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AC NYSE· Associated Capital Group Inc.
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AC NYSE· Associated Capital Group Inc.
Earnings report Q3 2023

AC Group Reports Decrease in Revenue for Q3 2022

Segments of Revenue

AC Group's total revenues for the quarter ended September 30, 2023, were $2.2 million, compared to $2.6 million in the third quarter of 2022. The company earns advisory fees based on the average level of assets under management (AUM) in its products. Advisory and incentive fees for the 2023 period were $2.1 million, compared to $2.5 million in the 2022 period. It is worth noting that incentive fees are recognized on an annual basis on December 31, and there were no material unrecognized incentive fees for the quarter ended September 30, 2023, and 2022, respectively.

Strengths

Despite the decrease in revenue, AC Group's management highlighted that the decrease in revenue was primarily due to the absence of material unrecognized incentive fees in the current quarter. This suggests that the decline in revenue is not indicative of a fundamental weakness in the company's operations. Additionally, the company's advisory fees, which are based on AUM, remained relatively stable compared to the prior year's quarter.

Challenges

The decrease in total revenues for the quarter is a challenge for AC Group. The absence of material unrecognized incentive fees impacted the revenue figures, indicating a potential decline in performance in this area. It is important for the company to address this challenge and find ways to generate consistent revenue growth.

Noteworthy

AC Group experienced a significant improvement in other income, which was $3.8 million in the current quarter compared to a loss of $17.8 million in the prior year's quarter. This improvement was primarily driven by mark-to-market changes in the company's holdings of the securities portfolio, resulting from market appreciation in the current period. The company also recorded income tax expense in the current quarter, compared to a benefit in the prior year's quarter.

Summary

AC Group reported a decrease in total revenues for the third quarter of 2022. The decline was primarily due to the absence of material unrecognized incentive fees in the current quarter. However, the company's advisory fees remained relatively stable. AC Group's management highlighted that the decrease in revenue does not reflect a fundamental weakness in the company's operations. The significant improvement in other income, driven by mark-to-market changes, is noteworthy. AC Group should address the challenge of declining revenue and focus on strategies to generate consistent growth.

Source documents

Form 10-Q  filed on Nov 14, 2023
35 pages scanned

Reference data

Company financials Q3 revenue 5.6M
Analyst estimates Q3 EPS missed by NaN%
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