Federated Hermes, Inc. — Q3 2026 Earnings Summary

Financial Performance:

• Reported Q3 2026 earnings per diluted share of $1.50, a 12% increase from $1.34 in Q3 2025.
• Net income for Q3 2026 was $111.9 million, up from $104.1 million in Q3 2025.
• Total revenue for Q3 2026 was $507.3 million, an 8% increase year-over-year, driven by higher average equity assets and the Q2 2026 acquisition of FCP Fund Manager, L.P.
• Operating expenses increased $14.0 million (4%) year-over-year, primarily due to an $8.5 million rise in distribution expenses and a $7.1 million increase in compensation related to the FCP acquisition.
• Nonoperating income (expenses), net decreased $12.1 million year-over-year, attributed to a decrease in the market value of investments and lower interest and dividend income.
• Year-to-date 2026 revenue increased 13% to $1.49 billion, while operating expenses rose 15% to $1.08 billion.
• Total managed assets were $884.4 billion at September 30, 2026, up 2% from September 30, 2025.
• Long-term assets totaled $234.5 billion at September 30, 2026.
• Money market assets were $649.9 billion at September 30, 2026.

Guidance and Future Outlook:

• No specific forward guidance or future growth targets were provided in the press release.

Business Segments and Product Lines:

• Equity assets reached a record $110.5 billion at September 30, 2026, up 17% from September 30, 2025.
• Fixed-income assets were $99.4 billion at September 30, 2026, down 2% from September 30, 2025.
• Alternative/private markets assets were $21.7 billion at September 30, 2026, up 14% from September 30, 2025, reaching record highs.
• Money market assets were $649.9 billion at September 30, 2026, down 4% from June 30, 2026.
• Top-selling equity funds on a net basis in Q3 2026 included the Federated Hermes MDT Large Cap Growth Fund, MDT Small Cap Core ETF, MDT All Cap Core Fund, MDT Large Cap Value Fund, and U.S. Strategic Dividend ETF.
• Top-selling fixed-income funds on a net basis in Q3 2026 included the Federated Hermes Sterling Cash Plus Fund, Municipal Ultrashort Fund, Ultrashort Bond Fund, Total Return Bond ETF, and Conservative Municipal Microshort Fund.
• The company acquired FCP Fund Manager, L.P. in Q2 2026, now operating as Federated Hermes FCP Manager, LLC.

Market and Competitive Landscape:

• Federated Hermes ranks in the top 5% of equity fund managers, top 9% of money market fund managers, and top 11% of fixed-income fund managers based on U.S. fund flows rankings as of September 30, 2026.
• The company ranks as the 9th-largest manager of model-delivered separately managed accounts as of Q2 2026.

Risks and Challenges:

• Forward-looking statements involve risks including the ability to predict fee waivers, performance fees, carried interest, product demand, asset flows, and market appreciation or depreciation.
• Risks include the impact of market conditions, investment performance, investor behavior, and fluctuations in foreign currency exchange rates.

Management Commentary and Tone:

• J. Christopher Donahue, President and CEO, stated the company generated positive net equity sales in Q3 2026, including across the MDT suite of quantitative investment solutions.
• Management noted that assets in MDT institutional separate accounts, MDT subadvised accounts, and total equity assets reached record highs.
• Management highlighted continued demand for alternative strategies, specifically MDT Market Neutral offerings, with alternative/private markets fund assets reaching record highs.

Other Key Points:

• The Board of Directors declared a quarterly dividend of $0.38 per share, payable on November 13, 2026, to shareholders of record as of November 6, 2026.
• During Q3 2026, Federated Hermes purchased 992,312 shares of Class B common stock for $57.4 million.
• Revenue composition for Q3 2026 was 50% from long-term assets (32% equity, 10% fixed-income, 8% alternative/multi-asset), 49% from money market assets, and 1% from other sources.
• Revenue composition for YTD 2026 was 51% from money market assets and 48% from long-term assets.
• Nonoperating income decreased significantly year-over-year due to the deconsolidation of two Federated Hermes Funds in the first nine months of 2026.
• A value added tax (VAT) refund was received in Q1 2025 related to amended VAT filings in the U.K., contributing to expense variances in the year-to-date period.