ALLIANCEBERNSTEIN HOLDING LP

Executive Overview(1)

Our total Assets Under Management ("AUM") as of December 31, 2023 were $725.2 billion, up $78.8 billion, or 12.2%, during 2023. The increase was driven by market appreciation of $85.8 billion, offset by net outflows of $7.0 billion (reflecting Institutional net outflows of $11.8 billion, offset by Retail net inflows of $3.7 billion and Private Wealth Management net inflows of $1.1 billion).

Institutional AUM increased $19.8 billion, or 6.7%, to $317.1 billion during 2023, primarily due to market appreciation of $31.5 billion, partially offset by net outflows of $11.8 billion. Gross sales decreased $20.4 billion, from $32.2 billion in 2022 to $11.8 billion in 2023. Redemptions and terminations decreased $0.7 billion, from $13.3 billion in 2022 to $12.6 billion in 2023.

Retail AUM increased $43.9 billion, or 18.1%, to $286.8 billion during 2023, primarily due to market appreciation of $40.3 billion and net inflows of $3.7 billion. Gross sales increased $5.2 billion, from $65.9 billion in 2022 to $71.1 billion in 2023. Redemptions and terminations decreased $8.2 billion, from $66.3 billion in 2022 to $58.1 billion in 2023.

Private Wealth Management AUM increased $15.1 billion, or 14.1%, to $121.3 billion during 2023, due to market appreciation of $14.0 billion and net inflows of $1.1 billion. Gross sales increased $1.1 billion, from $17.5 billion in 2022 to $18.6 billion in 2023. Redemptions and terminations increased $1.7 billion, from $15.8 billion in 2022 to $17.5 billion in 2023.

Bernstein Research Services ("BRS") revenue decreased $30.1 million, or 7.2%, in 2023. The decrease was primarily driven by significantly lower global customer trading activity due to the prevailing macro-economic environment. In the fourth quarter of 2022, AB and Société Générale (EURONEXT: GLE, “SocGen”), a leading European bank, announced plans to form a joint venture combining their respective cash equities and research businesses. As a result, the BRS business has been classified as held for sale. For further discussion, see Note 24 Acquisitions and Divestitures to our consolidated financial statements in Item 8.

Our 2023 net revenues of $4.2 billion increased $101.0 million, or 2.5%, compared to net revenues of $4.1 billion in the prior year. The increase was primarily driven by investment gains in the current year compared to investment losses in the prior year (impact of $116.6 million), higher net dividend and interest income of $35.2 million and higher base advisory fees of $4.8 million, partially offset by lower Bernstein Research Services revenue of $30.1 million and lower distribution revenues of $20.9 million.

Our operating expenses of $3.3 billion increased $98.5 million, or 3.0%, compared to the prior year. The increase was primarily driven by higher employee compensation and benefits expenses of $102.5 million, higher interest on borrowings of $36.5 million, higher amortization of intangibles of $20.3 million and higher contingent payment arrangements of $16.3 million, partially offset by lower general and administrative expenses of $60.1 million and lower promotion and servicing expenses of $17.1 million. Our operating income increased $2.6 million, or 0.3%, to $817.7 million from $815.1 million in 2022 and our operating margin decreased to 19.1% in 2023 from 21.5% in 2022.