Federated Hermes reported fourth-quarter earnings of $1.39 per share, surpassing the Zacks Consensus Estimate of $1.20 and up from $1.04 in the year-ago period. Net income for the quarter rose 28% year-over-year to $120 million, driven by higher fee revenues across its active equity and fixed-income strategies. The earnings beat reflects strong performance in both retail and institutional channels, with diluted shares outstanding declining 2% sequentially due to ongoing share repurchase activity.

Total assets under management reached a record $625 billion at December 31, up 7% from $584 billion a year earlier. Money-market assets led the gains, increasing 9% to $180 billion, while equity assets climbed 8% to $145 billion. Fee-based revenues grew 6% year-over-year to $490 million, benefiting from higher average AUM across core strategies. Institutional flows were particularly robust in the quarter, with net inflows of $4.2 billion in the Defined Contribution segment.

Operating expenses rose 8% to $310 million, reflecting elevated investments in compliance, technology upgrades and advisory hires. The firm’s cost-to-revenue ratio increased to 63% from 60% in the prior-year quarter, compressing pre-tax margins by 200 basis points. Management noted that while near-term margins will remain under pressure, expense growth should moderate in 2026 as productivity initiatives take effect.