the carrying value of any beneficial interests that represent compensation for services. The fair value of the beneficial interests held by the Company is based on third-party pricing information without adjustment. The securities purchased payable at March 31, 2025 and December 31, 2024 approximated fair value due to the short-term nature of the instruments. 16 Table of Contents The following table is a reconciliation of assets of CIP for Level 3 investments for which significant unobservable inputs were used to determine fair value: Three Months Ended March 31, (in thousands) 2025 2024 Balance at beginning of period $ 7,689 $ 37,062 Realized and unrealized gains (losses), net ( 1,055 ) ( 324 ) Purchases 135 — Sales ( 155 ) ( 14,625 ) Transfers to Level 2 ( 5,803 ) ( 13,468 ) Transfers from Level 2 17,957 39,148 Balance at end of period (1) $ 18,768 $ 47,793 (1) The investments that are categorized as Level 3 were valued utilizing third-party pricing information without adjustment. Transfers in and/or out of levels are reflected when significant inputs, including market inputs or performance attributes, used for the fair value measurement become observable/unobservable at period end. Nonconsolidated VIEs The Company serves as the collateral manager for other CLOs that are not consolidated. The assets and liabilities of these CLOs reside in bankruptcy remote, special purpose entities in which the Company has no ownership of, nor holds any notes issued by, the CLOs, and provides neither recourse nor guarantees. The Company has determined that the investment management fees it receives for serving as collateral manager for these CLOs did not represent a variable interest as (i) the fees the Company earns are compensation for services provided and are commensurate with the level of effort required to provide the investment management services, (ii) the Company does not hold other interests in the CLOs that individually, or in the aggregate, would absorb more than an insignificant amount of the CLOs' expected losses or receive more than an insignificant amount of the CLOs' expected residual return, and (iii) the investment management arrangement only includes terms, conditions and amounts that are customarily present in arrangements for similar services negotiated at arm's length. The Company has interests in certain other VIEs that the Company does not consolidate as it is not the primary beneficiary since its interest in these entities does not provide the Company with the power to direct the activities that most significantly impact the entities' economic performance. At March 31, 2025, the carrying value and maximum risk of loss related to the Company's interest in these VIEs was $ 26.9 million. 15. Segments The key GAAP measure of segment profit or loss that the chief operating decision maker ("CODM") uses to evaluate the Company’s financial performance and allocate resources of the Company is net income, as reported on the Company’s Condensed Consolidated Statements of Operations. In addition, the CODM uses net income in deciding whether to reinvest profits or allocate profits to other uses of capital, such as for acquisitions or to pay dividends. All expense categories on the Condensed Consolidated Statements of Operations are significant and there are no other significant segment expenses that would require disclosure. Assets provided to the CODM are consistent with those reported on the Condensed Consolidated Balance Sheets. 17 Table of Contents