UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2021~~March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 000-29961

ALLIANCEBERNSTEIN L.P.

(Exact name of registrant as specified in its charter)


Delaware						13-4064930
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

501 Commerce Street, Nashville, TN 37203

(Address of principal executive offices)

(Zip Code)

~~(212) 969-1000~~(615) 622-0000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes

☐

☒

Index

Securities registered pursuant to Section 12(g) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

None

The number of units of limited partnership interest outstanding as of ~~June 30, 2021~~March 31, 2022 was ~~271,994,122.~~

271,775,790.

Index

ALLIANCEBERNSTEIN L.P.

Index to Form 10-Q


		Page

	Part I

	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Statements of Financial Condition	1

	Condensed Consolidated Statements of Income	3

	Condensed Consolidated Statements of Comprehensive Income	4

	Condensed Consolidated Statements of Changes in Partners' Capital	5

	Condensed Consolidated Statements of Cash Flows	6

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2827

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5247

Item 4.	Controls and Procedures	5247

	Part II

	OTHER INFORMATION

Item 1.	Legal Proceedings	5348

Item 1A.	Risk Factors	5348

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5348

Item 3.	Defaults Upon Senior Securities	5348

Item 4.	Mine Safety Disclosures	5348

Item 5.	Other Information	5348

Item 6.	Exhibits	5449

SIGNATURE		5550

Index

Part I

FINANCIAL INFORMATION

Item 1. Financial Statements

ALLIANCEBERNSTEIN L.P.

AND SUBSIDIARIES

Condensed Consolidated Statements of Financial Condition

(in thousands, except unit amounts)

(unaudited)


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	1,093,097	$	1,037,400	Cash and cash equivalents	$	1,113,223	$	1,285,700
Cash and securities segregated, at fair value (cost: $1,072,523 and $1,752,483)		1,073,082		1,753,478
Cash and securities segregated, at fair value (cost: $1,692,566 and $1,503,554)						Cash and securities segregated, at fair value (cost: $1,692,566 and $1,503,554)	1,692,626		1,503,957
Receivables, net:	Receivables, net:					Receivables, net:
Brokers and dealers	Brokers and dealers	107,851		92,638		Brokers and dealers	317,293		65,897
Brokerage clients	Brokerage clients	2,011,409		1,713,377		Brokerage clients	2,013,265		2,059,842
AB funds fees	AB funds fees	253,740		325,407		AB funds fees	287,872		340,158
Other fees	Other fees	156,157		148,746		Other fees	177,381		185,653
Investments:	Investments:					Investments:
Long-term incentive compensation-related	Long-term incentive compensation-related	61,513		60,114		Long-term incentive compensation-related	52,461		63,839
Other	Other	167,133		193,261		Other	191,022		209,579
Assets of consolidated company-sponsored investment funds:	Assets of consolidated company-sponsored investment funds:					Assets of consolidated company-sponsored investment funds:
Cash and cash equivalents	Cash and cash equivalents	30,456		36,506		Cash and cash equivalents	24,145		90,326
Investments	Investments	166,940		302,582		Investments	486,926		613,025
Other assets	Other assets	8,288		12,244		Other assets	30,594		30,461
Furniture, equipment and leasehold improvements, net	Furniture, equipment and leasehold improvements, net	154,201		147,874		Furniture, equipment and leasehold improvements, net	165,101		169,175
Goodwill	Goodwill	3,091,767		3,082,778		Goodwill	3,091,767		3,091,763
Intangible assets, net	Intangible assets, net	44,981		44,496		Intangible assets, net	40,426		41,531
Deferred sales commissions, net	Deferred sales commissions, net	68,414		64,066		Deferred sales commissions, net	69,078		74,899
Right-of-use assets	Right-of-use assets	408,990		418,455		Right-of-use assets	408,508		421,980
Other assets	Other assets	338,115		264,418		Other assets	373,718		262,303
Total assets	Total assets	$	9,236,134	$	9,697,840	Total assets	$	10,535,406	$	10,510,088

LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND CAPITAL	LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND CAPITAL					LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND CAPITAL
Liabilities:	Liabilities:					Liabilities:
Payables:	Payables:					Payables:
Brokers and dealers	Brokers and dealers	$	251,725	$	216,403	Brokers and dealers	$	363,669	$	265,957
Securities sold not yet purchased	Securities sold not yet purchased	12,709		17,791		Securities sold not yet purchased	3,648		3,828
Brokerage clients	Brokerage clients	2,912,175		3,440,266		Brokerage clients	3,671,032		3,603,558
AB mutual funds	AB mutual funds	82,826		65,550		AB mutual funds	87,106		94,962
Accounts payable and accrued expenses	Accounts payable and accrued expenses	228,294		197,657		Accounts payable and accrued expenses	260,665		257,307
Lease liabilities	Lease liabilities	485,843		505,549		Lease liabilities	475,790		490,735
Liabilities of consolidated company-sponsored investment funds	Liabilities of consolidated company-sponsored investment funds	11,317		30,620		Liabilities of consolidated company-sponsored investment funds	36,774		87,000
Accrued compensation and benefits	Accrued compensation and benefits	601,222		335,122		Accrued compensation and benefits	412,002		369,649

Debt	Debt	590,000		675,000		Debt	850,000		755,000

Total liabilities	Total liabilities	5,176,111		5,483,958		Total liabilities	6,160,686		5,927,996

Index


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Commitments and contingencies (See Note 12)	Commitments and contingencies (See Note 12)	0		0		Commitments and contingencies (See Note 12)	0		0

Redeemable non-controlling interest		17,803		102,359
Redeemable non-controlling interest of consolidated entities						Redeemable non-controlling interest of consolidated entities	338,021		421,169

Capital:	Capital:					Capital:
General Partner	General Partner	41,953		41,776		General Partner	41,832		42,850
Limited partners: 271,994,122 and 270,509,658 units issued and outstanding		4,247,060		4,229,485
Limited partners: 271,775,790 and 271,453,043 units issued and outstanding						Limited partners: 271,775,790 and 271,453,043 units issued and outstanding	4,235,643		4,336,211
Receivables from affiliates	Receivables from affiliates	(7,799)		(8,316)		Receivables from affiliates	(8,126)		(8,333)
AB Holding Units held for long-term incentive compensation plans	AB Holding Units held for long-term incentive compensation plans	(140,204)		(57,219)		AB Holding Units held for long-term incentive compensation plans	(130,914)		(119,470)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(98,790)		(94,203)		Accumulated other comprehensive loss	(101,736)		(90,335)
Partners’ capital attributable to AB Unitholders	Partners’ capital attributable to AB Unitholders	4,042,220		4,111,523		Partners’ capital attributable to AB Unitholders	4,036,699		4,160,923

Total liabilities, redeemable non-controlling interest and capital	Total liabilities, redeemable non-controlling interest and capital	$	9,236,134	$	9,697,840	Total liabilities, redeemable non-controlling interest and capital	$	10,535,406	$	10,510,088

See Accompanying Notes to Condensed Consolidated Financial Statements.

Index

ALLIANCEBERNSTEIN L.P.

AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(in thousands, except per unit amounts)

(unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
Revenues:	Revenues:									Revenues:
Investment advisory and services fees	Investment advisory and services fees	$	777,624	$	578,203	$	1,481,090	$	1,199,928	Investment advisory and services fees		$	823,782	$	703,466
Bernstein research services	Bernstein research services	105,655		113,609		224,676		242,832		Bernstein research services		117,807		119,021
Distribution revenues	Distribution revenues	155,538		120,099		303,138		250,956		Distribution revenues		168,341		147,600
Dividend and interest income	Dividend and interest income	8,658		12,692		17,342		33,157		Dividend and interest income		11,475		8,684
Investment gains (losses)		4,181		24,189		6,109		(20,117)
Investment (losses) gains										Investment (losses) gains		(39,024)		1,928
Other revenues	Other revenues	25,900		26,092		53,611		51,603		Other revenues		26,155		27,711
Total revenues	Total revenues	1,077,556		874,884		2,085,966		1,758,359		Total revenues		1,108,536		1,008,410
Less: Interest expense	Less: Interest expense	734		3,435		1,878		12,754		Less: Interest expense		2,849		1,144
Net revenues	Net revenues	1,076,822		871,449		2,084,088		1,745,605		Net revenues		1,105,687		1,007,266

Expenses:	Expenses:									Expenses:
Employee compensation and benefits	Employee compensation and benefits	435,707		349,638		841,766		711,910		Employee compensation and benefits		439,420		406,059
Promotion and servicing:	Promotion and servicing:									Promotion and servicing:
Distribution-related payments	Distribution-related payments	167,761		125,678		330,015		265,823		Distribution-related payments		176,244		162,254
Amortization of deferred sales commissions	Amortization of deferred sales commissions	8,236		6,622		16,135		12,148		Amortization of deferred sales commissions		9,383		7,899
Trade execution, marketing, T&E and other	Trade execution, marketing, T&E and other	46,571		44,288		93,249		99,898		Trade execution, marketing, T&E and other		51,227		46,678

General and administrative:

General and administrative	General and administrative	131,324		121,424		251,547		243,691		General and administrative		177,625		120,223

Real estate charges		0		5,526		0		5,526

Contingent payment arrangements	Contingent payment arrangements	838		807		1,634		1,600		Contingent payment arrangements		838		796
Interest on borrowings	Interest on borrowings	1,241		1,096		2,535		3,930		Interest on borrowings		1,411		1,294
Amortization of intangible assets	Amortization of intangible assets	1,521		6,723		3,000		13,209		Amortization of intangible assets		1,136		1,479
Total expenses	Total expenses	793,199		661,802		1,539,881		1,357,735		Total expenses		857,284		746,682

Operating income	Operating income	283,623		209,647		544,207		387,870		Operating income		248,403		260,584

Income taxes	Income taxes	12,480		11,386		29,225		20,860		Income taxes		12,721		16,745

Net income	Net income	271,143		198,261		514,982		367,010		Net income		235,682		243,839

Net income (loss) of consolidated entities attributable to non-controlling interests		3,573		20,940		3,281		(4,631)
Net (loss) of consolidated entities attributable to non-controlling interests										Net (loss) of consolidated entities attributable to non-controlling interests		(25,045)		(292)

Net income attributable to AB Unitholders	Net income attributable to AB Unitholders	$	267,570	$	177,321	$	511,701	$	371,641	Net income attributable to AB Unitholders		$	260,727	$	244,131

Net income per AB Unit:	Net income per AB Unit:									Net income per AB Unit:
Basic	Basic	$	0.97	$	0.65	$	1.86	$	1.36	Basic		$	0.95	$	0.89
Diluted	Diluted	$	0.97	$	0.65	$	1.86	$	1.36	Diluted		$	0.95	$	0.89

See Accompanying Notes to Condensed Consolidated Financial Statements.

Index

ALLIANCEBERNSTEIN L.P.

AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021

Net income	Net income	$	271,143	$	198,261	$	514,982	$	367,010	Net income		$	235,682	$	243,839
Other comprehensive income (loss):
Other comprehensive (loss):										Other comprehensive (loss):

Foreign currency translation adjustments, before tax	Foreign currency translation adjustments, before tax	2,088		6,317		(5,050)		(15,079)		Foreign currency translation adjustments, before tax		(11,822)		(7,138)
Income tax benefit	Income tax benefit	26		67		48		140		Income tax benefit		101		22
Foreign currency translation adjustments, net of tax	Foreign currency translation adjustments, net of tax	2,114		6,384		(5,002)		(14,939)		Foreign currency translation adjustments, net of tax		(11,721)		(7,116)

Changes in employee benefit related items:	Changes in employee benefit related items:									Changes in employee benefit related items:
Amortization of prior service cost	Amortization of prior service cost	6		6		12		12		Amortization of prior service cost		6		6
Recognized actuarial gain	Recognized actuarial gain	324		325		405		650		Recognized actuarial gain		323		81
Changes in employee benefit related items	Changes in employee benefit related items	330		331		417		662		Changes in employee benefit related items		329		87
Income tax (expense)	Income tax (expense)	(2)		(1)		(2)		(78)		Income tax (expense)		(9)		—
Employee benefit related items, net of tax	Employee benefit related items, net of tax	328		330		415		584		Employee benefit related items, net of tax		320		87

Other comprehensive income (loss)		2,442		6,714		(4,587)		(14,355)
Less: Comprehensive income (loss) in consolidated entities attributable to non-controlling interests		3,573		20,940		3,281		(4,631)
Other comprehensive (loss)										Other comprehensive (loss)		(11,401)		(7,029)
Less: Comprehensive (loss) in consolidated entities attributable to non-controlling interests										Less: Comprehensive (loss) in consolidated entities attributable to non-controlling interests		(25,045)		(292)
Comprehensive income attributable to AB Unitholders	Comprehensive income attributable to AB Unitholders	$	270,012	$	184,035	$	507,114	$	357,286	Comprehensive income attributable to AB Unitholders		$	249,326	$	237,102

See Accompanying Notes to Condensed Consolidated Financial Statements.

Index

ALLIANCEBERNSTEIN L.P.

AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Partners' Capital

(in thousands)

(unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
General Partner’s Capital	General Partner’s Capital									General Partner’s Capital
Balance, beginning of period	Balance, beginning of period	$	42,022	$	40,571	$	41,776	$	41,225	Balance, beginning of period		$	42,850	$	41,776
Net income	Net income	2,676		1,774		5,117		3,717		Net income		2,607		2,441
Cash distributions to General Partner	Cash distributions to General Partner	(2,421)		(3,396)		(5,319)		(5,938)		Cash distributions to General Partner		(3,781)		(2,898)
Long-term incentive compensation plans activity	Long-term incentive compensation plans activity	18		3		11		5		Long-term incentive compensation plans activity		(1)		(7)
(Retirement) issuance of AB Units, net		(342)		(305)		368		(362)
Issuance of AB Units, net										Issuance of AB Units, net		157		710

Balance, end of period	Balance, end of period	41,953		38,647		41,953		38,647		Balance, end of period		41,832		42,022
Limited Partners' Capital	Limited Partners' Capital									Limited Partners' Capital
Balance, beginning of period	Balance, beginning of period	4,253,904		4,109,946		4,229,485		4,174,201		Balance, beginning of period		4,336,211		4,229,485
Net income	Net income	264,894		175,547		506,584		367,924		Net income		258,120		241,690
Cash distributions to Unitholders	Cash distributions to Unitholders	(239,678)		(189,425)		(526,491)		(440,686)		Cash distributions to Unitholders		(374,029)		(286,813)
Long-term incentive compensation plans activity	Long-term incentive compensation plans activity	1,859		293		1,151		628		Long-term incentive compensation plans activity		(157)		(708)
(Retirement) issuance of AB Units, net		(33,919)		(30,150)		36,331		(35,856)
Issuance of AB Units, net										Issuance of AB Units, net		15,498		70,250

Balance, end of period	Balance, end of period	4,247,060		4,066,211		4,247,060		4,066,211		Balance, end of period		4,235,643		4,253,904
Receivables from Affiliates	Receivables from Affiliates									Receivables from Affiliates
Balance, beginning of period	Balance, beginning of period	(1,725)		(9,279)		(8,316)		(9,011)		Balance, beginning of period		(8,333)		(8,316)

Long-term incentive compensation awards expense	Long-term incentive compensation awards expense	17		209		159		393		Long-term incentive compensation awards expense		174		142
Capital contributions (to) from AB Holding		(6,091)		(97)		358		(549)
Capital contributions from AB Holding										Capital contributions from AB Holding		33		6,449
Balance, end of period	Balance, end of period	(7,799)		(9,167)		(7,799)		(9,167)		Balance, end of period		(8,126)		(1,725)
AB Holding Units held for Long-term Incentive Compensation Plans	AB Holding Units held for Long-term Incentive Compensation Plans									AB Holding Units held for Long-term Incentive Compensation Plans
Balance, beginning of period	Balance, beginning of period	(143,807)		(81,314)		(57,219)		(76,310)		Balance, beginning of period		(119,470)		(57,219)
Purchases of AB Holding Units to fund long-term compensation plans, net	Purchases of AB Holding Units to fund long-term compensation plans, net	(39,614)		(29,665)		(75,468)		(47,415)		Purchases of AB Holding Units to fund long-term compensation plans, net		(13,822)		(35,854)
Retirement (issuance) of AB Units, net		34,515		30,455		(36,498)		36,218
(Issuance) of AB Units, net										(Issuance) of AB Units, net		(15,655)		(71,013)
Long-term incentive compensation awards expense	Long-term incentive compensation awards expense	9,505		7,268		27,507		14,675		Long-term incentive compensation awards expense		18,442		18,002
Re-valuation of AB Holding Units held in rabbi trust	Re-valuation of AB Holding Units held in rabbi trust	(803)		(473)		1,474		(909)		Re-valuation of AB Holding Units held in rabbi trust		(409)		2,277
Other		0		3		0		15

Balance, end of period	Balance, end of period	(140,204)		(73,726)		(140,204)		(73,726)		Balance, end of period		(130,914)		(143,807)
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive (Loss)										Accumulated Other Comprehensive (Loss)
Balance, beginning of period	Balance, beginning of period	(101,232)		(134,073)		(94,203)		(113,004)		Balance, beginning of period		(90,335)		(94,203)

Foreign currency translation adjustment, net of tax	Foreign currency translation adjustment, net of tax	2,114		6,384		(5,002)		(14,939)		Foreign currency translation adjustment, net of tax		(11,721)		(7,116)
Changes in employee benefit related items, net of tax	Changes in employee benefit related items, net of tax	328		330		415		584		Changes in employee benefit related items, net of tax		320		87

Balance, end of period	Balance, end of period	(98,790)		(127,359)		(98,790)		(127,359)		Balance, end of period		(101,736)		(101,232)
Total Partners' Capital attributable to AB Unitholders	Total Partners' Capital attributable to AB Unitholders	4,042,220		3,894,606		4,042,220		3,894,606		Total Partners' Capital attributable to AB Unitholders		4,036,699		4,049,162

See Accompanying Notes to Condensed Consolidated Financial Statements.

Index

ALLIANCEBERNSTEIN L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


		Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020			2022		2021

Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	514,982	$	367,010	Net income	$	235,682	$	243,839

Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred sales commissions	Amortization of deferred sales commissions	16,135		12,148		Amortization of deferred sales commissions	9,383		7,899
Non-cash long-term incentive compensation expense	Non-cash long-term incentive compensation expense	27,666		15,068		Non-cash long-term incentive compensation expense	18,616		18,144
Depreciation and other amortization	Depreciation and other amortization	64,505		72,034		Depreciation and other amortization	11,124		10,967
Unrealized losses on investments		4,269		13,637
Unrealized (gains) losses on investments of consolidated company-sponsored investment funds		(936)		11,938
Unrealized losses (gains) on investments						Unrealized losses (gains) on investments	21,024		(175)
Unrealized losses on investments of consolidated company-sponsored investment funds						Unrealized losses on investments of consolidated company-sponsored investment funds	40,898		6,941
Non-cash lease expense						Non-cash lease expense	26,557		23,907
Other, net	Other, net	10,064		154		Other, net	4,395		10,977
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Decrease (increase) in securities, segregated		680,396		(787,322)
(Increase) decrease in securities, segregated						(Increase) decrease in securities, segregated	(188,669)		340,605
(Increase) in receivables	(Increase) in receivables	(222,721)		(145,247)		(Increase) in receivables	(193,178)		(117,622)
Decrease (increase) in investments		19,963		(42,626)
Decrease in investments of consolidated company-sponsored investment funds		136,578		334,970
Decrease in investments						Decrease in investments	8,434		53,493
Decrease (increase) in investments of consolidated company-sponsored investment funds						Decrease (increase) in investments of consolidated company-sponsored investment funds	85,201		(12,401)
(Increase) in deferred sales commissions	(Increase) in deferred sales commissions	(20,483)		(34,435)		(Increase) in deferred sales commissions	(3,562)		(10,952)
(Increase) decrease in right-of-use assets		(33,369)		5,278
(Increase) in other assets	(Increase) in other assets	(80,455)		(9,909)		(Increase) in other assets	(111,939)		(68,957)
(Decrease) increase in other assets and liabilities of consolidated company-sponsored investment funds, net	(Decrease) increase in other assets and liabilities of consolidated company-sponsored investment funds, net	(15,347)		7,318		(Decrease) increase in other assets and liabilities of consolidated company-sponsored investment funds, net	(50,360)		3,681
(Decrease) increase in payables		(513,344)		851,419
(Decrease) in lease liabilities		(18,415)		(49,946)
Increase (decrease) in payables						Increase (decrease) in payables	199,166		(218,887)
Increase (decrease) in accounts payable and accrued expenses	Increase (decrease) in accounts payable and accrued expenses	13,617		(3,895)		Increase (decrease) in accounts payable and accrued expenses	20,473		(1,566)
Increase in accrued compensation and benefits	Increase in accrued compensation and benefits	265,557		202,893		Increase in accrued compensation and benefits	43,766		66,909
Cash payments to relieve operating lease liabilities						Cash payments to relieve operating lease liabilities	(26,828)		(28,007)
Net cash provided by operating activities	Net cash provided by operating activities	848,662		820,487		Net cash provided by operating activities	150,183		328,795

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:

Purchases of furniture, equipment and leasehold improvements	Purchases of furniture, equipment and leasehold improvements	(25,914)		(6,531)		Purchases of furniture, equipment and leasehold improvements	(6,237)		(15,584)

Acquisition of business, net of cash acquired	Acquisition of business, net of cash acquired	(3,793)		(13,552)		Acquisition of business, net of cash acquired	—		(3,795)
Net cash used in investing activities	Net cash used in investing activities	(29,707)		(20,083)		Net cash used in investing activities	(6,237)		(19,379)

Index


		Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
(Repayment) borrowings of debt, net		(85,000)		125,000
Borrowings (repayments) of debt, net						Borrowings (repayments) of debt, net	95,000		(50,000)

Increase in overdrafts payable		8,315		16,570
(Decrease) in overdrafts payable						(Decrease) in overdrafts payable	(14,736)		(1,190)
Distributions to General Partner and Unitholders	Distributions to General Partner and Unitholders	(531,810)		(446,624)		Distributions to General Partner and Unitholders	(377,810)		(289,711)
(Redemptions) of non-controlling interest in consolidated company-sponsored investment funds, net	(Redemptions) of non-controlling interest in consolidated company-sponsored investment funds, net	(87,837)		(269,849)		(Redemptions) of non-controlling interest in consolidated company-sponsored investment funds, net	(58,103)		(13,500)

Capital contributions to affiliates		(408)		(971)
Capital contributions (from) to affiliates						Capital contributions (from) to affiliates	(529)		6,096

Additional investments by AB Holding with proceeds from exercise of compensatory options to buy AB Holding Units	Additional investments by AB Holding with proceeds from exercise of compensatory options to buy AB Holding Units	3,402		147		Additional investments by AB Holding with proceeds from exercise of compensatory options to buy AB Holding Units	—		1,914
Purchases of AB Holding Units to fund long-term incentive compensation plan awards, net	Purchases of AB Holding Units to fund long-term incentive compensation plan awards, net	(75,468)		(47,415)		Purchases of AB Holding Units to fund long-term incentive compensation plan awards, net	(13,822)		(35,854)

Other	Other	721		642		Other	(1,173)		(475)
Net cash used in financing activities	Net cash used in financing activities	(768,085)		(622,500)		Net cash used in financing activities	(371,173)		(382,720)

Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(1,223)		(11,162)		Effect of exchange rate changes on cash and cash equivalents	(11,431)		(1,589)

Net increase in cash and cash equivalents		49,647		166,742
Net decrease in cash and cash equivalents						Net decrease in cash and cash equivalents	(238,658)		(74,893)
Cash and cash equivalents as of beginning of the period	Cash and cash equivalents as of beginning of the period	1,073,906		691,171		Cash and cash equivalents as of beginning of the period	1,376,026		1,073,906
Cash and cash equivalents as of end of the period	Cash and cash equivalents as of end of the period	$	1,123,553	$	857,913	Cash and cash equivalents as of end of the period	$	1,137,368	$	999,013

Non-cash investing activities:	Non-cash investing activities:					Non-cash investing activities:
Fair value of assets acquired (less cash acquired of $2.8 million and $0.6 million, respectively)		$	13,235	$	18,389
Fair value of assets acquired (less cash acquired of $2.8 million in the first quarter of 2021)						Fair value of assets acquired (less cash acquired of $2.8 million in the first quarter of 2021)	$	—	$	12,962
Fair value of liabilities assumed	Fair value of liabilities assumed	$	1,642	$	437	Fair value of liabilities assumed	$	—	$	1,642

Non-cash financing activities:	Non-cash financing activities:					Non-cash financing activities:
Payables recorded under contingent payment arrangements	Payables recorded under contingent payment arrangements	$	7,800	$	4,400	Payables recorded under contingent payment arrangements	$	—	$	7,525

See Accompanying Notes to Condensed Consolidated Financial Statements.

Index

ALLIANCEBERNSTEIN L.P.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

~~June 30, 2021~~March 31, 2022

(unaudited)

The words “we” and “our” refer collectively to AllianceBernstein L.P. and its subsidiaries (“AB”), or to their officers and employees. Similarly, the word “company” refers to AB. These statements should be read in conjunction with AB’s audited consolidated financial statements included in AB’s Form 10-K for the year ended December 31, ~~2020.~~2021.

1. Business Description Organization and Basis of Presentation

Business Description

We provide diversified investment management, research and related services globally to a broad range of clients. Our principal services include:

• Institutional Services – servicing our institutional clients, including private and public pension plans, foundations and endowments, insurance companies, central banks and governments worldwide, and affiliates such as Equitable Holdings, Inc. ("EQH") and its subsidiaries, by means of separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles.

• Retail Services – servicing our retail clients, primarily by means of retail mutual funds sponsored by AB or an affiliated company, sub-advisory relationships with mutual funds sponsored by third parties, separately-managed account programs sponsored by financial intermediaries worldwide and other investment vehicles.

• Private Wealth ~~Management~~ Services – servicing our private clients, including high-net-worth individuals and families, trusts and estates, charitable foundations, partnerships, private and family corporations, and other entities, by means of separately-managed accounts, hedge funds, mutual funds and other investment vehicles.

•Bernstein Research Services – servicing institutional investors, such as pension fund, hedge fund and mutual fund managers, seeking high-quality fundamental research, quantitative services and brokerage-related services in equities and listed options.

We also provide distribution, shareholder servicing, transfer agency services and administrative services to the mutual funds we sponsor.

Our high-quality, in-depth research is the foundation of our business. Our research disciplines include economic, fundamental equity, fixed income and quantitative research. In addition, we have expertise in multi-asset strategies, wealth management, environmental, social and corporate governance ("ESG"), and alternative investments.

We provide a broad range of investment services with expertise in:

•Actively-managed equity strategies, with global and regional portfolios across capitalization ranges, concentration ranges and investment strategies, including value, growth and core equities;

•Actively-managed traditional and unconstrained fixed income strategies, including taxable and tax-exempt strategies;

•Alternative investments, including hedge funds, fund of funds, direct lending, real estate and private equity;

•Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds; and

•Some passive management, including index and enhanced index strategies.

Index

Organization

As of ~~June 30, 2021,~~March 31, 2022, EQH owned approximately 4.0% of the issued and outstanding units representing assignments of beneficial ownership of limited partnership interests in AllianceBernstein Holding L.P. (“AB Holding Units”). AllianceBernstein Corporation (an indirect wholly-owned subsidiary of EQH, “General Partner”) is the general partner of both AllianceBernstein Holding L.P. (“AB Holding”) and AB. AllianceBernstein Corporation owns 100,000 general partnership units in AB Holding and a 1%1.0% general partnership interest in AB.

As of ~~June 30, 2021,~~March 31, 2022, the ownership structure of AB, including limited partnership units outstanding as well as the general partner's 1%1.0% interest, was as follows:


EQH and its subsidiaries	~~62.9~~63.0	%
AB Holding	36.3
Unaffiliated holders	~~0.8~~0.7
	100.0	%

Including both the general partnership and limited partnership interests in AB Holding and AB, EQH and its subsidiaries had an approximate ~~64.4%~~64.5% economic interest in AB as of ~~June 30, 2021.~~March 31, 2022.

Basis of Presentation

The interim condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the interim results, have been made. The preparation of the condensed consolidated financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the interim reporting periods. Actual results could differ from those estimates. The condensed consolidated statement of financial condition as of December 31, ~~2020~~2021 was derived from audited financial statements. Certain disclosures included in the annual financial statements have been condensed or omitted from these financial statements as they are not required for interim financial statements under principles generally accepted in the United States of America ("GAAP") and the rules of the ~~Securities and Exchange Commission.~~SEC.

Principles of Consolidation

The condensed consolidated financial statements include AB and its majority-owned and/or controlled subsidiaries, and the consolidated entities that are considered to be variable interest entities (“VIEs”) ~~and~~and/or voting interest entities (“VOEs”) in which AB has a controlling financial interest. Non-controlling interests on the condensed consolidated statements of financial condition include the portion of consolidated company-sponsored investment funds in which we do not have direct equity ownership. All significant inter-company transactions and balances among the consolidated entities have been eliminated.

Reclassifications

~~During 2021,~~Certain prior period amounts previously presented as net issuance (repayment) of commercial paper, proceeds (repayment) of EQH facility and proceeds (repayment) of bank loans are now combined and presented as net repayments (borrowings) of debt in the condensed consolidated statements of cash flowshave been reclassified to conform to the current period's presentation. Amounts previously presented on the Statement of Cash Flows as (increase) decrease in right-of-use assets and increase (decrease) in lease liabilities during 2021 are now presented net as "Cash payments to relieve operating lease liabilities". Non-cash lease expense under adjustments to reconcile net income to net cash provided by operating activities formerly classified as "Depreciation and other amortization" during 2021 are now classified separately on the Statement of Cash Flows as "Non-cash lease expense". Amounts previously classified under Financing "Other" related to non-cash accretion expense associated with our contingent payment arrangements during 2021 have been reclassified to non-cash "Other, net" under adjustments to reconcile net income to net cash provided by operating activities.

Subsequent Events

We have evaluated subsequent events through the date that these financial statements were filed with the ~~Securities~~SEC and ~~Exchange Commission~~.did not identify any subsequent events that would require disclosure in these financial statements.

Index

2. Significant Accounting Policies

~~Recently Adopted Accounting Pronouncements~~During the first quarter of 2022, there have been no recently adopted accounting pronouncements or pronouncements not yet adopted.

~~In August 2018, the FASB issued ASU 2018-14,~~ ~~Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20)~~. The amendment modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. We adopted this standard prospectively on January 1, 2021. The adoption of this standard did not have a material impact on our financial condition or results of operations.

~~In December 2019, the FASB issued ASU 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~. The amendments simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify US GAAP for other areas of Topic 740 by clarifying and amending the existing guidance. We adopted this standard prospectively on January 1, 2021. The adoption of this standard did not have a material impact on our financial condition or results of operations.

3. Revenue Recognition

Revenues for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ consisted of the following:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
		(in thousands)										(in thousands)
Subject to contracts with customers:	Subject to contracts with customers:									Subject to contracts with customers:
Investment advisory and services fees	Investment advisory and services fees									Investment advisory and services fees
Base fees	Base fees	$	723,717	$	569,296	$	1,411,408	$	1,182,883	Base fees		$	747,813	$	687,691
Performance-based fees	Performance-based fees	53,907		8,907		69,682		17,045		Performance-based fees		75,969		15,775
Bernstein research services	Bernstein research services	105,655		113,609		224,676		242,832		Bernstein research services		117,807		119,021
Distribution revenues	Distribution revenues									Distribution revenues
All-in-management fees	All-in-management fees	86,073		75,828		171,255		162,185		All-in-management fees		81,221		85,182
12b-1 fees	12b-1 fees	20,653		17,830		40,687		37,283		12b-1 fees		19,517		20,034
Other		48,812		26,441		91,196		51,488
Other distribution fees										Other distribution fees		67,603		42,384
Other revenues	Other revenues									Other revenues
Shareholder servicing fees	Shareholder servicing fees	22,383		19,694		44,078		40,537		Shareholder servicing fees		22,414		21,695
Other	Other	2,933		5,790		8,616		10,462		Other		3,509		5,683
		1,064,133		837,395		2,061,598		1,744,715				1,135,853		997,465
Not subject to contracts with customers:	Not subject to contracts with customers:									Not subject to contracts with customers:
Dividend and interest income, net of interest expense	Dividend and interest income, net of interest expense	7,924		9,257		15,464		20,403		Dividend and interest income, net of interest expense		8,626		7,540
Investment gains (losses)		4,181		24,189		6,109		(20,117)
Investment (losses) gains										Investment (losses) gains		(39,024)		1,928
Other revenues	Other revenues	584		608		917		604		Other revenues		232		333
		12,689		34,054		22,490		890				(30,166)		9,801
Total net revenues	Total net revenues	$	1,076,822	$	871,449	$	2,084,088	$	1,745,605	Total net revenues		$	1,105,687	$	1,007,266

4. Long-term Incentive Compensation Plans

We maintain several unfunded, non-qualified long-term incentive compensation plans, under which we grant annual awards to employees, generally in the fourth quarter, and to members of the Board of Directors of the General Partner, who are not employed by our company or by any of our affiliates (“Eligible Directors”).

We fund our restricted AB Holding Unit awards either by purchasing AB Holding Units on the open market or purchasing newly-issued AB Holding Units from AB Holding, and then keeping these AB Holding Units in a consolidated rabbi trust until delivering them or retiring them. In accordance with the Amended and Restated Agreement of Limited Partnership of AB (“AB Partnership Agreement”), when AB purchases newly-issued AB Holding Units from AB Holding, AB Holding is

~~Index~~

required to use the proceeds it receives from AB to purchase the equivalent number of newly-issued AB Units, thus increasing its percentage ownership interest in AB. AB Holding Units held in the consolidated rabbi trust are corporate assets in the name of the trust and are available to the general creditors of AB.

Index

Repurchases and retention of AB Holding Units for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ consisted of the following:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
		(in millions)										(in millions)
Total amount of AB Holding Units Purchased (1)		0.9		1.3		1.9		2.2
Total Cash Paid for AB Holding Units Purchased (1)		$	38.3	$	27.8	$	75.7	$	47.6
Total amount of AB Holding Units Purchased/Retained (1)										Total amount of AB Holding Units Purchased/Retained (1)		0.3		1.0
Total Cash Paid for AB Holding Units Purchased/Retained (1)										Total Cash Paid for AB Holding Units Purchased/Retained (1)		$	14.0	$	37.4
Open Market Purchases of AB Holding Units Purchased ~~(2)~~(1)	Open Market Purchases of AB Holding Units Purchased ~~(2)~~(1)	0.8		1.3		1.4		2.2		Open Market Purchases of AB Holding Units Purchased ~~(2)~~(1)		—		0.6
Total Cash Paid for Open Market Purchases of AB Holding Units ~~(2)~~(1)	Total Cash Paid for Open Market Purchases of AB Holding Units ~~(2)~~(1)	$	34.6	$	27.8	$	58.8	$	45.1	Total Cash Paid for Open Market Purchases of AB Holding Units ~~(2)~~(1)		$	—	$	24.2

(1) Purchased on a trade date basis.

~~(2)~~ The ~~remainder related to~~difference between open-market purchases and units retained reflects the retention of AB Holding Units from employees to fulfill statutory tax withholding requirements at the time of delivery of long-term incentive compensation ~~award.~~awards.

Purchases of AB Holding Units reflected on the condensed consolidated statements of cash flows are net of AB Holding Unit purchases by employees as part of a distribution reinvestment election.

Each quarter, we consider whether to implement a plan to repurchase AB Holding Units pursuant to Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended ("Exchange Act"). A plan of this type allows a company to repurchase its shares at times when it otherwise might be prevented from doing so because of self-imposed trading blackout periods or because it possesses material non-public information. Each broker we select has the authority under the terms and limitations specified in the plan to repurchase AB Holding Units on our behalf. Repurchases are subject to regulations promulgated by the SEC as well as certain price, market volume and timing constraints specified in the plan. ~~The~~We did not adopt a plan ~~adopted~~ during the ~~second~~first quarter of ~~2021 expired at the close of business on July 28, 2021.~~2022. We may adopt additional plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under our incentive compensation award program and for other corporate purposes.

During the first ~~six~~three months of ~~2021~~2022 and ~~2020,~~2021, we awarded to employees and Eligible Directors ~~3.5~~0.7 million and ~~0.2~~3.4 million restricted AB Holding Unit awards, respectively. We ~~used~~use any AB Holding Units repurchased during the applicable period and newly-issued AB Holding Units to fund these awards.

During the first ~~six~~three months of ~~2021~~2022 and ~~2020,~~2021, AB Holding ~~issued~~had no issuances and 0.1 million ~~and 5,182~~issuances of AB Holding Units, respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of ~~$3.4 million~~zero and ~~$0.1~~$1.9 million, respectively, received from award recipients as payment in cash for the exercise price to purchase the equivalent number of newly-issued AB Units.

~~Index~~

5. Net Income per Unit

Basic net income per unit is derived by reducing net income for the 1% general partnership interest and dividing the remaining 99% by the basic weighted average number of limited partnership units outstanding for each period. Diluted net income per unit is derived by reducing net income for the 1% general partnership interest and dividing the remaining 99% by the total of the diluted weighted average number of limited partnership units outstanding for each period.


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
		(in thousands, except per unit amounts)										(in thousands, except per unit amounts)
Net income attributable to AB Unitholders	Net income attributable to AB Unitholders	$	267,570	$	177,321	$	511,701	$	371,641	Net income attributable to AB Unitholders		$	260,727	$	244,131

Weighted average limited partnership units outstanding – basic	Weighted average limited partnership units outstanding – basic	272,344		269,081		272,339		269,789		Weighted average limited partnership units outstanding – basic		271,383		272,332
Dilutive effect of compensatory options to buy AB Holding Units	Dilutive effect of compensatory options to buy AB Holding Units	12		9		20		22		Dilutive effect of compensatory options to buy AB Holding Units		3		32
Weighted average limited partnership units outstanding – diluted	Weighted average limited partnership units outstanding – diluted	272,356		269,090		272,359		269,811		Weighted average limited partnership units outstanding – diluted		271,386		272,364
Basic net income per AB Unit	Basic net income per AB Unit	$	0.97	$	0.65	$	1.86	$	1.36	Basic net income per AB Unit		$	0.95	$	0.89
Diluted net income per AB Unit	Diluted net income per AB Unit	$	0.97	$	0.65	$	1.86	$	1.36	Diluted net income per AB Unit		$	0.95	$	0.89

Index

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
(amounts as shown)
Anti-dilutive options excluded from diluted net income 0 44,877 0 44,877
There were no anti-dilutive options excluded from diluted net income in the three months ended March 31, 2022 or 2021, respectively.

6. Cash Distributions

AB is required to distribute all of its Available Cash Flow, as defined in the AB Partnership Agreement, to its Unitholders and to the General Partner. Available Cash Flow can be summarized as the cash flow received by AB from operations minus such amounts as the General Partner determines, in its sole discretion, should be retained by AB for use in its business, or plus such amounts as the General Partner determines, in its sole discretion, should be released from previously retained cash flow.

Typically, Available Cash Flow has been the adjusted diluted net income per unit for the quarter multiplied by the number of general and limited partnership interests at the end of the quarter. In future periods, management anticipates that Available Cash Flow will be based on adjusted diluted net income per unit, unless management determines, with the concurrence of the Board of Directors, that one or more adjustments that are made for adjusted net income should not be made with respect to the Available Cash Flow calculation.

On ~~July~~April 29, ~~2021,~~2022, the General Partner declared a distribution of ~~$0.97~~$0.99 per AB Unit, representing a distribution of Available Cash Flow for the three months ended ~~June 30, 2021.~~March 31, 2022. The General Partner, as a result of its 1% general partnership interest, is entitled to receive 1% of each distribution. The distribution is payable on ~~August 19, 2021~~May 26, 2022 to holders of record on ~~August~~May 9, ~~2021.~~2022.

7. Cash and Securities Segregated Under Federal Regulations and Other Requirements

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020, $1.1~~2021, $1.7 billion and ~~$1.8~~$1.5 billion, respectively, of U.S. Treasury Bills were segregated in a special reserve bank custody account for the exclusive benefit of our brokerage customers under Rule 15c3-3 of the Exchange Act.

~~Index~~

8. Investments

Investments consist of:


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(in thousands)					(in thousands)

Equity securities:	Equity securities:					Equity securities:
Long-term incentive compensation-related	Long-term incentive compensation-related	$	30,808	$	34,351	Long-term incentive compensation-related	$	24,128	$	32,237
Seed capital	Seed capital	102,828		75,766		Seed capital	127,383		133,992
Other	Other	8,415		55,439		Other	2,232		18,243
Exchange-traded options	Exchange-traded options	2,165		7,527		Exchange-traded options	445		1,893
Investments in limited partnership hedge funds:	Investments in limited partnership hedge funds:					Investments in limited partnership hedge funds:
Long-term incentive compensation-related	Long-term incentive compensation-related	30,705		25,762		Long-term incentive compensation-related	28,333		31,602
Seed capital	Seed capital	20,100		16,646		Seed capital	26,392		19,318
Time deposits	Time deposits	18,120		18,602		Time deposits	21,942		21,024
Other	Other	15,505		19,282		Other	12,628		15,109
Total investments	Total investments	$	228,646	$	253,375	Total investments	$	243,483	$	273,418

Total investments related to long-term incentive compensation obligations of ~~$61.5~~$52.5 million and ~~$60.1~~$63.8 million as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, consist of company-sponsored mutual funds and hedge funds. For long-term incentive compensation awards granted before 2009, we typically made investments in company-sponsored mutual funds and hedge funds that were notionally elected by plan participants and maintained them (and continue to maintain them) in a consolidated rabbi trust or separate custodial account. The rabbi trust and custodial account enable us to hold such investments separate from our other assets for the purpose of settling our obligations to participants. The investments held in the rabbi trust and custodial account remain available to the general creditors of AB.

Index

The underlying investments of hedge funds in which we invest include long and short positions in equity securities, fixed income securities (including various agency and non-agency asset-based securities), currencies, commodities and derivatives (including various swaps and forward contracts). These investments are valued at quoted market prices or, where quoted market prices are not available, are fair valued based on the pricing policies and procedures of the underlying funds.

We allocate seed capital to our investment teams to help develop new products and services for our clients. A portion of our seed capital trading investments are equity and fixed income products, primarily in the form of separately-managed account portfolios, U.S. mutual funds, Luxembourg funds, Japanese investment trust management funds or Delaware business trusts. We also may allocate seed capital to investments in private equity funds. Regarding our seed capital investments, the amounts above reflect those funds in which we are not the primary beneficiary of a VIE or hold a controlling financial interest in a VOE. See Note 14, Consolidated Company-Sponsored Investment Funds, for a description of the seed capital investments that we consolidate. As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, our total seed capital investments were ~~$299.3~~$320.5 million and ~~$310.3~~$379.0 million, respectively. Seed capital investments in unconsolidated company-sponsored investment funds are valued using published net asset values or non-published net asset values if they are not listed on an active exchange but have net asset values that are comparable to funds with published net asset values and have no redemption restrictions.

In addition, we also have long positions in corporate equities and long exchange-traded options traded through our options desk.

~~Index~~

The portion of unrealized gains (losses) related to equity securities, as defined by ASC 321-10, held as of ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ were as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
		(in thousands)										(in thousands)
Net gains (losses) recognized during the period		$	7,719	$	14,386	$	12,606	$	(7,600)
Net (losses) gains recognized during the period										Net (losses) gains recognized during the period		$	(16,550)	$	4,887
Less: net gains recognized during the period on equity securities sold during the period	Less: net gains recognized during the period on equity securities sold during the period	12,156		7,471		16,721		6,076		Less: net gains recognized during the period on equity securities sold during the period		4,539		4,565
Unrealized (losses) gains recognized during the period on equity securities held	Unrealized (losses) gains recognized during the period on equity securities held	$	(4,437)	$	6,915	$	(4,115)	$	(13,676)	Unrealized (losses) gains recognized during the period on equity securities held		$	(21,089)	$	322

9. Derivative Instruments

See Note 14, Consolidated Company-Sponsored Investment Funds, for disclosure of derivative instruments held by our consolidated company-sponsored investment funds.

We enter various futures, forwards, options and swaps to economically hedge certain seed capital investments. Also, we have currency forwards that help us to economically hedge certain balance sheet exposures. In addition, our options desk trades long and short exchange-traded equity options. We do not hold any derivatives designated in a formal hedge relationship under ASC 815-10, Derivatives and Hedging.

Index

The notional value and fair value as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 for derivative instruments (excluding derivative instruments relating to our options desk trading activities discussed below) not designated as hedging instruments were as follows:


				Fair Value							Fair Value
		Notional Value		Derivative Assets		Derivative Liabilities			Notional Value		Derivative Assets		Derivative Liabilities
		(in thousands)							(in thousands)
June 30, 2021:
March 31, 2022:								March 31, 2022:
Exchange-traded futures	Exchange-traded futures	$	128,533	$	497	$	758	Exchange-traded futures	$	100,466	$	1,564	$	1,895
Currency forwards	Currency forwards	49,260		8,332		7,661		Currency forwards	66,216		7,647		7,133
Interest rate swaps	Interest rate swaps	13,483		372		441		Interest rate swaps	10,683		545		652
Credit default swaps	Credit default swaps	121,176		7,275		7,180		Credit default swaps	159,622		9,572		4,883
Total return swaps	Total return swaps	47,390		116		762		Total return swaps	61,597		2,754		1,060
Option swaps	Option swaps	50,000		0		112		Option swaps	50,000		—		524
Total derivatives	Total derivatives	$	409,842	$	16,592	$	16,914	Total derivatives	$	448,584	$	22,082	$	16,147

December 31, 2020:
December 31, 2021:								December 31, 2021:
Exchange-traded futures	Exchange-traded futures	$	142,886	$	118	$	1,834	Exchange-traded futures	$	131,876	$	392	$	1,186
Currency forwards	Currency forwards	63,906		8,576		8,451		Currency forwards	66,058		7,344		6,980
Interest rate swaps	Interest rate swaps	60,997		2,043		2,955		Interest rate swaps	13,483		497		833
Credit default swaps	Credit default swaps	167,649		10,910		13,304		Credit default swaps	155,757		6,594		6,967
Total return swaps	Total return swaps	52,061		94		1,847		Total return swaps	63,817		595		527
Option swaps	Option swaps	2,486		0		2,146		Option swaps	50,000		—		430
Total derivatives	Total derivatives	$	489,985	$	21,741	$	30,537	Total derivatives	$	480,991	$	15,422	$	16,923

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the derivative assets and liabilities are included in both receivables and payables to brokers and dealers on our condensed consolidated statements of financial condition.

~~Index~~

The gains and losses for derivative instruments (excluding our options desk trading activities discussed below) for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ recognized in investment gains (losses) in the condensed consolidated statements of income were as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020					2022		2021
		(in thousands)										(in thousands)
Exchange-traded futures	Exchange-traded futures	$	(4,882)	$	(5,818)	$	(3,747)	$	(4,812)	Exchange-traded futures			$	7,513	$	1,135
Currency forwards	Currency forwards	(354)		(212)		827		446		Currency forwards			544		1,181
Interest rate swaps	Interest rate swaps	(111)		225		(23)		(387)		Interest rate swaps			(73)		88
Credit default swaps	Credit default swaps	(1,714)		(4,311)		(2,236)		7,790		Credit default swaps			1,717		(522)
Total return swaps	Total return swaps	(2,980)		(18,966)		(3,887)		(3,851)		Total return swaps			7,406		(907)
Option swaps	Option swaps	(1,373)		(1,831)		(12)		(533)		Option swaps			2,625		1,361
Net (losses) on derivative instruments		$	(11,414)	$	(30,913)	$	(9,078)	$	(1,347)
Net gains on derivative instruments										Net gains on derivative instruments			$	19,732	$	2,336

We may be exposed to credit-related losses in the event of non-performance by counterparties to derivative financial instruments. We minimize our counterparty exposure through a credit review and approval process. In addition, we have executed various collateral arrangements with counterparties to the over-the-counter derivative transactions that require both pledging and accepting collateral in the form of cash. As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we held ~~$2.1~~$7.8 million and ~~$0.4~~$2.9 million, respectively, of cash collateral payable to trade counterparties. This obligation to return cash is reported in payables to brokers and dealers in our condensed consolidated statements of financial condition.

Although notional amount typically is utilized as the measure of volume in the derivatives market, it is not used as a measure of credit risk. Generally, the current credit exposure of our derivative contracts is limited to the net positive estimated fair value of derivative contracts at the reporting date after taking into consideration the existence of netting agreements and any collateral received. A derivative with positive value (a derivative asset) indicates existence of credit

Index

risk because the counterparty would owe us if the contract were closed. Alternatively, a derivative contract with negative value (a derivative liability) indicates we would owe money to the counterparty if the contract were closed. Generally, if there is more than one derivative transaction with a single counterparty, a master netting arrangement exists with respect to derivative transactions with that counterparty to provide for aggregate net settlement.

Certain of our standardized contracts for over-the-counter derivative transactions (“ISDA Master Agreements”) contain credit risk related contingent provisions pertaining to each counterparty’s credit rating. In some ISDA Master Agreements, if the counterparty’s credit rating, or in some agreements, our assets under management (“AUM”), falls below a specified threshold, either a default or a termination event permitting us or the counterparty to terminate the ISDA Master Agreement would be triggered. In all agreements that provide for collateralization, various levels of collateralization of net liability positions are applicable, depending on the credit rating of the counterparty. As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we delivered ~~$4.4~~$6.5 million and ~~$6.4~~$5.6 million, respectively, of cash collateral into brokerage accounts. We report this cash collateral in cash and cash equivalents in our condensed consolidated statements of financial condition.

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we held ~~$2.2~~$0.4 million and ~~$7.5~~$1.9 million, respectively, of long exchange-traded equity options, which are included in other investments on our condensed consolidated statements of financial condition. In addition, as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we held ~~$1.7~~$0.2 million and ~~$12.5~~$2.8 million, respectively, of short exchange-traded equity options, which are included in securities sold not yet purchased on our condensed consolidated statements of financial condition. Our options desk provides our clients with equity derivative strategies and execution for exchange-traded options on single stocks, exchange-traded funds and indices. While predominately agency-based, the options desk may commit capital to facilitate a client’s transaction. Our options desk hedges the risks associated with this activity by taking offsetting positions in equities. For the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, we recognized losses of ~~$1.7~~$2.0 million and gains of ~~$3.1~~$4.8 million, respectively, on equity options ~~activity. For the three and six months ended June 30, 2020, we recognized losses of $18.5 million and $0.1 million, respectively, on equity option~~ activity. These gains and losses are recognized in investment gains (losses) in the condensed consolidated statements of income.

~~Index~~

10. Offsetting Assets and Liabilities

See Note 14, Consolidated Company-Sponsored Investment Funds, for disclosure of offsetting assets and liabilities of our consolidated company-sponsored investment funds.

Offsetting of assets as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 was as follows:


		Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Assets Presented in the Statement of Financial Condition		Financial Instruments Collateral		Cash Collateral Received		Net Amount			Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Assets Presented in the Statement of Financial Condition		Financial Instruments Collateral		Cash Collateral Received		Net Amount
		(in thousands)													(in thousands)
June 30, 2021:
March 31, 2022:														March 31, 2022:
Securities borrowed	Securities borrowed	$	26,081	$	0	$	26,081	$	(14,712)	$	0	$	11,369	Securities borrowed	$	97,865	$	—	$	97,865	$	(93,012)	$	—	$	4,853
Derivatives	Derivatives	$	16,592	$	0	$	16,592	$	0	$	(2,102)	$	14,490	Derivatives	$	22,082	$	—	$	22,082	$	—	$	(7,782)	$	14,300
Long exchange-traded options	Long exchange-traded options	$	2,165	$	0	$	2,165	$	0	$	0	$	2,165	Long exchange-traded options	$	445	$	—	$	445	$	—	$	—	$	445
December 31, 2020:
December 31, 2021:														December 31, 2021:
Securities borrowed	Securities borrowed	$	7,808	$	0	$	7,808	$	(7,344)	$	0	$	464	Securities borrowed	$	19,899	$	—	$	19,899	$	(18,327)	$	—	$	1,572
Derivatives	Derivatives	$	21,741	$	0	$	21,741	$	0	$	(380)	$	21,361	Derivatives	$	15,422	$	—	$	15,422	$	—	$	(2,872)	$	12,550
Long exchange-traded options	Long exchange-traded options	$	7,527	$	0	$	7,527	$	0	$	0	$	7,527	Long exchange-traded options	$	1,893	$	—	$	1,893	$	—	$	—	$	1,893

Index

Offsetting of liabilities as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 was as follows:


		Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Liabilities Presented in the Statement of Financial Condition		Financial Instruments Collateral		Cash Collateral Pledged		Net Amount			Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Liabilities Presented in the Statement of Financial Condition		Financial Instruments Collateral		Cash Collateral Pledged		Net Amount
		(in thousands)													(in thousands)
June 30, 2021:

March 31, 2022:														March 31, 2022:
Securities loaned														Securities loaned	$	81,049	$	—	$	81,049	$	(78,208)	$	—	$	2,841
Derivatives	Derivatives	$	16,914	$	0	$	16,914	$	0	$	(4,379)	$	12,535	Derivatives	$	16,147	$	—	$	16,147	$	—	$	(6,216)	$	9,931
Short exchange-traded options	Short exchange-traded options	$	1,706	$	0	$	1,706	$	0	$	0	$	1,706	Short exchange-traded options	$	221	$	—	$	221	$	—	$	—	$	221
December 31, 2020:

December 31, 2021:														December 31, 2021:
Securities loaned														Securities loaned	$	23,911	$	—	$	23,911	$	(23,373)	$	—	$	538
Derivatives	Derivatives	$	30,537	$	0	$	30,537	$	0	$	(6,374)	$	24,163	Derivatives	$	16,923	$	—	$	16,923	$	—	$	(5,572)	$	11,351
Short exchange-traded options	Short exchange-traded options	$	12,486	$	0	$	12,486	$	0	$	0	$	12,486	Short exchange-traded options	$	2,774	$	—	$	2,774	$	—	$	—	$	2,774

Cash collateral, whether pledged or received on derivative instruments, is not considered material and, accordingly, is not disclosed by counterparty.

Index

11. Fair Value

See Note 14, Consolidated Company-Sponsored Investment Funds, for disclosure of fair value of our consolidated company-sponsored investment funds.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. The three broad levels of fair value hierarchy are as follows:

• Level 1 – Quoted prices in active markets are available for identical assets or liabilities as of the reported date.

• Level 2 – Quoted prices in markets that are not active or other pricing inputs that are either directly or indirectly observable as of the reported date.

• Level 3 – Prices or valuation techniques that are both significant to the fair value measurement and unobservable as of the reported date. These financial instruments do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Valuation of our financial instruments by pricing observability levels as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 was as follows (in thousands):


		Level 1		Level 2		Level 3		NAV Expedient(1)		Other		Total			Level 1		Level 2		Level 3		NAV Expedient(1)		Other		Total
June 30, 2021:
March 31, 2022:														March 31, 2022:
Money markets	Money markets	$	158,844	$	0	$	0	$	—	$	—	$	158,844	Money markets	$	122,582	$	—	$	—	$	—	$	—	$	122,582
Securities segregated (U.S. Treasury Bills)	Securities segregated (U.S. Treasury Bills)	0		1,072,928		0		—		—		1,072,928		Securities segregated (U.S. Treasury Bills)	—		1,692,536		—		—		—		1,692,536
Derivatives	Derivatives	497		16,095		0		—		—		16,592		Derivatives	1,564		20,518		—		—		—		22,082
Investments:	Investments:													Investments:

Equity securities	Equity securities	123,315		18,450		126		160		—		142,051		Equity securities	125,428		28,052		119		144		—		153,743
Long exchange-traded options	Long exchange-traded options	2,165		0		0		—		—		2,165		Long exchange-traded options	445		—		—		—		—		445
Limited partnership hedge funds(2)	Limited partnership hedge funds(2)	—		—		—		—		50,805		50,805		Limited partnership hedge funds(2)	—		—		—		—		54,725		54,725

Time deposits(3)	Time deposits(3)	—		—		—		—		18,120		18,120		Time deposits(3)	—		—		—		—		21,942		21,942
Other investments	Other investments	8,164		—		—		—		7,341		15,505		Other investments	7,861		—		—		—		4,767		12,628
Total investments	Total investments	133,644		18,450		126		160		76,266		228,646		Total investments	133,734		28,052		119		144		81,434		243,483
Total assets measured at fair value	Total assets measured at fair value	$	292,985	$	1,107,473	$	126	$	160	$	76,266	$	1,477,010	Total assets measured at fair value	$	257,880	$	1,741,106	$	119	$	144	$	81,434	$	2,080,683

Securities sold not yet purchased:	Securities sold not yet purchased:													Securities sold not yet purchased:
Short equities – corporate	Short equities – corporate	$	11,003	$	0	$	0	$	—	$	—	$	11,003	Short equities – corporate	$	3,427	$	—	$	—	$	—	$	—	$	3,427
Short exchange-traded options	Short exchange-traded options	1,706		0		0		—		—		1,706		Short exchange-traded options	221		—		—		—		—		221
Derivatives	Derivatives	758		16,156		0		—		—		16,914		Derivatives	1,895		14,252		—		—		—		16,147
Contingent payment arrangements	Contingent payment arrangements	0		0		37,184		—		—		37,184		Contingent payment arrangements	—		—		39,098		—		—		39,098
Total liabilities measured at fair value	Total liabilities measured at fair value	$	13,467	$	16,156	$	37,184	$	—	$	—	$	66,807	Total liabilities measured at fair value	$	5,543	$	14,252	$	39,098	$	—	$	—	$	58,893

Index


		Level 1		Level 2		Level 3		NAV Expedient(1)		Other		Total			Level 1		Level 2		Level 3		NAV Expedient(1)		Other		Total
December 31, 2020:
December 31, 2021:														December 31, 2021:
Money markets	Money markets	$	130,675	$	0	$	0	$	—	$	—	$	130,675	Money markets	$	151,156	$	—	$	—	$	—	$	—	$	151,156
Securities segregated (U.S. Treasury Bills)	Securities segregated (U.S. Treasury Bills)	0		1,752,906		0		—		—		1,752,906		Securities segregated (U.S. Treasury Bills)	—		1,503,828		—		—		—		1,503,828
Derivatives	Derivatives	118		21,623		0		—		—		21,741		Derivatives	392		15,030		—		—		—		15,422
Investments:	Investments:													Investments:
Equity securities	Equity securities	147,705		17,565		125		161		—		165,556		Equity securities	144,917		39,284		126		145		—		184,472
Long exchange-traded options	Long exchange-traded options	7,527		0		0		—		—		7,527		Long exchange-traded options	1,893		—		—		—		—		1,893
Limited partnership hedge funds(2)	Limited partnership hedge funds(2)	—		—		—		—		42,408		42,408		Limited partnership hedge funds(2)	—		—		—		—		50,920		50,920

Time deposits(3)	Time deposits(3)	—		—		—		—		18,602		18,602		Time deposits(3)	—		—		—		—		21,024		21,024
Other investments	Other investments	7,011		—		—		—		12,271		19,282		Other investments	9,094		—		—		—		6,015		15,109
Total investments	Total investments	162,243		17,565		125		161		73,281		253,375		Total investments	155,904		39,284		126		145		77,959		273,418
Total assets measured at fair value	Total assets measured at fair value	$	293,036	$	1,792,094	$	125	$	161	$	73,281	$	2,158,697	Total assets measured at fair value	$	307,452	$	1,558,142	$	126	$	145	$	77,959	$	1,943,824

Securities sold not yet purchased:	Securities sold not yet purchased:													Securities sold not yet purchased:
Short equities – corporate	Short equities – corporate	$	5,305	$	0	$	0	$	—	$	—	$	5,305	Short equities – corporate	$	1,054	$	—	$	—	$	—	$	—	$	1,054
Short exchange-traded options	Short exchange-traded options	12,486		0		0		—		—		12,486		Short exchange-traded options	2,774		—		—		—		—		2,774
Derivatives	Derivatives	1,834		28,703		0		—		—		30,537		Derivatives	1,186		15,737		—		—		—		16,923
Contingent payment arrangements	Contingent payment arrangements	0		0		27,750		—		—		27,750		Contingent payment arrangements	—		—		38,260		—		—		38,260
Total liabilities measured at fair value	Total liabilities measured at fair value	$	19,625	$	28,703	$	27,750	$	—	$	—	$	76,078	Total liabilities measured at fair value	$	5,014	$	15,737	$	38,260	$	—	$	—	$	59,011

(1) Investments measured at fair value using NAV (or its equivalent) as a practical expedient.

(2) Investments in equity method investees that are not measured at fair value in accordance with GAAP.

(3) Investments carried at amortized cost that are not measured at fair value in accordance with GAAP.

Other investments included in Level 1 of the fair value hierarchy include ~~(i) an~~our investment in a ~~software publishing company~~mutual fund measured at fair value ($7.9 million and $9.1 million as of March 31, 2022 and December 31, 2021, respectively). Other investments not measured at fair value include (i) investments in start-up companies that ~~does~~do not have a readily available fair value ~~($2.2 million and $2.1 million as of June 30, 2021 and December 31, 2020, respectively), (ii) investment in a start-up company that does not have a readily available fair value (this investment was~~(these investments were $0.3 million as of ~~both June 30, 2021~~March 31, 2022 and December 31, ~~2020)~~2021), ~~(iii)~~(ii) investments in equity method investees that are not measured at fair value in accordance with GAAP ($~~2.1~~1.6 million and ~~$6.5~~$2.9 million as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively), and ~~(iv)~~(iii) broker dealer exchange memberships that are not measured at fair value in accordance with GAAP ($2.8 million ~~and $3.3 million~~ as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020, respectively)~~2021).

We provide below a description of the fair value methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy:

• Money markets: We invest excess cash in various money market funds that are valued based on quoted prices in active markets; these are included in Level 1 of the valuation hierarchy.

• Treasury Bills: We hold U.S. Treasury Bills, which are primarily segregated in a special reserve bank custody account as required by Rule 15c3-3 of the Exchange Act. These securities are valued based on quoted yields in secondary markets and are included in Level 2 of the valuation hierarchy.

• Equity securities: Our equity securities consist principally of company-sponsored mutual funds with NAVs and various separately-managed portfolios consisting primarily of equity and fixed income mutual funds with quoted prices in active markets, which are included in Level 1 of the valuation hierarchy. In addition, some securities are valued based on observable inputs from recognized pricing vendors, which are included in Level 2 of the valuation hierarchy.

• Derivatives: We hold exchange-traded futures with counterparties that are included in Level 1 of the valuation hierarchy. In addition, we also hold currency forward contracts, interest rate swaps, credit default swaps, option swaps

Index

and total return swaps with counterparties that are valued based on observable inputs from recognized pricing vendors, which are included in Level 2 of the valuation hierarchy.

• Options: We hold long exchange-traded options that are included in Level 1 of the valuation hierarchy.

• Securities sold not yet purchased: Securities sold not yet purchased, primarily reflecting short positions in equities and exchange-traded options, are included in Level 1 of the valuation hierarchy.

• Contingent payment arrangements: Contingent payment arrangements relate to contingent payment liabilities associated with various acquisitions. At each reporting date, we estimate the fair values of the contingent consideration expected to be paid based upon probability-weighted AUM and revenue projections, using unobservable market data inputs, which are included in Level 3 of the valuation hierarchy.

During the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 there were no transfers between Level 2 and Level 3 securities.

The change in carrying value associated with Level 3 financial instruments carried at fair value, classified as equity securities, is as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
		(in thousands)									(in thousands)
Balance as of beginning of period	Balance as of beginning of period	$	124	$	118	$	125	$	119	Balance as of beginning of period	$	126	$	125
Purchases	Purchases	0		0		0		0		Purchases	—		—
Sales	Sales	0		0		0		0		Sales	—		—
Realized gains (losses), net	Realized gains (losses), net	0		0		0		0		Realized gains (losses), net	—		—
Unrealized gains (losses), net		2		(4)		1		(5)
Unrealized (losses), net										Unrealized (losses), net	(7)		(1)
Balance as of end of period	Balance as of end of period	$	126	$	114	$	126	$	114	Balance as of end of period	$	119	$	124

Realized and unrealized gains and losses on Level 3 financial instruments are recorded in investment gains and losses in the condensed consolidated statements of income.

As part of acquisitions made by the Company, we may enter into contingent consideration arrangements as part of the purchase price. The change in carrying value associated with Level 3 financial instruments carried at fair value, classified as contingent payment arrangements, is as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
		(in thousands)									(in thousands)
Balance as of beginning of period	Balance as of beginning of period	$	36,073	$	23,704	$	27,750	$	22,911	Balance as of beginning of period	$	38,260	$	27,750
Addition	Addition	274		4,400		7,800		4,400		Addition	—		7,526
Accretion	Accretion	837		806		1,634		1,599		Accretion	838		797

Payments	Payments	0		0		0		0		Payments	—		—
Balance as of end of period	Balance as of end of period	$	37,184	$	28,910	$	37,184	$	28,910	Balance as of end of period	$	39,098	$	36,073

The liabilities were valued using expected revenue growth rates and discount rates. As of ~~June 30, 2021,~~March 31, 2022, the expected revenue growth rates range from 2.0% to 83.9%, with a weighted average of ~~13.0%~~7.9%, calculated using cumulative revenues and range of revenue growth rates (excluding revenue growth from additional AUM contributed in year of acquisition). The discount rates ranged from 1.9% to 10.4%, with a weighted average of ~~6.6%~~7.0%, calculated using total contingent liabilities and range of discount rates. As of ~~June 30, 2020~~March 31, 2021 the expected revenue growth rates ranged from ~~0.7%~~2.0% to ~~50.0%~~135.6%, with a weighted average of ~~4.9%~~9.0%, calculated using cumulative revenues and a range of revenue growth ~~rates.~~rates (excluding revenue growth from additional AUM contributed from existing clients). The discount rates ranged from 1.9% to ~~10.4%~~20.0%, with a weighted average of ~~8.0%~~10.8%, calculated using total contingent liabilities and range of discount rates.

Index

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

We did not have any material assets or liabilities that were measured at fair value for impairment on a nonrecurring basis during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 or during the year ended December 31, ~~2020.~~2021.

12. Commitments and Contingencies

Legal Proceedings

With respect to all significant litigation matters, we consider the likelihood of a negative outcome. If we determine the likelihood of a negative outcome is probable and the amount of the loss can be reasonably estimated, we record an estimated loss for the expected outcome of the litigation. If the likelihood of a negative outcome is reasonably possible and we can determine an estimate of the possible loss or range of loss in excess of amounts already accrued, if any, we disclose that fact together with the estimate of the possible loss or range of loss. However, it is often difficult to predict the outcome or estimate a possible loss or range of loss because litigation is subject to inherent uncertainties, particularly when plaintiffs allege substantial or indeterminate damages. Such is also the case when the litigation is in its early stages or when the litigation is highly complex or broad in scope. In these cases, we disclose that we are unable to predict the outcome or estimate a possible loss or range of loss.

AB may be involved in various matters, including regulatory inquiries, administrative proceedings and litigation, some of which may allege significant damages. It is reasonably possible that we could incur losses pertaining to these matters, but we cannot currently estimate any such losses.

Management, after consultation with legal counsel, currently believes that the outcome of any individual matter that is pending or threatened, or all of them combined, will not have a material adverse effect on our results of operations, financial condition or liquidity. However, any inquiry, proceeding or litigation has an element of uncertainty; management cannot determine whether further developments relating to any individual matter that is pending or threatened, or all of them combined, will have a material adverse effect on our results of operation, financial condition or liquidity in any future reporting period.

13. Leases

We lease office space, furniture and office equipment under various operating and financing leases. Our current leases have remaining lease terms of one year to 15 years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year. Since 2010, we have sub-leased over 1000000 square feet of office space.

Leases included in the condensed consolidated statement of financial condition as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 were as follows:


		Classification	June 30, 2021		December 31, 2020			Classification	March 31, 2022		December 31, 2021
			(in thousands)						(in thousands)
Operating Leases	Operating Leases						Operating Leases
Operating lease right-of-use assets	Operating lease right-of-use assets	Right-of-use assets	$	404,238	$	416,007	Operating lease right-of-use assets	Right-of-use assets	$	398,804	$	414,105
Operating lease liabilities	Operating lease liabilities	Lease liabilities	481,046		503,174		Operating lease liabilities	Lease liabilities	466,439		482,781

Finance Leases	Finance Leases						Finance Leases
Property and equipment, gross	Property and equipment, gross	Right-of-use assets	7,329		5,167		Property and equipment, gross	Right-of-use assets	13,284		10,947
Amortization of right-of-use assets	Amortization of right-of-use assets	Right-of-use assets	(2,577)		(2,719)		Amortization of right-of-use assets	Right-of-use assets	(3,580)		(3,072)
Property and equipment, net	Property and equipment, net		4,752		2,448		Property and equipment, net		9,704		7,875
Finance lease liabilities	Finance lease liabilities	Lease liabilities	4,797		2,375		Finance lease liabilities	Lease liabilities	9,351		7,954

Index

The components of lease expense included in the condensed consolidated statement of income as of ~~June 30,~~March 31, 2022 and March 31, 2021 ~~and June 30, 2020~~ were as follows:


			Three Months Ended June 30,				Six Months Ended June 30,						Three Months Ended March 31,
		Classification	2021		2020		2021		2020			Classification			2022		2021
			(in thousands)											(in thousands)
Operating lease cost	Operating lease cost	General and administrative	$	24,629	$	22,411	$	49,047	$	45,415	Operating lease cost	General and administrative			$	24,525	$	24,418
Financing lease cost:	Financing lease cost:										Financing lease cost:
Amortization of right-of-use assets	Amortization of right-of-use assets	General and administrative	479		426		980		903		Amortization of right-of-use assets	General and administrative			740		501
Interest on lease liabilities	Interest on lease liabilities	Interest expense	21		23		43		49		Interest on lease liabilities	Interest expense			37		22
Total finance lease cost	Total finance lease cost		500		449		1,023		952		Total finance lease cost				777		523
Variable lease cost (1)	Variable lease cost (1)	General and administrative	10,344		9,833		19,890		19,310		Variable lease cost (1)	General and administrative			10,687		9,546
Sublease income	Sublease income	General and administrative	(9,506)		(9,626)		(19,313)		(19,241)		Sublease income	General and administrative			(8,561)		(9,807)
Net lease cost	Net lease cost		$	25,967	$	23,067	$	50,647	$	46,436	Net lease cost				$	27,428	$	24,680

(1) Variable lease expense includes operating expenses, real estate taxes and employee parking.

The sub-lease income represents all revenues received from sub-tenants. It is primarily fixed base rental payments combined with variable reimbursements such as operating expenses, real estate taxes and employee parking. We derive most of our sub-tenant income from our New York metro sub-tenant agreements. Sub-tenant income related to base rent is recorded on a straight-line basis.

Maturities of lease liabilities were as follows:


		Operating Leases		Financing Leases		Total			Operating Leases		Financing Leases		Total
Year ending December 31,	Year ending December 31,	(in thousands)						Year ending December 31,	(in thousands)
2021 (excluding the six months ended June 30, 2021)		$	52,186	$	903	$	53,089
2022		102,262		1,552		103,814
2022 (excluding the three months ended March 31, 2022)								2022 (excluding the three months ended March 31, 2022)	$	75,061	$	1,940	$	77,001
2023	2023	94,902		1,289		96,191		2023	97,522		2,887		100,409
2024	2024	91,698		722		92,420		2024	100,148		2,043		102,191
2025	2025	26,818		426		27,244		2025	34,308		1,747		36,055
2026								2026	32,868		1,011		33,879
Thereafter	Thereafter	163,857		24		163,881		Thereafter	172,179		—		172,179
Total lease payments	Total lease payments	531,723		4,916		536,639		Total lease payments	512,086		9,628		521,714
Less interest	Less interest	(50,677)		(119)				Less interest	(45,647)		(277)
Present value of lease liabilities	Present value of lease liabilities	$	481,046	$	4,797			Present value of lease liabilities	$	466,439	$	9,351

We have signed a lease which commences in 2024, relating to approximately 166,000 square feet of space in New York City. Our estimated total base rent obligation (excluding taxes, operating expenses and utilities) over the 20-year lease term is approximately $393.0 million.


Lease term and discount rate:
Weighted average remaining lease term (years):
Operating leases	~~7.42~~7.51
Finance leases	~~3.35~~3.73
Weighted average discount rate:
Operating leases	~~3.01~~2.74	%
Finance leases	~~1.71~~1.62	%

Index

Supplemental cash flow information related to leases was as follows:

Six Months Ended June 30,
2021 2020
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases $ 57,353 $ 58,107
Operating cash flows used for financing leases 43 49
Financing cash flows used for finance leases 862 959
Right-of-use assets obtained in exchange for lease obligations(1):
Operating leases (2)
29,333 (1,223)
Finance leases 3,283 1,695


	Three Months Ended March 31,
	2022	2021
	(in thousands)




Right-of-use assets obtained in exchange for lease obligations(1):
Operating leases	7,719	12,161
Finance leases	2,569	3,283

(1) Represents non-cash activity and, accordingly, is not reflected in the consolidated statements of cash flows.

~~(2)~~ ~~Represents net non-cash activity of new lease obligations, extensions and reductions of existing lease obligations.~~

14. Consolidated Company-Sponsored Investment Funds

We regularly provide seed capital to new company-sponsored investment funds. As such, we may consolidate or de-consolidate a variety of company-sponsored investment funds each quarter. Due to the similarity of risks related to our involvement with each company-sponsored investment fund, disclosures required under the VIE model are aggregated, such as disclosures regarding the carrying amount and classification of assets.

We are not required to provide financial support to company-sponsored investment funds, and only the assets of such funds are available to settle each fund's own liabilities. Our exposure to loss regarding consolidated company-sponsored investment funds is limited to our investment in, and our management fee earned from, such funds. Equity and debt holders of such funds have no recourse to AB’s assets or to the general credit of AB.

The balances of consolidated VIEs ~~and VOEs~~ included in our condensed consolidated statements of financial condition were as follows:


		June 30, 2021						December 31, 2020							March 31, 2022		December 31, 2021
		(in thousands)													(in thousands)
		VIEs		VOEs		Total		VIEs		VOEs		Total
Cash and cash equivalents	Cash and cash equivalents	$	30,456	$	0	$	30,456	$	36,370	$	136	$	36,506	Cash and cash equivalents	$	24,145		$	90,326
Investments	Investments	166,940		0		166,940		242,541		60,041		302,582		Investments	486,926			613,025
Other assets	Other assets	8,288		0		8,288		4,859		7,385		12,244		Other assets	30,594			30,461
Total assets	Total assets	$	205,684	$	0	$	205,684	$	283,770	$	67,562	$	351,332	Total assets	$	541,665		$	733,812

Liabilities	Liabilities	$	11,317	$	0	$	11,317	$	7,741	$	22,879	$	30,620	Liabilities	$	36,774		$	87,000
Redeemable non-controlling interest	Redeemable non-controlling interest	17,803		0		17,803		82,753		19,606		102,359		Redeemable non-controlling interest	338,021			421,169
Partners' capital attributable to AB Unitholders	Partners' capital attributable to AB Unitholders	176,564		0		176,564		193,276		25,077		218,353		Partners' capital attributable to AB Unitholders	166,870			225,643
Total liabilities, redeemable non-controlling interest and partners' capital	Total liabilities, redeemable non-controlling interest and partners' capital	$	205,684	$	0	$	205,684	$	283,770	$	67,562	$	351,332	Total liabilities, redeemable non-controlling interest and partners' capital	$	541,665		$	733,812

During the ~~second~~first quarter of ~~2021,~~2022, we deconsolidated 23 funds in which we had a seed investment of approximately ~~$86.1~~$55.1 million due to no longer having a controlling financial interest.

~~Index~~

Fair Value

Cash and cash equivalents include cash on hand, demand deposits, overnight commercial paper and highly liquid investments with original maturities of three months or less. Due to the short-term nature of these instruments, the recorded value has been determined to approximate fair value.

Index

Valuation of consolidated company-sponsored investment funds' financial instruments by pricing observability levels as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 was as follows (in thousands):

Level 1 Level 2 Level 3 Total
June 30, 2021:
  Investments - VIEs $ 53,028 $ 113,702 $ 210 $ 166,940
  Derivatives - VIEs 240 1,711 0 1,951
Total assets measured at fair value $ 53,268 $ 115,413 $ 210 $ 168,891
Derivatives - VIEs 2,927 1,422 0 4,349
Total liabilities measured at fair value $ 2,927 $ 1,422 $ 0 $ 4,349
December 31, 2020:
  Investments - VIEs $ 73,909 $ 168,114 $ 518 $ 242,541
  Investments - VOEs 0 59,940 101 60,041
  Derivatives - VIEs 442 2,782 0 3,224
  Derivatives - VOEs 0 464 0 464
Total assets measured at fair value $ 74,351 $ 231,300 $ 619 $ 306,270
Derivatives - VIEs $ 1,649 $ 5,244 $ 0 $ 6,893
  Derivatives - VOEs 0 664 0 664
Total liabilities measured at fair value $ 1,649 $ 5,908 $ 0 $ 7,557


	Level 1		Level 2		Level 3		Total
March 31, 2022:
Investments	$	84,737	$	401,941	$	248	$	486,926

Derivatives	1,782		2,620		—		4,402

Total assets measured at fair value	$	86,519	$	404,561	$	248	$	491,328

Derivatives	16,013		2,927		—		18,940

Total liabilities measured at fair value	$	16,013	$	2,927	$	—	$	18,940

December 31, 2021:
Investments	$	165,415	$	444,253	$	3,357	$	613,025

Derivatives	622		5,265		—		5,887

Total assets measured at fair value	$	166,037	$	449,518	$	3,357	$	618,912


Derivatives	$	16,291	$	2,051	$	—	$	18,342

Total liabilities measured at fair value	$	16,291	$	2,051	$	—	$	18,342

See Note 11 for a description of the fair value methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy.

The change in carrying value associated with Level 3 financial instruments carried at fair value within consolidated company-sponsored investment funds was as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
		(in thousands)										(in thousands)

Balance as of beginning of period	Balance as of beginning of period	$	717	$	534	$	619	$	854	Balance as of beginning of period		$	3,357	$	619

Deconsolidated funds	Deconsolidated funds	(717)		(135)		(717)		(135)		Deconsolidated funds		(3,351)		—
Transfers (out) in		0		340		(10)		571
Transfers (out)										Transfers (out)		(6)		(10)
Purchases	Purchases	204		13		323		46		Purchases		248		119
Sales	Sales	0		(82)		(3)		(444)		Sales		—		(3)
Realized gains (losses), net		0		(14)		3		(14)
Unrealized gains (losses), net		6		(138)		(5)		(362)
Accrued discounts		0		(1)		0		1
Realized gains, net										Realized gains, net		—		3
Unrealized (losses), net										Unrealized (losses), net		—		(11)

Balance as of end of period	Balance as of end of period	$	210	$	517	$	210	$	517	Balance as of end of period		$	248	$	717

The Level 3 securities primarily consist of corporate bonds that are vendor priced with no ratings available, bank loans, non-agency collateralized mortgage obligations and asset-backed securities.

~~Index~~

Transfers into and out of all levels of the fair value hierarchy are reflected at end-of-period fair values. Realized and unrealized gains and losses on Level 3 financial instruments are recorded in investment gains and losses in the condensed consolidated statements of income.

Derivative Instruments

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the VIEs held ~~$2.4~~$14.5 million and ~~$3.7~~$12.5 million (net), respectively, of futures, forwards and swaps within their portfolios. For the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, we recognized ~~$1.8 million and $0.7 million of gains, respectively, on these derivatives. For the three and six months ended June 30, 2020, we recognized $1.0~~$0.5 million of gains and ~~$0.7~~$1.1 million of losses, respectively, on these derivatives. These gains and losses are recognized in investment gains (losses) in the condensed consolidated statements of income.

Index

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the VIEs held ~~$0.4~~$1.5 million and ~~$0.5~~$0.9 million, respectively, of cash collateral payable to trade counterparties. This obligation to return cash is reported in the liabilities of consolidated company-sponsored investment funds in our condensed consolidated statements of financial condition.

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the VIEs delivered ~~$1.0~~$2.5 million and ~~$4.2~~$1.8 million, respectively, of cash collateral into brokerage accounts. The VIEs ~~report this cash collateral in the consolidated company-sponsored investment funds cash and cash equivalents in our condensed consolidated statements of financial condition.~~

As of June 30, 2021 and December 31, 2020, the VOEs held 0 and $0.2 million (net), respectively, of futures, forwards, options and swaps within their portfolios. For the three and six months ended June 30, 2021, we recognized zero and $0.9 million of gains, respectively, on these derivatives. For the three and six months ended June 30, 2020, we recognized $0.8 million and $0.9 million of losses, respectively, on these derivatives. These gains and losses are recognized in investment gains (losses) in the condensed consolidated statements of income.

As of both June 30, 2021 and December 31, 2020, the VOEs held 0 cash collateral payable to trade counterparties. This obligation to return cash is reported in the liabilities of consolidated company-sponsored investment funds in our condensed consolidated statements of financial condition.

~~As of June 30, 2021 and December 31, 2020, the VOEs delivered 0 and $0.1 million, respectively, of cash collateral in brokerage accounts. The VOEs~~ report this cash collateral in the consolidated company-sponsored investment funds cash and cash equivalents in our condensed consolidated statements of financial condition.

Offsetting Assets and Liabilities

Offsetting of derivative assets of consolidated company-sponsored investment funds as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 was as follows:

Gross Amounts of Recognized Assets Gross Amounts Offset in the Statement of Financial Condition Net Amounts of Assets Presented in the Statement of Financial Condition Financial
Instruments Collateral Cash Collateral
Received Net
Amount
(in thousands)
June 30, 2021:
Derivatives - VIEs $ 1,951 $ 0 $ 1,951 $ 0 $ (442) $ 1,509
December 31, 2020:
Derivatives - VIEs $ 3,224 $ 0 $ 3,224 $ 0 $ (513) $ 2,711
Derivatives - VOEs $ 464 $ 0 $ 464 $ 0 $ 0 $ 464


	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Assets Presented in the Statement of Financial Condition		Financial Instruments Collateral		Cash Collateral Received		Net Amount
	(in thousands)
March 31, 2022:
Derivatives	$	4,402	$	—	$	4,402	$	—	$	(1,524)	$	2,878

December 31, 2021:
Derivatives	$	5,887	$	—	$	5,887	$	—	$	(904)	$	4,983

~~Index~~

Offsetting of derivative liabilities of consolidated company-sponsored investment funds as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 was as follows:

Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Condition Net Amounts of Liabilities Presented in the Statement of Financial Condition Financial
Instruments Collateral Cash Collateral
Pledged Net Amount
(in thousands)
June 30, 2021:
Derivatives - VIEs $ 4,349 $ 0 $ 4,349 $ 0 $ (989) $ 3,360
December 31, 2020:
Derivatives - VIEs $ 6,893 $ 0 $ 6,893 $ 0 $ (4,201) $ 2,692
Derivatives - VOEs $ 664 $ 0 $ 664 $ 0 $ (138) $ 526


	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Liabilities Presented in the Statement of Financial Condition		Financial Instruments Collateral		Cash Collateral Pledged		Net Amount
	(in thousands)
March 31, 2022:
Derivatives	$	18,940	$	—	$	18,940	$	—	$	(2,486)	$	16,454

December 31, 2021:
Derivatives	$	18,342	$	—	$	18,342	$	—	$	(1,824)	$	16,518

Cash collateral, whether pledged or received on derivative instruments, is not considered material and, accordingly, is not disclosed by counterparty.

Non-Consolidated VIEs

As of ~~June 30, 2021,~~March 31, 2022, the net assets of company-sponsored investment products that are non-consolidated VIEs are approximately ~~$73.3~~$59.1 billion, and our maximum risk of loss is our investment of ~~$8.8~~$15.1 million in these VIEs and our advisory fee receivables from these VIEs is ~~$77.6~~$70.3 million. As of December 31, 2021, the net assets of company-sponsored investment products that were non-consolidated VIEs was approximately $68.9 billion; our maximum risk of loss was our investment of $8.8 million in these VIEs and our advisory fees receivable from these VIEs was $75.7 million.

Index

15. Units Outstanding

Changes in AB Units outstanding during the ~~six-month~~three-month period ended ~~June 30, 2021~~March 31, 2022 were as follows:


Outstanding as of December 31, ~~2020~~2021			~~270,509,658~~271,453,043
~~Options exercised~~			~~143,211~~
Units issued			~~3,019,529~~582,992
Units retired~~(1)~~			~~(1,678,276)~~(260,245)
Outstanding as of ~~June 30, 2021~~March 31, 2022			~~271,994,122~~271,775,790

~~(1)~~ ~~During the six-months ended June 30, 2021, we purchased 1,400 AB Units in private transactions and retired them.~~

16. Debt

AB has an $800.0 million committed, unsecured senior revolving credit facility (the “Credit Facility”) with a group of commercial banks and other lenders, which matures on ~~September 27, 2023.~~October 13, 2026. The Credit Facility provides for possible increases in the principal amount by up to an aggregate incremental amount of $200.0 million; any such increase is subject to the consent of the affected lenders. The Credit Facility is available for AB and Sanford C. Bernstein & Co., LLC ("SCB LLC") business purposes, including the support of AB’s commercial paper program. Both AB and SCB LLC can draw directly under the Credit Facility and management may draw on the Credit Facility from time to time. AB has agreed to guarantee the obligations of SCB LLC under the Credit Facility.

The Credit Facility contains affirmative, negative and financial covenants, which are customary for facilities of this type, including restrictions on dispositions of assets, restrictions on liens, a minimum interest coverage ratio and a maximum leverage ratio. As of ~~June 30, 2021,~~March 31, 2022, we were in compliance with these covenants. The Credit Facility also includes customary events of default (with customary grace periods, as applicable), including provisions under which, upon the occurrence of an event of default, all outstanding loans may be accelerated and/or lender’s commitments may be terminated. Also, under such provisions, upon the occurrence of certain insolvency- or bankruptcy-related events of default, all amounts payable under the Credit Facility would automatically become immediately due and payable, and the lender’s commitments automatically would terminate.

~~Index~~

Amounts under the Credit Facility may be borrowed, repaid and re-borrowed by us from time to time until the maturity of the facility. Voluntary prepayments and commitment reductions requested by us are permitted at any time without a fee (other than customary breakage costs relating to the prepayment of any drawn loans) upon proper notice and subject to a minimum dollar requirement. Borrowings under the Credit Facility bear interest at a rate per annum, which will be, at our option, a rate equal to an applicable margin, which is subject to adjustment based on the credit ratings of AB, plus one of the following indices: London Interbank Offered Rate; a floating base rate; or the Federal Funds rate.

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we had 0no amounts outstanding under the Credit Facility. Furthermore, during the first ~~six~~three months of ~~2021~~2022 and the full year ~~2020,~~2021, we did not draw upon the Credit Facility.

AB also has a $900.0 million committed, unsecured senior credit facility (“EQH Facility”) with EQH. The EQH Facility matures on November 4, 2024 and is available for AB's general business purposes. Borrowings under the EQH Facility generally bear interest at a rate per annum based on prevailing overnight commercial paper rates.

The EQH Facility contains affirmative, negative and financial covenants which are substantially similar to those in AB’s committed bank facilities. The EQH Facility also includes customary events of default substantially similar to those in AB’s committed bank facilities, including provisions under which, upon the occurrence of an event of default, all outstanding loans may be accelerated and/or the lender’s commitment may be terminated.

Amounts under the EQH Facility may be borrowed, repaid and re-borrowed by us from time to time until the maturity of the facility. AB or EQH may reduce or terminate the commitment at any time without penalty upon proper notice. EQH also may terminate the facility immediately upon a change of control of our general partner.

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, AB had ~~$590.0~~$850.0 million and ~~$675.0~~$755.0 million outstanding under the EQH Facility, ~~in each case~~ with an interest ~~rate~~rates of approximately 0.3% and 0.2%., respectively. Average daily borrowings on the EQH Facility for the first ~~six~~three months of ~~2021~~2022 and the full year ~~2020~~2021 were ~~$551.2~~$645.4 million and ~~$470.8~~$404.6 million, respectively, with a weighted average interest ~~rates~~rate of approximately 0.2% ~~and 0.5%, respectively.~~.

Index

In addition to the EQH Facility, ~~on September 1, 2020,~~ AB ~~established~~has a ~~new~~ $300.0 million uncommitted, unsecured senior credit facility (“EQH Uncommitted Facility”) with EQH. The EQH Uncommitted Facility matures on September 1, 2024 and is available for AB's general business purposes. Borrowings under the EQH Unsecured Facility generally bear interest at a rate per annum based on prevailing overnight commercial paper rates. The EQH Uncommitted Facility contains affirmative, negative and financial covenants which are substantially similar to those in the EQH Facility. As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we had 0no amounts outstanding under the EQH Uncommitted ~~Facility. Furthermore, during the first six months of 2021~~Facility and ~~the full year 2020, we did~~have not ~~draw~~drawn upon the ~~EQH Uncommitted Facility.~~facility since its inception.

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we had 0no commercial paper outstanding. The commercial paper is short term in nature, and as such, recorded value is estimated to approximate fair value (and considered a Level 2 security in the fair value hierarchy). Average daily borrowings of commercial paper during the first ~~six~~three months of ~~2021~~2022 and full year ~~2020~~2021 were ~~$110.8~~$257.0 million and ~~$83.2~~$157.0 million, respectively, with weighted average interest rates of approximately 0.2% and ~~0.4%~~0.2%, respectively.

AB ~~has~~had a $200.0 million committed, unsecured senior revolving credit facility (the "Revolver") with a leading international bank, which ~~matures~~matured on November 16, 2021. The Revolver is available for AB's and SCB LLC's business purposes, including the provision of additional liquidity to meet funding requirements primarily related to SCB LLC's operations. Both AB and SCB LLC can draw directly under the Revolver and management expects to draw on the Revolver from time to time. AB has agreed to guarantee the obligations of SCB LLC under the Revolver. The Revolver contains affirmative, negative and financial covenants that are identical to those of the Credit Facility. Borrowings under the Revolver bear interest at a rate per annum, which will be, at our option, a rate equal to an applicable margin, which is subject to adjustment based on the credit ratings of AB, plus one of the following indices: London Interbank Offered Rate; a floating base rate; or the Federal Funds rate. As of both June 30, 2021 and December 31, 2020, we had 0 amounts outstanding under the Revolver. Average daily borrowings under the Revolver ~~during~~for the ~~first six months of 2021 and~~ full year ~~2020~~2021 were ~~$22.0~~$13.3 million ~~and $16.5 million, respectively,~~ with a weighted average interest ~~rates~~rate of approximately 1.1% ~~and 1.6%, respectively.~~.

In addition, SCB LLC currently has 35 uncommitted lines of credit with 35 financial institutions. NaN of these lines of credit permit us to borrow up to an aggregate of approximately ~~$165.0~~$315.0 million, with AB named as an additional borrower,

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while the other line has no stated limit. AB has agreed to guarantee the obligations on SCB LLC under these lines of credit. As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, SCB LLC had 0no outstanding balance on these lines of credit. ~~We did not draw on these lines of credit during the first six months of 2021.~~ Average daily borrowings during the first three months of 2022 and full year ~~2020~~2021 were ~~$0.9~~$2.9 million and $47 thousand with a weighted average interest ~~rate~~rates of approximately ~~1.6%.~~

0.8% and 0.9%, respectively.

17. ~~Non-controlling Interests~~Acquisition

~~Non-controlling interest in net income for the three~~On March 17, 2022, AB Holding and ~~six months ended June 30, 2021 and 2020 consisted~~AB entered into a transaction agreement to acquire 100% of the ~~following:~~

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
(in thousands)
Redeemable non-controlling interests:
Consolidated company-sponsored investment funds 3,573 20,940 $ 3,281 $ (4,631)
Total non-controlling interest in net income $ 3,573 $ 20,940 $ 3,281 $ (4,631)
equity interests of CarVal Investors, L.P. (“CarVal”) in exchange for (i) AB Holding Units to be delivered in 2022 (“Upfront Payment”), and (ii) the issuance of additional AB Holding Units at future dates that are contingent upon achievement of performance hurdles by CarVal during the six-year period beginning January 1, 2022 and ending on December 31, 2027. The Upfront Payment will total approximately $750,000,000 and consist of the AB Holding Units discussed above as well as cash to fund certain CarVal business expenses and other obligations. Immediately following the acquisition of CarVal by AB Holding, AB Holding will contribute all of the equity interests of CarVal to AB in exchange for AB Units. The transaction is expected to close in the third quarter of 2022. The transaction agreement has been filed as Exhibit 10.1 to this Form 10-Q.

~~Redeemable non-controlling interest as of June 30, 2021 and December 31, 2020 consisted of the following:~~

June 30, 2021 December 31, 2020
(in thousands)
Consolidated company-sponsored investment funds $ 17,803 $ 102,359
Total redeemable non-controlling interest $ 17,803 $ 102,359

2726

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Impact of COVID-19

~~General Economic Conditions~~

~~During the first quarter of 2020,~~AB continues to actively monitor COVID-19 ~~significantly impacted~~developments and their impact on our employees, business and operations. The aggregate extent to which COVID-19, including existing and new variants and its impact on the global ~~economy. The impact has been profound, has continued through~~economy, affects AB’s business, liquidity, results of operations and financial condition, will depend on future COVID-19 developments that are highly uncertain, including the first six months of 2021 and may persist for months to come. While most businesses have re-opened, vaccinations are underway (particularly in the U.S., the U.K., much of Europe, and Israel) and leading economic indicators have improved significantly, the overall extentscope and duration of ~~COVID-19's impact on businesses~~the pandemic and any recovery period, the emergence, spread and seriousness of COVID-19 variants, the continuing prevalence of severe, unconstrained and/or escalating rates of infection and hospitalization in various countries and regions, the availability, adoption and efficacy of treatments and vaccines, and future actions taken by governmental authorities, central banks and other parties in response to COVID-19. Further, we have benefited from certain of our adjusted operating expenses declining significantly as a result of the COVID-19 pandemic, such as costs for travel and entertainment and client meetings, particularly during 2020. Although these costs increased in 2021, they have not yet returned to a normalized level. These cost savings have benefited our margins. If financial markets continue to normalize and economic activity ~~generally remains unclear.~~

~~Governments around the world have responded~~increases, we do not anticipate continued cost savings related to COVID-19, with economic stimulus measures, including a $2 trillion emergency relief bill passed in the U.S. during the first quarter of 2020, an additional $900 billion in aid passed during the fourth quarter of 2020, and the most recent $1.9 trillion COVID-19 relief package passed in the first quarter of 2021. Similar fiscal stimulus was passed by many governments around the world. These measures were intended to steady businesses and consumers until economic activity meaningfully recovered and were largely successful in doing so. The U.S. economy has experienced a strong recovery; however, the continuing strength of the recovery and the possibility of a new downturn resulting from a possible resurgence of COVID-19 remains uncertain.

Various countries around the world, and certain areas in the U.S., have continued to experience surges in the rates of COVID-19 infections, which have resulted from the emergence and spread of virus variants (particularly the "delta variant"), greatly increased social interactions, including at colleges and universities and social venues, after re-opening of economies, and decreased usage of mitigation techniques, such as mask wearing and social distancing, in combination with large portions of the population remaining unvaccinated. These ongoing circumstances surrounding the virus may adversely affect consumer sentiment and the durability of business re-openings, and they also may slow economic recovery and possibly cause additional market volatility and even a new downturn.

~~AB Impact~~

At the onset of COVID-19 during the first quarter of 2020, we quickly responded in the various jurisdictions where we operate, including the U.S., the U.K., Tokyo, Hong Kong, Shanghai, Singapore and Taiwan. We implemented business continuity measures, including travel restrictions and a work-from-home requirement for almost all personnel (other than a relatively small number of employees whose physical presence in our offices was considered critical), which generally have remained in place throughout 2020 and the first six months of 2021 to ensure operating continuity for all critical functions. We also instituted a notification process, which persists today, for any employee who tests positive for COVID-19 or has been exposed to someone else who has tested positive. As the COVID-19 crisis has continued to evolve since the lockdown in the first quarter of 2020, certain key functions of the business, such as Risk Management, Business Continuity, Finance and Human Capital, have maintained constant communication and monitored the evolution of the pandemic to keep our employees safe and disseminate information regarding key developments. Additionally, we continue to monitor communications from the World Health Organization and the U.S. Centers for Disease Control and Prevention to ensure we have current information.

~~We have continued to enhance our technology, which has increased the effectiveness~~these savings are not indicative of our remote work force. We have also continued to enhance our virtual programs to support business functions, such as training on cybersecurity and enhancements to our existing technology platforms. There has been a heightened focus on the emotional well-being of our employees, and we have provided regular touch points with employees through virtual town halls and management communications. Additionally, we have maintained regular communications and updates on the virus and the Company's response, which are posted on the Company's internal website, to ensure transparent communication with our employees.

We are implementing return to office programs for our U.S. and European offices and are in the process of gradually bringing our workforce back into the office, across each of our U.S. and European locations, during the third quarter of 2021. However, we continue to monitor the daily evolution of the pandemic, including the spread of the delta variant, in order to ensure the health and safety of our employees remains our top priority. We will modify our return to office plans, as needed, to ensure the safety of our employees and to ensure that the highest safety and cleanliness protocols are followed. We believe that our business continuity plan and technology platform will continue to support the effectiveness of our employees working remotely to the extent that we continue that arrangement.

The economic impact of COVID-19 and any additional declines in the financial markets could have a significant adverse effect on our AUM and revenues, particularly if economic activity does not continue to recover. Although countries throughout the world continue to grapple with re-opening their economies, there is a significant risk that the opening process may be interrupted or reversed if infection rates increase. Also, although unemployment rates have declined, they are still considered

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~~elevated and any reluctance of consumers to resume spending could do long-term damage to the global economy, which would have an adverse effect on our business.~~future performance. Additionally, as most of our workforce continues working ~~remotely, at least part of the time,~~in a hybrid model, which includes two remote days each week, we are mindful of increased risk related to cybersecurity, which could significantly disrupt our business functions.

Ultimately, the return to normal business and economic activity will likely require the broad application of effective vaccines. The distribution of multiple safe, effective vaccines was initiated towards the end of the fourth quarter of 2020 and the distribution of such vaccines increased globally through the first six months of 2021. However, vaccination rates in the U.S. plateaued, and in some areas began to decrease, by the end of the second quarter of 2021. If global vaccination rates do not improve further, a significant risk will remain that COVID-19 and/or a variant thereof, could accelerate global health concerns and, in so doing, cause heightened market and economic turmoil in the future.

Executive Overview

Our total assets under management (“AUM”) as of ~~June 30, 2021~~March 31, 2022 were ~~$738.4~~$735.4 billion, ~~up $41.2~~down $43.2 billion, or ~~5.9%~~5.5%, compared to December 31, 2021, and up $38.2 billion, or 5.5%, compared to March 31, ~~2021, and up $138.4 billion, or 23.1%, compared to June 30, 2020.~~2021. During the ~~second~~first quarter of ~~2021,~~2022, AUM ~~increased~~decreased as a result of market ~~appreciation~~depreciation of ~~$35.0~~$54.6 billion, ~~and~~partially offset by net inflows of $6.2 billion (Retail net inflows of $5.2 billion, Institutional net inflows of $0.9 billion and Private Wealth Management net inflows of $0.1 billion). Excluding AXA S.A. ("AXA") redemptions of low-fee fixed income mandates of $1.3 billion in the second quarter, the firm generated net inflows of $7.5 billion in the second quarter (~~see discussion below). During the twelve months ended June 30, 2021, AUM increased as a result of market appreciation of $120.7 billion and net inflows of $17.7~~$11.4 billion (Institutional net inflows of ~~$8.7~~$10.2 billion, ~~Retail~~Private Wealth net inflows of ~~$7.9~~$2.2 billion, ~~and Private Wealth Management~~offset by Retail net ~~inflows~~outflows of ~~$1.1~~$1.0 billion). ~~Excluding AXA's redemption~~We continue to expect approximately $5 billion of additional redemptions by AXA of low-fee ~~fixed income mandates of $4.2 billion (see discussion below), the firm generated net inflows of $21.9 billion during the twelve months ended June 30, 2021. These AXA redemptions, which began~~retail AUM commencing in the ~~first~~second quarter and continuing into the second half of ~~2020, are now essentially complete.~~2022.

Institutional AUM ~~increased $14.4~~decreased $11.2 billion, or ~~4.6%~~3.3%, to ~~$329.1~~$325.9 billion during the ~~second~~first quarter of ~~2021,~~2022, due to market ~~appreciation~~depreciation of ~~$13.5~~$21.4 billion, ~~and~~partially offset by net inflows of ~~$0.9~~$10.2 billion. Gross sales increased sequentially from ~~$4.9~~$6.6 billion during the fourth quarter of 2021 to $14.3 billion during the first quarter of ~~2021~~2022. Redemptions and terminations decreased sequentially from $4.1 billion to ~~$17.6~~$2.1 billion.

Retail AUM decreased $27.3 billion, or 8.5%, to $292.6 billion during the ~~second~~first quarter of ~~2021.~~2022, due to market depreciation of $26.3 billion and net outflows of $1.0 billion. Gross sales decreased sequentially from $27.6 billion during the fourth quarter of 2021 to $20.6 billion during the first quarter of 2022. Redemptions and terminations increased sequentially from ~~$2.8~~$17.1 billion to ~~$13.7~~$18.7 billion. Additionally, AB experienced $8.7 billion in sales and $10.0 billion in redemptions associated with Equitable Holding’s sale to Venerable Holdings of its legacy variable annuity assets, for which AB remained the preferred investment manager. Our ending Institutional channel AUM reflects $1.3 billion in net outflows as a result of this transaction.

~~Retail~~Private Wealth AUM ~~increased $21.4~~decreased $4.7 billion, or ~~7.9%~~3.9%, to ~~$293.7~~$116.9 billion during the ~~second~~first quarter of ~~2021,~~2022, due to market ~~appreciation~~depreciation of ~~$16.2~~$6.9 billion, ~~and~~partially offset by net inflows of ~~$5.2~~$2.2 billion. Gross sales increased sequentially from ~~$23.0~~$5.2 billion during the fourth quarter of 2021 to $6.0 billion during the first quarter of ~~2021 to $23.8 billion during the second quarter of 2021.~~2022. Redemptions and terminations decreased sequentially from ~~$17.7~~$4.5 billion to ~~$15.3 billion.~~

Private Wealth Management AUM increased $5.4 billion, or 4.9%, to $115.6 billion during the second quarter of 2021, due to market appreciation of $5.3 billion and net inflows of $0.1 billion. Gross sales decreased sequentially from $5.4 billion during the first quarter of 2021 to $3.6 billion during the second quarter of 2021. Redemptions and terminations decreased sequentially from $3.7 billion to $3.4$3.8 billion.

Bernstein Research Services revenue for the ~~second~~first quarter of ~~2021~~2022 was ~~$105.7~~$117.8 million, down ~~$8.0~~$1.2 million, or ~~7.0%~~1.0%, compared to the ~~second~~first quarter of ~~2020 due to reduced~~2021. The slight decrease was driven by lower customer trading activity ~~driven~~in Asia partially offset by ~~decreased~~higher market volatility ~~as compared to~~and trading volumes in the ~~COVID-related significant surge in trading volume experienced during the second quarter of 2020.~~U.S. and U.K.

Net revenues for the ~~second~~first quarter of ~~2021~~2022 increased ~~$205.4~~$98.4 million, or ~~23.6%~~9.8%, to $1.1 billion from ~~$871.4 million~~$1.0 billion in the ~~second~~first quarter of ~~2020.~~2021. The increase was primarily due to higher performance-based fees of $60.2 million, higher investment advisory base fees of ~~$154.4 million, higher performance-based fees of $45.0~~$60.1 million and higher distribution revenues of ~~$35.4~~$20.7 million, partially offset by ~~lower~~higher investment losses of $41.0 million compared to investment gains ~~of $20.0 million and lower Bernstein Research Services revenue of $8.0 million.~~in the prior-year period. Operating expenses for the ~~second~~first quarter of ~~2021~~2022 increased ~~$131.4~~$110.6 million, or ~~19.9%~~14.8%, to ~~$793.2~~$857.3 million from ~~$661.8~~$746.7 million in the ~~second~~first quarter of ~~2020.~~2021. The increase was primarily due to higher general and administrative expenses of $57.4 million, higher employee compensation and benefits expenses of ~~$86.1~~$33.4 million and higher promotion and servicing expense of ~~$46.0 million and higher general and administrative expenses of $4.4 million, partially offset by lower amortization of intangible assets of $5.2~~$20.0 million. Our operating income ~~increased $74.0~~decreased $12.2 million, or ~~35.3%~~4.7%, to ~~$283.6~~$248.4 million from ~~$209.6~~$260.6 million in the first quarter of 2021 and our operating margin ~~increased~~decreased to ~~26.0%~~24.7% in the ~~second~~first quarter of ~~2021~~2022 from ~~21.7%~~25.9% in the ~~second~~first quarter of ~~2020.~~2021.

Market Commentary

After markets were relatively calm in 2021 and generally on upward trajectories, volatility returned in the first quarter of 2022, as inflation surged to historical highs, the Federal Reserve raised interest rates, and indicated an intention to continue raising

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~~Market Environment~~

rates in 2022, faster than previously anticipated, and Russia shocked the world by invading Ukraine, marking the first major military conflict in Europe in decades. As a result, U.S. equity markets, ~~were strong during~~including the ~~second quarter, as the economy continued reopening and more people returned to work. The~~ S&P 500, ~~reached a new all-time high in June, while~~ the Dow Jones Industrial Average and the Nasdaq, each ~~also~~ finished the quarter in ~~positive~~negative territory. ~~However,~~Inflation continued to be a significant worry as it escalated globally to the ~~combination of~~highest on record in 41 years. Higher commodity prices and increased ~~consumer demand and disrupted supply chains, a result of the ripple effects of the pandemic, have created inflationary pressures in the short-term.~~fuel costs, coupled with wage increases to alleviate labor shortages, applied further upward pressure on prices. In response, the Federal Reserve raised ~~its~~interest rates in March and indicated that further rate hikes are likely through the rest of 2022. Given market conditions, we expect our 2022 margins to be impacted as compared to prior year reflecting continued higher inflation, ~~projections but remains patient~~our growth-related investments, rebounding travel and entertainment expenses and lower performance fees.

The grave implications of Russia’s attack on ~~increasing interest rates.~~ Ukraine rippled through the global markets, with commodity prices soaring, as Russia is a key producer of several commodities, particularly in the energy sector, and global trading and settlement systems were disrupted. Regarding trading, while AB was not immune from settlement difficulties during the quarter, the impact on AB was immaterial.

In the U.K., despite economic ~~outlook brightened as GDP forecasts were upgraded~~concerns, the FTSE 100 Index recorded gains in the first quarter, following the easing of COVID-19 restrictions. However, uncertainty remains given the impact of higher energy and commodity prices caused by the conflict in Ukraine. Also, with inflation remaining above the Bank of ~~England indicated it would slow the pace~~England’s target, a gradual tightening of ~~quantitative easing.~~monetary policy through 2022 is likely. In China, ~~equities struggled during~~a new outbreak of the ~~second quarter as a result~~Omicron variant and subsequent highly restrictive lockdowns in numerous cities caused Chinese markets to decline. Manufacturing plant shutdowns and shipping port delays due to dock access restrictions exacerbated global supply constraints in crucial sectors. More easing measures from the People’s Bank of ~~increasing regulations on Chinese technology companies. However, growth for the year remains~~China are likely in ~~China. Political tensions between China~~2022, including interest rate cuts and the U.S. continue to linger, with nothing substantial arising from a meeting between the administrations earlier in the year. Lastly, continued spread of COVID-19, particularly the delta variant, among those who are unvaccinated remains concerning and could cause significant market disruption in future periods.increased fiscal infrastructure spending.

~~MiFID II~~

In Europe, MiFID II, which has been effective since 2018, has significantly modified how European broker-dealers can be compensated for research. These modifications have significantly reduced the overall research spend by many European buy-side firms, which has decreased the revenues we earn from these clients. If this trend continues, the revenues we earn from our European clients would deplete further.

Also, while MiFID II does not apply outside of Europe, competitive and client pressures may force buy-side firms operating outside of Europe to pay for research from their own resources instead of through bundled trading commissions. If this occurs, research budgets from those clients, as well as our sell-side revenues, may decrease further. Additionally, these pressures could force our buy-side operation to pay for research out of our own revenues instead of through bundled trading commissions, which could increase our firm’s expenses and decrease our operating income.

~~Lastly, although the impact of MiFID II is largely known, the ultimate, global impact is still uncertain.~~

Relationship with Equitable Holdings and ~~AXA~~

~~Prior to an initial public offering ("IPO") by Equitable Holdings, Inc. (“EQH”) in May of 2018, EQH was a wholly-owned subsidiary of AXA. Since the IPO, AXA has fully divested~~ its ~~ownership in EQH.~~Subsidiaries

~~The impact on AB of AXA's divestment has included a reduction in the support AXA provided to~~EQH (our parent company) and its subsidiaries are our largest client. EQH is collaborating with AB in the past with respect to AB's investment management business, resulting in a modest decrease in our revenues and ability to initiate new investment services. Our ending AUM at June 30, 2021, of which 2.8% remains investments by AXA, reflects $13.1 billion in outflows resulting from AXA's redemption of certain low-fee fixed income mandates, including $1.3 billion in redemptions made during the three months ended June 30, 2021. These redemptions, which began in the first quarter of 2020, are now essentially complete. Additional redemptions in future periods are possible and would be at the complete discretion of AXA.

~~AB and EQH are collaborating to each firm's expected mutual benefit~~order to improve the ~~risk adjusted~~risk-adjusted yield for the General Accounts of EQH's ~~General Account~~insurance subsidiaries by investing ~~more~~additional assets at AB, including the utilization of AB's higher-fee, longer-duration alternative offerings.

~~Relocation Strategy~~

~~We previously announced that we would establish our corporate headquarters~~ Equitable Financial Life Insurance Company, a subsidiary of EQH ("Equitable Financial"), has agreed to provide $10 billion in permanent capital1 over the next three years to build out AB’s private illiquid offerings, including private alternatives and relocate approximately 1,250 jobs located in the New York metro area to, Nashville, TN. Our Nashville headquarters houses Finance, IT, Operations, Legal, Compliance, Internal Audit, Human Capital, and Sales and Marketing.private placements. We ~~have been actively relocating jobs and~~ expect this ~~transition~~anticipated capital from Equitable Financial will accelerate both organic and inorganic growth in our private alternatives business, allowing us to ~~take several more years. We have begun the process of moving into our new headquarters office building located at 501 Commerce Street in downtown Nashville. We will~~ continue to ~~maintain a principal location in New York City, which houses our Portfolio Management, Sell-Side Research and Trading, and New York-based Private Wealth Management businesses.~~

~~We believe relocating our corporate headquarters to Nashville affords us the opportunity to provide an improved quality of life alternative~~deliver for our clients, employees, unitholders and ~~enable us to attract and recruit new talented employees to a highly desirable location while improving the long-term cost structure of the firm.~~

During the transition period, which began in 2018 and is expected to continue through 2024, we currently estimate that we will incur transition costs of approximately $145 million to $155 million. These costs include employee relocation, severance, recruitment, and overlapping compensation and occupancy costs. Over this same period, we expect to realize total expense savings of approximately $205 million to $215 million. However, we did incur some transition costs before we began to realize

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expense savings. For the period beginning in 2018 and ending in the fourth quarter of 2020, we incurred $70 million of cumulative transition costs compared to $46 million of cumulative savings. In addition, we incurred $14 million of transition costs for the six months ended June 30, 2021 compared to $19 million of expense savings, resulting in an overall net savings of $5 million for the period. We currently anticipate an EPU increase in 2021 of approximately $0.02 resulting from our relocation strategy, which compares to the $0.01 EPU increase that occurred in 2020. We also expect to achieve EPU accretion in each year thereafter. Beginning in 2025, once the transition period has been completed, we estimate ongoing annual expense savings towards the upper end of the range of $75 million to $80 million, which will result from a combination of occupancy and compensation-related savings. Our estimates for both the transition costs and the corresponding expense savings are based on our current assumptions of employee relocation costs, severance, and overlapping compensation and occupancy costs. In addition, our estimates for both the timing of when we incur transition costs and realize the related expense savings are based on our current relocation implementation plan and the timing for execution of each phase. The actual total charges we eventually record, the related expense savings we realize, and timing of EPU impact may differ from our current estimates as we implement each phase of our headquarters relocation.

During October 2018, we signed a lease, which commenced in the fourth quarter of 2020, relating to 218,976 square feet of space at our new Nashville headquarters. Our estimated total base rent obligation (excluding taxes, operating expenses and utilities) over the 15-year initial lease term is $134 million.

Although we have presented our transition costs and annual expense savings with numerical specificity, and we believe these targets to be reasonable as of the date of this report, the uncertainties surrounding the assumptions we ~~discuss above~~ create a significant risk that these targets may not be achieved. Accordingly, the expenses we actually incur and the savings we actually realize may differ from our targets, particularly if actual events adversely differ from one or more of our key assumptions. The transition costs and expense savings, together with their underlying assumptions, are Forward-Looking Statements and can be affected by any of the factors discussed in “Risk Factors” and “Cautions Regarding Forward-Looking Statements” in this 10-Q and our 2020 10-K. We strongly caution investors not to place undue reliance on any of these assumptions or our cost and expense targets. Except as may be required by applicable securities laws, we are not under any obligation, and we expressly disclaim any obligation, to update or alter any assumptions, estimates, financial goals, targets, projections or other ~~related statements that we may make.~~stakeholders.

Assets Under Management

Assets under management by distribution channel are as follows:


		As of June 30,									As of March 31,
		2021		2020		$ Change		% Change			2022		2021		$ Change		% Change
		(in billions)									(in billions)

Institutions	Institutions	$	329.1	$	276.2	$	52.9	19.2	%	Institutions	$	325.9	$	314.7	$	11.2	3.6	%
Retail	Retail	293.7		229.5		64.2		28.0		Retail	292.6		272.3		20.3		7.4
Private Wealth Management		115.6		94.3		21.3		22.6
Private Wealth										Private Wealth	116.9		110.2		6.7		6.1
Total	Total	$	738.4	$	600.0	$	138.4	23.1	%	Total	$	735.4	$	697.2	$	38.2	5.5	%

1 Permanent capital means investment capital of indefinite duration, which may be withdrawn under certain conditions. Although Equitable Financial has indicated its intention over time to provide this investment capital to AB, which is mutually beneficial to both firms, it has no binding commitment to do so.

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Assets under management by investment service are as follows:


		As of June 30,									As of March 31,
		2021		2020		$ Change		% Change			2022		2021		$ Change		% Change
		(in billions)									(in billions)
Equity	Equity									Equity
Actively Managed	Actively Managed	$	256.7	$	173.1	$	83.6	48.3	%	Actively Managed	$	265.2	$	231.8	$	33.4	14.4	%
Passively Managed(1)	Passively Managed(1)	69.5		54.3		15.2		28.1		Passively Managed(1)	66.2		66.3		(0.1)		—
Total Equity	Total Equity	326.2		227.4		98.8		43.5		Total Equity	331.4		298.1		33.3		11.2

Fixed Income	Fixed Income									Fixed Income
Actively Managed	Actively Managed									Actively Managed
Taxable	Taxable	252.3		247.9		4.4		1.7		Taxable	225.9		252.2		(26.3)		(10.4)
Tax–exempt	Tax–exempt	54.0		47.1		6.9		14.8		Tax–exempt	54.9		51.8		3.1		5.9
		306.3		295.0		11.3		3.8			280.8		304.0		(23.2)		(7.6)

Passively Managed(1)	Passively Managed(1)	9.3		9.9		(0.6)		(5.8)		Passively Managed(1)	12.7		8.3		4.4		51.8
Total Fixed Income	Total Fixed Income	315.6		304.9		10.7		3.5		Total Fixed Income	293.5		312.3		(18.8)		(6.0)

Alternatives/Multi-Asset Solutions(2)	Alternatives/Multi-Asset Solutions(2)									Alternatives/Multi-Asset Solutions(2)
Actively Managed	Actively Managed	92.8		65.9		26.9		40.7		Actively Managed	104.7		83.6		21.1		25.3
Passively Managed(1)	Passively Managed(1)	3.8		1.8		2.0		110.6		Passively Managed(1)	5.8		3.2		2.6		81.3
Total Alternatives/Multi-Asset Solutions	Total Alternatives/Multi-Asset Solutions	96.6		67.7		28.9		42.5		Total Alternatives/Multi-Asset Solutions	110.5		86.8		23.7		27.4
Total	Total	$	738.4	$	600.0	$	138.4	23.1	%	Total	$	735.4	$	697.2	$	38.2	5.5	%

(1)Includes index and enhanced index services.

(2)Includes certain multi-asset solutions and services not included in equity or fixed income services. Prior to December 31, 2020, this investment service line was disclosed as “Other.” In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to “Alternatives and Multi-Asset Solutions."

3229

Index

Changes in assets under management for the three-month ~~six-month~~ and twelve-month periods ended ~~June 30, 2021~~March 31, 2022 are as follows:


											Distribution Channel
											Institutions		Retail		Private Wealth		Total
											(in billions)
Balance as of December 31, 2021										Balance as of December 31, 2021	$	337.1	$	319.9	$	121.6	$	778.6
Long-term flows:										Long-term flows:
Sales/new accounts										Sales/new accounts	14.3		20.6		6.0		40.9
Redemptions/terminations										Redemptions/terminations	(2.1)		(18.7)		(3.8)		(24.6)
Cash flow/unreinvested dividends										Cash flow/unreinvested dividends	(2.0)		(2.9)		—		(4.9)
Net long-term inflows (outflows)										Net long-term inflows (outflows)	10.2		(1.0)		2.2		11.4

Market depreciation										Market depreciation	(21.4)		(26.3)		(6.9)		(54.6)
Net change										Net change	(11.2)		(27.3)		(4.7)		(43.2)
Balance as of March 31, 2022										Balance as of March 31, 2022	$	325.9	$	292.6	$	116.9	$	735.4

		Distribution Channel
		Institutions		Retail		Private Wealth Management		Total
		(in billions)
Balance as of March 31, 2021	Balance as of March 31, 2021	$	314.7	$	272.3	$	110.2	$	697.2	Balance as of March 31, 2021	$	314.7	$	272.3	$	110.2	$	697.2
Long-term flows:	Long-term flows:									Long-term flows:
Sales/new accounts	Sales/new accounts	17.6		23.8		3.6		45.0		Sales/new accounts	41.0		97.7		18.9		157.6
Redemptions/terminations	Redemptions/terminations	(13.7)		(15.3)		(3.4)		(32.4)		Redemptions/terminations	(22.7)		(66.1)		(15.4)		(104.2)
Cash flow/unreinvested dividends	Cash flow/unreinvested dividends	(3.0)		(3.3)		(0.1)		(6.4)		Cash flow/unreinvested dividends	(6.6)		(14.5)		—		(21.1)
Net long-term inflows(1)	Net long-term inflows(1)	0.9		5.2		0.1		6.2		Net long-term inflows(1)	11.7		17.1		3.5		32.3
Transfers		—		—		—		—

Market appreciation		13.5		16.2		5.3		35.0

Market (depreciation) appreciation										Market (depreciation) appreciation	(0.5)		3.2		3.2		5.9
Net change	Net change	14.4		21.4		5.4		41.2		Net change	11.2		20.3		6.7		38.2
Balance as of June 30, 2021		$	329.1	$	293.7	$	115.6	$	738.4

Balance as of December 31, 2020		$	315.6	$	265.3	$	105.0	$	685.9
Long-term flows:
Sales/new accounts		22.5		46.9		9.0		78.4
Redemptions/terminations		(16.5)		(33.0)		(7.1)		(56.6)
Cash flow/unreinvested dividends		(4.3)		(6.0)		—		(10.3)
Net long-term inflows(1)		1.7		7.9		1.9		11.5
Transfers		(0.2)		0.2		—		—
Market appreciation		12.0		20.3		8.7		41.0
Net change		13.5		28.4		10.6		52.5
Balance as of June 30, 2021		$	329.1	$	293.7	$	115.6	$	738.4

Balance as of June 30, 2020		$	276.2	$	229.5	$	94.3	$	600.0
Long-term flows:
Sales/new accounts		40.6		82.0		16.3		138.9
Redemptions/terminations		(24.1)		(62.5)		(15.1)		(101.7)
Cash flow/unreinvested dividends		(7.8)		(11.6)		(0.1)		(19.5)
Net long-term inflows(1)		8.7		7.9		1.1		17.7

Transfers		1.1		(0.5)		(0.6)		—

Market appreciation		43.1		56.8		20.8		120.7
Net change		52.9		64.2		21.3		138.4
Balance as of June 30, 2021		$	329.1	$	293.7	$	115.6	$	738.4
Balance as of March 31, 2022										Balance as of March 31, 2022	$	325.9	$	292.6	$	116.9	$	735.4

(1)Institutional net flows include $1.3 billion ~~$1.3 billion and $4.2 billion~~ of AXA's redemptions of certain low-fee fixed income mandates for the ~~three-month, six-month and~~ twelve-month ~~periods~~period ended ~~June 30, 2021, respectively.~~March 31, 2022.

3330

Index


																	Investment Service
																	Equity Actively Managed		Equity Passively Managed(1)		Fixed Income Actively Managed - Taxable		Fixed Income Actively Managed - Tax- Exempt		Fixed Income Passively Managed(1)		Alternatives/ Multi-Asset Solutions(2)		Total
																	(in billions)
Balance as of December 31, 2021																Balance as of December 31, 2021	$	287.6	$	71.6	$	246.3	$	57.1	$	13.2	$	102.8	$	778.6
Long-term flows:																Long-term flows:
Sales/new accounts																Sales/new accounts	17.3		0.2		7.1		4.0		(0.1)		12.4		40.9
Redemptions/terminations																Redemptions/terminations	(10.3)		(0.1)		(10.4)		(2.8)		(0.1)		(0.9)		(24.6)
Cash flow/unreinvested dividends																Cash flow/unreinvested dividends	(2.4)		(1.9)		(1.4)		(0.2)		0.6		0.4		(4.9)
Net long-term inflows (outflows)																Net long-term inflows (outflows)	4.6		(1.8)		(4.7)		1.0		0.4		11.9		11.4

Market depreciation																Market depreciation	(27.0)		(3.6)		(15.7)		(3.2)		(0.9)		(4.2)		(54.6)
Net change																Net change	(22.4)		(5.4)		(20.4)		(2.2)		(0.5)		7.7		(43.2)
Balance as of March 31, 2022																Balance as of March 31, 2022	$	265.2	$	66.2	$	225.9	$	54.9	$	12.7	$	110.5	$	735.4

		Investment Service
		Equity Actively Managed		Equity Passively Managed(1)		Fixed Income Actively Managed - Taxable		Fixed Income Actively Managed - Tax- Exempt		Fixed Income Passively Managed(1)		Alternatives/ Multi-Asset Solutions(2)		Total
		(in billions)
Balance as of March 31, 2021	Balance as of March 31, 2021	$	231.8	$	66.3	$	252.2	$	51.8	$	8.3	$	86.8	$	697.2	Balance as of March 31, 2021	$	231.8	$	66.3	$	252.2	$	51.8	$	8.3	$	86.8	$	697.2
Long-term flows:	Long-term flows:															Long-term flows:
Sales/new accounts	Sales/new accounts	18.3		0.4		16.3		3.2		0.8		6.0		45.0		Sales/new accounts	74.7		1.5		39.6		14.0		4.5		23.3		157.6
Redemptions/terminations	Redemptions/terminations	(9.8)		(0.3)		(19.9)		(1.7)		(0.1)		(0.6)		(32.4)		Redemptions/terminations	(40.7)		(0.6)		(50.8)		(8.5)		(0.4)		(3.2)		(104.2)
Cash flow/unreinvested dividends	Cash flow/unreinvested dividends	(2.9)		(1.8)		(1.7)		—		0.2		(0.2)		(6.4)		Cash flow/unreinvested dividends	(11.1)		(8.1)		(2.7)		(0.2)		1.1		(0.1)		(21.1)
Net long-term inflows (outflows)(3)	Net long-term inflows (outflows)(3)	5.6		(1.7)		(5.3)		1.5		0.9		5.2		6.2		Net long-term inflows (outflows)(3)	22.9		(7.2)		(13.9)		5.3		5.2		20.0		32.3

Market appreciation		19.3		4.9		5.4		0.7		0.1		4.6		35.0
Net change		24.9		3.2		0.1		2.2		1.0		9.8		41.2
Balance as of June 30, 2021		$	256.7	$	69.5	$	252.3	$	54.0	$	9.3	$	96.6	$	738.4

Balance as of December 31, 2020		$	217.8	$	64.5	$	263.2	$	50.3	$	8.5	$	81.6	$	685.9
Long-term flows:
Sales/new accounts		33.9		0.6		28.7		6.7		0.8		7.7		78.4
Redemptions/terminations		(19.1)		(0.8)		(32.1)		(3.8)		(0.2)		(0.6)		(56.6)
Cash flow/unreinvested dividends		(5.5)		(3.5)		(2.6)		0.2		0.5		0.6		(10.3)
Net long-term inflows (outflows)(3)		9.3		(3.7)		(6.0)		3.1		1.1		7.7		11.5

Market appreciation (depreciation)	Market appreciation (depreciation)	29.6		8.7		(4.9)		0.6		(0.3)		7.3		41.0		Market appreciation (depreciation)	10.5		7.1		(12.4)		(2.2)		(0.8)		3.7		5.9
Net change	Net change	38.9		5.0		(10.9)		3.7		0.8		15.0		52.5		Net change	33.4		(0.1)		(26.3)		3.1		4.4		23.7		38.2
Balance as of June 30, 2021		$	256.7	$	69.5	$	252.3	$	54.0	$	9.3	$	96.6	$	738.4

Balance as of June 30, 2020		$	173.1	$	54.3	$	247.9	$	47.1	$	9.9	$	67.7	$	600.0
Long-term flows:
Sales/new accounts		59.4		1.8		53.3		11.7		0.8		11.9		138.9
Redemptions/terminations		(37.4)		(2.6)		(51.9)		(7.7)		(0.3)		(1.8)		(101.7)
Cash flow/unreinvested dividends		(9.6)		(4.8)		(5.7)		0.4		(1.1)		1.3		(19.5)
Net long-term inflows (outflows)(3)		12.4		(5.6)		(4.3)		4.4		(0.6)		11.4		17.7

Market appreciation		71.2		20.8		8.7		2.5		—		17.5		120.7
Net change		83.6		15.2		4.4		6.9		(0.6)		28.9		138.4
Balance as of June 30, 2021		$	256.7	$	69.5	$	252.3	$	54.0	$	9.3	$	96.6	$	738.4
Balance as of March 31, 2022																Balance as of March 31, 2022	$	265.2	$	66.2	$	225.9	$	54.9	$	12.7	$	110.5	$	735.4

(1)Includes index and enhanced index services.

(3) Fixed income – taxable investment service net flows include $1.3 billion ~~$1.3 billion and $4.2 billion~~ of AXA's redemptions of certain low-fee fixed income mandates for the ~~three-month, six-month and~~ twelve-month ~~periods~~period ended ~~June 30, 2021, respectively.~~March 31, 2022.

3431

Index

Net long-term inflows (outflows) for actively managed investment services as compared to passively managed investment services for the three-month ~~six-month~~ and twelve-month periods ended ~~June 30, 2021~~March 31, 2022 are as follows:


		Periods Ended June 30, 2021							Periods Ended March 31, 2022
		Three-months		Six-months		Twelve-months			Three-months		Twelve-months
		(in billions)							(in billions)
Actively Managed	Actively Managed							Actively Managed
Equity	Equity	$	5.6	$	9.3	$	12.4	Equity	$	4.6	$	22.9
Fixed Income	Fixed Income	(3.8)		(2.9)		0.1		Fixed Income	(3.7)		(8.6)
Alternatives/Multi-Asset Solutions	Alternatives/Multi-Asset Solutions	4.9		6.8		10.2		Alternatives/Multi-Asset Solutions	11.3		17.6
		6.7		13.2		22.7			12.2		31.9
Passively Managed	Passively Managed							Passively Managed
Equity	Equity	(1.7)		(3.7)		(5.6)		Equity	(1.8)		(7.2)
Fixed Income	Fixed Income	0.9		1.1		(0.6)		Fixed Income	0.4		5.2
Alternatives/Multi-Asset Solutions	Alternatives/Multi-Asset Solutions	0.3		0.9		1.2		Alternatives/Multi-Asset Solutions	0.6		2.4
		(0.5)		(1.7)		(5.0)			(0.8)		0.4
Total net long-term inflows	Total net long-term inflows	$	6.2	$	11.5	$	17.7	Total net long-term inflows	$	11.4	$	32.3

Average assets under management by distribution channel and investment service are as follows:


		Three Months Ended June 30,								Six Months Ended June 30,									Three Months Ended March 31,
		2021		2020		$ Change		% Change		2021		2020		$ Change		% Change			2022		2021		$ Change		% Change
		(in billions)								(in billions)									(in billions)
Distribution Channel:	Distribution Channel:																	Distribution Channel:
Institutions	Institutions	$	324.9	$	271.5	$	53.4	19.7	%	$	319.7	$	276.6	$	43.1	15.6	%	Institutions	$	331.6	$	313.4	$	18.2	5.8	%
Retail	Retail	284.3		215.8		68.5		31.7		276.7		225.8		50.9		22.5		Retail	301.5		268.0		33.5		12.5
Private Wealth Management		113.4		91.2		22.2		24.4		110.3		94.8		15.5		16.3
Private Wealth																		Private Wealth	118.1		107.1		11.0		10.2
Total	Total	$	722.6	$	578.5	$	144.1	24.9	%	$	706.7	$	597.2	$	109.5	18.3	%	Total	$	751.2	$	688.5	$	62.7	9.1	%
Investment Service:	Investment Service:																	Investment Service:
Equity Actively Managed	Equity Actively Managed	$	246.6	$	160.5	$	86.1	53.6	%	$	235.4	$	165.7	$	69.7	42.1	%	Equity Actively Managed	$	270.5	$	223.4	$	47.1	21.1	%
Equity Passively Managed(1)	Equity Passively Managed(1)	68.5		51.7		16.8		32.4		66.6		54.5		12.1		22.3		Equity Passively Managed(1)	67.5		64.6		2.9		4.5
Fixed Income Actively Managed – Taxable	Fixed Income Actively Managed – Taxable	253.2		244.9		8.3		3.4		255.7		252.9		2.8		1.1		Fixed Income Actively Managed – Taxable	236.2		257.3		(21.1)		(8.2)
Fixed Income Actively Managed – Tax-exempt	Fixed Income Actively Managed – Tax-exempt	52.9		46.1		6.8		14.8		52.1		47.1		5.0		10.7		Fixed Income Actively Managed – Tax-exempt	56.1		51.2		4.9		9.4
Fixed Income Passively Managed(1)	Fixed Income Passively Managed(1)	8.7		10.2		(1.5)		(14.6)		8.5		9.8		(1.3)		(13.3)		Fixed Income Passively Managed(1)	12.9		8.4		4.5		54.2
Alternatives/Multi-Asset Solutions(2)	Alternatives/Multi-Asset Solutions(2)	92.7		65.1		27.6		42.4		88.4		67.2		21.2		31.5		Alternatives/Multi-Asset Solutions(2)	108.0		83.6		24.4		29.2
Total	Total	$	722.6	$	578.5	$	144.1	24.9	%	$	706.7	$	597.2	$	109.5	18.3	%	Total	$	751.2	$	688.5	$	62.7	9.1	%

(1)Includes index and enhanced index services.

(2)Includes certain multi-asset solutions and services not included in equity of fixed income services. Prior to December 31, 2020, this investment service line was disclosed as “Other.” In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to “Alternatives and Multi-Asset Solutions."

Our Institutional channel ~~second~~first quarter average AUM of ~~$324.9~~$331.6 billion increased ~~$53.4~~$18.2 billion, or ~~19.7%~~5.8%, compared to the ~~second~~first quarter of ~~2020,~~2021, primarily due to this AUM increasing ~~$52.9~~$11.2 billion, or ~~19.2%~~3.6%, to ~~$329.1~~$325.9 billion over the last ~~twelve~~12 months. The ~~$52.9~~$11.2 billion increase ~~primarily~~ resulted from net inflows of $11.7 billion, offset by market depreciation of $0.5 billion.

Our Retail channel first quarter average AUM of $301.5 billion increased $33.5 billion, or 12.5%, compared to the first quarter of 2021, primarily due to this AUM increasing $20.3 billion, or 7.4%, to $292.6 billion over the last 12 months. The $20.3 billion increase resulted from net inflows of $17.1 billion and market appreciation of ~~$43.1~~$3.2 billion.

Our Private Wealth channel first quarter average AUM of $118.1 billion ~~and~~increased $11.0 billion, or 10.2%, compared to the first quarter of 2021, primarily due to this AUM increasing $6.7 billion, or 6.1%, to $116.9 billion over the last 12 months. The $6.7 billion increase resulted from net inflows of ~~$8.7~~$3.5 billion and market appreciation of $3.2 billion.

Index

Our Retail channel second quarter average AUM of $284.3 billion increased $68.5 billion, or 31.7%, compared to the second quarter of 2020, primarily due to this AUM increasing $64.2 billion, or 28.0%, to $293.7 billion over the last twelve months. The $64.2 billion increase primarily resulted from market appreciation of $56.8 billion and net inflows of $7.9 billion.

Our Private Wealth Management channel second quarter average AUM of $113.4 billion increased $22.2 billion, or 24.4%, compared to the second quarter of 2020, primarily due to this AUM increasing $21.3 billion, or 22.6%, to $115.6 billion over the last twelve months. The $21.3 billion increase primarily resulted from market appreciation of $20.8 billion and net inflows of $1.1 billion.

Absolute investment composite returns, gross of fees, and relative performance as of ~~June 30, 2021~~March 31, 2022 compared to benchmarks for certain representative Institutional equity and fixed income services are as follows:


		1-Year		3-Year(1)		5-Year(1)			1-Year		3-Year(1)		5-Year(1)

Global High Income - Hedged (fixed income)	Global High Income - Hedged (fixed income)							Global High Income - Hedged (fixed income)
Absolute return	Absolute return	17.6	%	6.4	%	6.8	%	Absolute return	(0.1)	%	4.0	%	3.8	%
Relative return (vs. Bloomberg Barclays Global High Yield Index - Hedged)	Relative return (vs. Bloomberg Barclays Global High Yield Index - Hedged)	4.0		(0.4)		0.1		Relative return (vs. Bloomberg Barclays Global High Yield Index - Hedged)	2.5		1.0		0.2
Global Plus - Hedged (fixed income)	Global Plus - Hedged (fixed income)							Global Plus - Hedged (fixed income)
Absolute return	Absolute return	2.5		5.1		3.6		Absolute return	(3.4)		1.7		2.5
Relative return (vs. Bloomberg Barclays Global Aggregate Index - Hedged)	Relative return (vs. Bloomberg Barclays Global Aggregate Index - Hedged)	2.4		0.5		0.6		Relative return (vs. Bloomberg Barclays Global Aggregate Index - Hedged)	0.5		0.4		0.2
Intermediate Municipal Bonds (fixed income)	Intermediate Municipal Bonds (fixed income)							Intermediate Municipal Bonds (fixed income)
Absolute return	Absolute return	4.7		4.3		2.8		Absolute return	(2.8)		1.7		2.2
Relative return (vs. Lipper Short/Int. Blended Muni Fund Avg)	Relative return (vs. Lipper Short/Int. Blended Muni Fund Avg)	1.6		1.0		0.7		Relative return (vs. Lipper Short/Int. Blended Muni Fund Avg)	0.4		0.7		0.7
U.S. Strategic Core Plus (fixed income)	U.S. Strategic Core Plus (fixed income)							U.S. Strategic Core Plus (fixed income)
Absolute return	Absolute return	1.7		5.8		3.8		Absolute return	(3.9)		2.2		2.6
Relative return (vs. Bloomberg Barclays U.S. Aggregate Index)	Relative return (vs. Bloomberg Barclays U.S. Aggregate Index)	2.0		0.4		0.8		Relative return (vs. Bloomberg Barclays U.S. Aggregate Index)	0.2		0.5		0.5
Emerging Market Debt (fixed income)	Emerging Market Debt (fixed income)							Emerging Market Debt (fixed income)
Absolute return	Absolute return	10.0		7.3		5.4		Absolute return	(5.9)		1.1		2.0
Relative return (vs. JPM EMBI Global/JPM EMBI)	Relative return (vs. JPM EMBI Global/JPM EMBI)	3.2		0.8		1.0		Relative return (vs. JPM EMBI Global/JPM EMBI)	0.3		0.6		0.3
Sustainable Global Thematic (equity)	Sustainable Global Thematic (equity)							Sustainable Global Thematic (equity)
Absolute return	Absolute return	44.9		22.8		21.4		Absolute return	2.5		19.5		16.8
Relative return (vs. MSCI ACWI Index)	Relative return (vs. MSCI ACWI Index)	5.7		8.2		6.8		Relative return (vs. MSCI ACWI Index)	(4.8)		5.7		5.2
International Strategic Core Equity (equity)	International Strategic Core Equity (equity)							International Strategic Core Equity (equity)
Absolute return	Absolute return	24.5		6.9		9.4		Absolute return	5.2		6.8		7.7
Relative return (vs. MSCI EAFE Index)	Relative return (vs. MSCI EAFE Index)	(7.8)		(1.4)		(0.9)		Relative return (vs. MSCI EAFE Index)	4.0		(0.9)		1.0
U.S. Small & Mid Cap Value (equity)	U.S. Small & Mid Cap Value (equity)							U.S. Small & Mid Cap Value (equity)
Absolute return	Absolute return	72.2		10.3		13.5		Absolute return	7.3		13.8		9.6
Relative return (vs. Russell 2500 Value Index)	Relative return (vs. Russell 2500 Value Index)	9.0		(0.3)		1.2		Relative return (vs. Russell 2500 Value Index)	(0.4)		0.8		0.4
U.S. Strategic Value (equity)	U.S. Strategic Value (equity)							U.S. Strategic Value (equity)
Absolute return	Absolute return	49.2		9.7		10.5		Absolute return	10.8		12.4		8.7
Relative return (vs. Russell 1000 Value Index)	Relative return (vs. Russell 1000 Value Index)	5.5		(2.7)		(1.4)		Relative return (vs. Russell 1000 Value Index)	(0.9)		(0.6)		(1.6)
U.S. Small Cap Growth (equity)	U.S. Small Cap Growth (equity)							U.S. Small Cap Growth (equity)
Absolute return	Absolute return	51.4		25.4		28.5		Absolute return	(15.0)		15.3		18.3
Relative return (vs. Russell 2000 Growth Index)	Relative return (vs. Russell 2000 Growth Index)	0.1		9.5		9.7		Relative return (vs. Russell 2000 Growth Index)	(0.7)		5.4		8.0
U.S. Large Cap Growth (equity)	U.S. Large Cap Growth (equity)							U.S. Large Cap Growth (equity)
Absolute return	Absolute return	39.6		25.8		24.9		Absolute return	11.8		21.2		20.7
Relative return (vs. Russell 1000 Growth Index)	Relative return (vs. Russell 1000 Growth Index)	(2.9)		0.7		1.2		Relative return (vs. Russell 1000 Growth Index)	(3.2)		(2.4)		(0.1)
U.S. Small & Mid Cap Growth (equity)								U.S. Small & Mid Cap Growth (equity)
Absolute return								Absolute return	(9.8)		15.1		17.0
Relative return (vs. Russell 2500 Growth Index)								Relative return (vs. Russell 2500 Growth Index)	0.3		2.1		3.8
Concentrated U.S. Growth (equity)								Concentrated U.S. Growth (equity)
Absolute return								Absolute return	9.1		18.7		18.4
Relative return (vs. S&P 500 Index)								Relative return (vs. S&P 500 Index)	(6.5)		(0.2)		2.4

3633

Index


		1-Year	3-Year(1)	5-Year(1)		1-Year	3-Year(1)	5-Year(1)
U.S. Small & Mid Cap Growth (equity)
Absolute return		44.5	22.3	25.0
Relative return (vs. Russell 2500 Growth Index)		(5.1)	2.2	4.3
Concentrated U.S. Growth (equity)
Absolute return		46.4	24.9	23.3
Relative return (vs. S&P 500 Index)		5.6	6.2	5.7
Select U.S. Equity (equity)	Select U.S. Equity (equity)				Select U.S. Equity (equity)
Absolute return	Absolute return	44.6	18.8	18.0	Absolute return	16.6	19.8	16.8
Relative return (vs. S&P 500 Index)	Relative return (vs. S&P 500 Index)	3.8	0.1	0.4	Relative return (vs. S&P 500 Index)	1.0	0.9	0.9
Strategic Equities (equity)	Strategic Equities (equity)				Strategic Equities (equity)
Absolute return	Absolute return	42.4	17.1	15.9	Absolute return	10.7	16.1	13.7
Relative return (vs. Russell 3000 Index)	Relative return (vs. Russell 3000 Index)	(1.8)	(1.6)	(2.0)	Relative return (vs. Russell 3000 Index)	(1.3)	(2.1)	(1.7)
Global Core Equity (equity)	Global Core Equity (equity)				Global Core Equity (equity)
Absolute return	Absolute return	39.7	16.0	16.5	Absolute return	2.9	11.8	12.0
Relative return (vs. MSCI ACWI Index)	Relative return (vs. MSCI ACWI Index)	0.5	1.4	1.9	Relative return (vs. MSCI ACWI Index)	(4.3)	(1.9)	0.3
U.S. Strategic Core Equity (equity)	U.S. Strategic Core Equity (equity)				U.S. Strategic Core Equity (equity)
Absolute return	Absolute return	31.6	16.0	13.3	Absolute return	15.2	15.0	13.6
Relative return (vs. S&P 500 Index)	Relative return (vs. S&P 500 Index)	(9.2)	(2.6)	(4.4)	Relative return (vs. S&P 500 Index)	(0.5)	(4.0)	(2.4)
Select U.S. Equity Long/Short (alternatives)	Select U.S. Equity Long/Short (alternatives)				Select U.S. Equity Long/Short (alternatives)
Absolute return	Absolute return	27.1	12.7	12.0	Absolute return	10.7	13.2	11.5
Relative return (vs. S&P 500 Index)	Relative return (vs. S&P 500 Index)	(13.7)	(5.9)	(5.7)	Relative return (vs. S&P 500 Index)	(5.0)	(5.7)	(4.5)

(1)Reflects annualized returns.

3734

Index

Consolidated Results of Operations


		Three Months Ended June 30,										Six Months Ended June 30,											Three Months Ended March 31,
		2021			2020			$ Change		% Change		2021			2020			$ Change		% Change			2022			2021			$ Change		% Change
		(in thousands, except per unit amounts)																					(in thousands, except per unit amounts)
Net revenues	Net revenues	$	1,076,822		$	871,449		$	205,373	23.6	%	$	2,084,088		$	1,745,605		$	338,483	19.4	%	Net revenues	$	1,105,687		$	1,007,266		$	98,421	9.8	%
Expenses	Expenses	793,199			661,802			131,397		19.9		1,539,881			1,357,735			182,146		13.4		Expenses	857,284			746,682			110,602		14.8
Operating income	Operating income	283,623			209,647			73,976		35.3		544,207			387,870			156,337		40.3		Operating income	248,403			260,584			(12,181)		(4.7)
Income taxes	Income taxes	12,480			11,386			1,094		9.6		29,225			20,860			8,365		40.1		Income taxes	12,721			16,745			(4,024)		(24.0)
Net income	Net income	271,143			198,261			72,882		36.8		514,982			367,010			147,972		40.3		Net income	235,682			243,839			(8,157)		(3.3)
Net income (loss) of consolidated entities attributable to non-controlling interests		3,573			20,940			(17,367)		(82.9)		3,281			(4,631)			7,912		n/m
Net (loss) of consolidated entities attributable to non-controlling interests																						Net (loss) of consolidated entities attributable to non-controlling interests	(25,045)			(292)			(24,753)		n/m
Net income attributable to AB Unitholders	Net income attributable to AB Unitholders	$	267,570		$	177,321		$	90,249	50.9		$	511,701		$	371,641		$	140,060	37.7		Net income attributable to AB Unitholders	$	260,727		$	244,131		$	16,596	6.8

Diluted net income per AB Unit	Diluted net income per AB Unit	$	0.97		$	0.65		$	0.32	49.2		$	1.86		$	1.36		$	0.50	36.8		Diluted net income per AB Unit	$	0.95		$	0.89		$	0.06	6.7

Distributions per AB Unit	Distributions per AB Unit	$	0.97		$	0.68		$	0.29	42.6		$	1.85		$	1.39		$	0.46	33.1		Distributions per AB Unit	$	0.99		$	0.88		$	0.11	12.5

Operating margin (1)	Operating margin (1)	26.0		%	21.7		%					26.0		%	22.5		%					Operating margin (1)	24.7		%	25.9		%

(1)Operating income excluding net ~~income~~ (loss) attributable to non-controlling interests as a percentage of net revenues.

Net income attributable to AB Unitholders for the three months ended ~~June 30, 2021~~March 31, 2022 increased ~~$90.2~~$16.6 million, or ~~50.9%~~6.8%, from the three months ended ~~June 30, 2020.~~March 31, 2021. The increase primarily is due to (in millions):


Higher ~~base advisory~~performance-based fees	$	~~154.4~~60.2
Higher ~~performance-based~~base advisory fees	~~45.0~~60.1
Higher net loss of consolidated entities attributable to non-controlling interest	24.8
Higher distribution revenues	~~35.4~~20.7
~~Lower net income of consolidated entities attributable to non-controlling interest~~Higher general and administrative expenses	~~17.4~~ (57.4)
~~Lower amortization of intangible assets~~Higher investment losses	~~5.2~~ (41.0)
Higher employee compensation and benefits expense	~~(86.1)~~(33.4)
Higher promotion and servicing expense	~~(46.0)~~
~~Lower investment gains~~	(20.0)
~~Lower Bernstein Research Services revenue~~	~~(8.0)~~
~~Higher general and administrative expenses~~	~~(4.4)~~
~~Higher income tax expense~~	~~(1.1)~~
Other	~~(1.6)~~2.6
	$	~~90.2~~

~~Index~~

Net income attributable to AB Unitholders for the six months ended June 30, 2021 increased $140.1 million, or 37.7%, from the six months ended June 30, 2020. The increase primarily is due to (in millions):


~~Higher base advisory fees~~	$	~~228.5~~
~~Higher performance-based fees~~	~~52.6~~
~~Higher distribution revenues~~	~~52.2~~
~~Higher investment gains~~	~~26.2~~
~~Lower amortization of intangible assets~~	~~10.2~~
~~Higher employee compensation and benefits expense~~	~~(129.9)~~
~~Higher promotion and servicing expense~~	~~(61.5)~~
~~Lower Bernstein Research Services revenue~~	~~(18.2)~~
~~Higher income tax expense~~	~~(8.4)~~
~~Higher net income of consolidated entities attributable to non-controlling interest~~	~~(7.9)~~
~~Higher general and administrative expenses~~	~~(2.3)~~
~~Other~~	~~(1.4)~~
	$	~~140.1~~16.6

Units Outstanding

Each quarter, we consider whether to implement a plan to repurchase AB Holding Units pursuant to Rules 10b5-1 and 10b-18 under the Securities Exchange ~~Act.~~Act of 1934, as amended (“Exchange Act”). A plan of this type allows a company to repurchase its shares at times when it otherwise might be prevented from doing so because of self-imposed trading blackout periods or because it possesses material non-public information. Each broker we select has the authority ~~under~~to repurchase AB Holding Units on our behalf in accordance with the terms and limitations specified in the ~~plan to repurchase AB Holding Units on our behalf.~~plan. Repurchases are subject to regulations promulgated by the SEC, as well as certain price, market volume and timing constraints specified in the plan. ~~The~~There was no plan adopted during the ~~second~~first quarter of ~~2021 expired at the close of business on July 28, 2021.~~2022. We may adopt additional plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under our incentive compensation award program and for other corporate purposes.

Index

Cash Distributions

We are required to distribute all of our Available Cash Flow, as defined in the AB Partnership Agreement, to our Unitholders and the General Partner. Available Cash Flow typically is the adjusted diluted net income per unit for the quarter multiplied by the number of general and limited partnership interests at the end of the quarter. In future periods, management anticipates that Available Cash Flow will continue to be based on adjusted diluted net income per unit, unless management determines, with concurrence of the Board of Directors, that one or more adjustments that are made for adjusted net income should not be made with respect to the Available Cash Flow calculation. See Note 6 to our consolidated financial statements contained in Item 1 for a description of Available Cash Flow.

Management Operating Metrics

We are providing the non-GAAP measures “adjusted net revenues,” “adjusted operating income” and “adjusted operating margin” because they are the principal operating metrics management uses in evaluating and comparing period-to-period operating performance. Management principally uses these metrics in evaluating performance because they present a clearer picture of our operating performance and allow management to see long-term trends without the distortion primarily caused by long-term incentive compensation-related mark-to-market adjustments, real estate charges and other adjustment items. Similarly, we believe that these management operating metrics help investors better understand the underlying trends in our results and, accordingly, provide a valuable perspective for investors.

These non-GAAP measures are provided in addition to, and not as substitutes for, net revenues, operating income and operating

margin, and they may not be comparable to non-GAAP measures presented by other companies. Management uses both accounting principles generally accepted in the United States of America ("US GAAP") and non-GAAP measures in evaluating our financial performance. The non-GAAP measures alone may pose limitations because they do not include all of our revenues and expenses.


	Three Months Ended March 31,
	2022		2021
	(in thousands, except per unit amounts)
Net revenues, US GAAP basis	$	1,105,687	$	1,007,266
Adjustments:
Distribution-related adjustments:
Distribution revenues	(168,341)		(147,600)
Investment advisory services fees	(17,285)		(22,553)
Pass-through adjustments:
Investment advisory services fees	(35,976)		(4,196)
Other revenues	(8,963)		(10,531)
Impact of consolidated company-sponsored funds	24,538		(311)
Long-term incentive compensation-related investment gains and dividend and interest	4,084		(2,097)


Adjusted net revenues	$	903,744	$	819,978

Index


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
		2021			2020			2021			2020
		(in thousands, except per unit amounts)
Net revenues, US GAAP basis		$	1,076,822		$	871,449		$	2,084,088		$	1,745,605
Adjustments:
Distribution-related adjustments:
Distribution revenues		(155,538)			(120,099)			(303,138)			(250,956)
Investment advisory services fees		(20,459)			(12,202)			(43,012)			(27,015)
Pass-through adjustments:
Investment advisory services fees		(4,403)			(3,331)			(8,598)			(10,393)
Other revenues		(8,229)			(10,195)			(18,760)			(19,802)
Impact of consolidated company-sponsored funds		(4,286)			(21,552)			(4,597)			2,583
Long-term incentive compensation-related investment gains and dividend and interest		(2,272)			(5,345)			(4,370)			1,647
Write-down of investment		—			—			—			859

Adjusted net revenues		$	881,635		$	698,725		$	1,701,613		$	1,442,528
															2022			2021
Operating income, US GAAP basis	Operating income, US GAAP basis	$	283,623		$	209,647		$	544,207		$	387,870		Operating income, US GAAP basis	$	248,403		$	260,584
Adjustments:	Adjustments:													Adjustments:
Real estate	Real estate	(985)			5,188			(1,970)			4,849			Real estate	(206)			(985)
Long-term incentive compensation-related items	Long-term incentive compensation-related items	(91)			104			(85)			670			Long-term incentive compensation-related items	945			6
CEO's EQH award compensation		17			209			159			393
Write-down of investment		—			—			—			859
EQH award compensation														EQH award compensation	175			142

Acquisition-related expenses	Acquisition-related expenses	180			805			202			1,331			Acquisition-related expenses	10,687			22

Sub-total of non-GAAP adjustments	Sub-total of non-GAAP adjustments	(879)			6,306			(1,694)			8,102			Sub-total of non-GAAP adjustments	11,601			(815)
Less: Net income (loss) of consolidated entities attributable to non-controlling interests		3,573			20,940			3,281			(4,631)
Less: Net (loss) of consolidated entities attributable to non-controlling interests														Less: Net (loss) of consolidated entities attributable to non-controlling interests	(25,045)			(292)
Adjusted operating income	Adjusted operating income	279,171			195,013			539,232			400,603			Adjusted operating income	285,049			260,061
Adjusted income taxes	Adjusted income taxes	12,284			10,589			28,957			21,552			Adjusted income taxes	14,595			16,722
Adjusted net income	Adjusted net income	$	266,887		$	184,424		$	510,275		$	379,051		Adjusted net income	$	270,454		$	243,339

Diluted net income per AB Unit, GAAP basis	Diluted net income per AB Unit, GAAP basis	$	0.97		$	0.65		$	1.86		$	1.36		Diluted net income per AB Unit, GAAP basis	$	0.95		$	0.89
Impact of non-GAAP adjustments	Impact of non-GAAP adjustments	—			0.03			(0.01)			0.03			Impact of non-GAAP adjustments	0.04			(0.01)
Adjusted diluted net income per AB Unit	Adjusted diluted net income per AB Unit	$	0.97		$	0.68		$	1.85		$	1.39		Adjusted diluted net income per AB Unit	$	0.99		$	0.88

Operating margin, GAAP basis	Operating margin, GAAP basis	26.0		%	21.7		%	26.0		%	22.5		%	Operating margin, GAAP basis	24.7		%	25.9		%
Impact of non-GAAP adjustments	Impact of non-GAAP adjustments	5.7			6.2			5.7			5.3			Impact of non-GAAP adjustments	6.8			5.8
Adjusted operating margin	Adjusted operating margin	31.7		%	27.9		%	31.7		%	27.8		%	Adjusted operating margin	31.5		%	31.7		%

Adjusted operating income for the three months ended ~~June 30, 2021~~March 31, 2022 increased ~~$84.2~~$25.0 million, or ~~43.2%~~9.6%, from the three months ended ~~June 30, 2020,~~March 31, 2021, primarily due to higher investment advisory base fees of ~~$144.8~~$64.5 million and higher performance-based fees of ~~$45.0 million and lower amortization of intangible assets of $5.2~~$29.2 million, partially offset by higher employee compensation and benefits expense (excluding the impact of long-term incentive compensation-related items) of ~~$89.7~~$37.9 million, higher general and administrative expenses of ~~$9.8~~$16.9 million, ~~lower Bernstein Research Services revenues~~higher investment losses of ~~$8.0~~$8.4 million and higher promotion and servicing expenses of ~~$4.3~~$6.1 million.

Adjusted operating income for the six months ended June 30, 2021 increased $138.6 million, or 34.6%, from the six months ended June 30, 2020, primarily due to higher investment advisory base fees of $211.3 million, higher performance-based fees of $55.3 million, lower amortization of intangible assets of $10.2 million, higher net investment gains of $7.9 million and lower promotion and servicing expenses of $5.6 million, partially offset by higher employee compensation and benefits expense (excluding the impact of long-term incentive compensation-related items) of $125.2 million, lower Bernstein Research Services revenues of $18.2 million and higher general and administrative expenses of $12.4 million.

~~Index~~

Adjusted Net Revenues

Net Revenue, as adjusted, is reduced to exclude all of the company's distribution revenues, which are recorded as a separate line

item on the consolidated statement of income, as well as a portion of investment advisory services fees received that is used to pay distribution and servicing costs. For certain products, based on the distinct arrangements, certain distribution fees are collected by us and passed through to third-party client intermediaries, while for certain other products, we collect investment advisory services fees and a portion is passed through to third-party client intermediaries. In both arrangements, the third-party client intermediary owns the relationship with the client and is responsible for performing services and distributing the product to the client on our behalf. We believe offsetting distribution revenues and certain investment advisory services fees is useful for our investors and other users of our financial statements because such presentation appropriately reflects the nature of these costs as pass-through payments to third parties that perform functions on behalf of our sponsored mutual funds and/or shareholders of these funds. Distribution-related adjustments fluctuate each period based on the type of investment products sold, as well as the average AUM over the period. Also, we adjust distribution revenues for the amortization of deferred sales commissions as these costs, over time, will offset such revenues.

We adjust investment advisory and services fees and other revenues for pass through costs, primarily related to our transfer agent and shareholder servicing fees. These fees do not affect operating income, but they do affect our operating margin. As such, we exclude these fees from adjusted net revenues.

We adjust for the revenue impact of consolidating company-sponsored investment funds by eliminating the consolidated company-sponsored investment funds' revenues and including AB's fees from such consolidated company-sponsored investment funds and AB's investment gains and losses on its investments in such consolidated company-sponsored investment funds that were eliminated in consolidation.

Also, adjusted net revenues exclude investment gains and losses and dividends and interest on employee long-term incentive compensation-related investments.

Index

Lastly, during the first quarter of 2020, we wrote-off an investment that had been received in exchange for the sale of software technology, bringing the balance to zero. Previously, we had been excluding the value of this investment from adjusted net revenues.

Adjusted Operating Income

Adjusted operating income represents operating income on a US GAAP basis excluding (1) real estate charges (credits), (2) the impact on net revenues and compensation expense of the investment gains and losses (as well as the dividends and interest) associated with employee long-term incentive compensation-related investments, (3) our ~~CEO's~~senior management's EQH award compensation, as discussed below, (4) ~~the write-down of an investment (discussed immediately above), (5)~~ acquisition-related expenses and ~~(6)~~(5) the impact of consolidated company-sponsored investment funds.

Real estate charges (credits) incurred have been excluded because they are not considered part of our core operating results when comparing financial results from period to period and to industry peers. Real estate charges (credits) incurred during the fourth quarter of 2019 through the fourth quarter of 2020, while excluded in the period in which the charges (credits) were recorded, are included ratably over the remaining applicable lease term.

Prior to 2009, a significant portion of employee compensation was in the form of long-term incentive compensation awards that were notionally invested in AB investment services and generally vested over a period of four years. AB economically hedged the exposure to market movements by purchasing and holding these investments on its balance sheet. All such investments had vested as of year-end 2012 and the investments have been delivered to the participants, except for those investments with respect to which the participant elected a long-term deferral. Fluctuation in the value of these investments, which also impacts compensation expense, is recorded within investment gains and losses on the income statement. Management believes it is useful to reflect the offset achieved from economically hedging the market exposure of these investments in the calculation of adjusted operating income and adjusted operating margin. The non-GAAP measures exclude gains and losses and dividends and interest on employee long-term incentive compensation-related investments included in revenues and compensation expense.

The board of directors of EQH granted to Seth P. Bernstein, ~~(“CEO”),~~ our ~~President and Chief Executive Officer,~~CEO, equity awards in connection with EQH's ~~IPO~~IPO. Additionally, equity awards have been granted to Mr. Bernstein and ~~Mr. Bernstein's~~other members of AB's senior management for their membership on the EQH Management Committee. ~~Mr. Bernstein~~These individuals may receive additional equity or cash compensation from EQH in the future related to ~~his~~their service on the Management Committee.

~~Index~~

Any awards granted to ~~Mr. Bernstein~~these individuals by EQH are recorded as compensation expense in AB’s consolidated statement of income. The compensation expense associated with these awards has been excluded from our non-GAAP measures because they are non-cash and are based upon EQH's, and not AB's, financial performance.

~~The write-off of the investment~~ ~~discussed above in Adjusted net revenues~~ ~~has been excluded due to its non-recurring nature and because it is not part of our core operating results.~~

Acquisition-related expenses have been excluded because they are not considered part of our core operating results when comparing financial results from period to period and to industry peers. Acquisition-related expenses include professional fees and the recording of changes in estimates to contingent payment arrangements associated with our acquisitions. Beginning in the first quarter of 2022, acquisition-related expenses also include certain compensation-related expenses, amortization of intangible assets for contracts acquired and accretion expense with respect to contingent payment arrangements.

We adjusted for the operating income impact of consolidating certain company-sponsored investment funds by eliminating the consolidated company-sponsored funds' revenues and expenses and including AB's revenues and expenses that were eliminated in consolidation. We also excluded the limited partner interests we do not own.

Adjusted Net Income and Adjusted Diluted Net Income per AB Unit

As previously discussed, our quarterly distribution is typically our adjusted diluted net income per unit (which is derived from adjusted net income) for the quarter multiplied by the number of general and limited partnership interests at the end of the quarter. Adjusted income taxes, used in calculating adjusted net income, are calculated using the GAAP effective tax rate adjusted for non-GAAP income tax adjustments.

Adjusted Operating Margin

Adjusted operating margin allows us to monitor our financial performance and efficiency from period to period without the volatility noted above in our discussion of adjusted operating income and to compare our performance to industry peers on a basis that better reflects our performance in our core business. Adjusted operating margin is derived by dividing adjusted operating income by adjusted net revenues.

4238

Index

Net Revenues

The components of net revenues are as follows:


		Three Months Ended June 30,								Six Months Ended June 30,									Three Months Ended March 31,
		2021		2020		$ Change		% Change		2021		2020		$ Change		% Change			2022		2021		$ Change		% Change
		(in thousands)								(in thousands)									(in thousands)
Investment advisory and services fees:	Investment advisory and services fees:																	Investment advisory and services fees:
Institutions:	Institutions:																	Institutions:
Base fees	Base fees	$	136,067	$	109,280	$	26,787	24.5	%	$	265,497	$	219,643	$	45,854	20.9	%	Base fees	$	138,073	$	129,430	$	8,643	6.7	%
Performance-based fees	Performance-based fees	2,484		699		1,785		n/m		6,914		2,988		3,926		n/m		Performance-based fees	41,809		4,430		37,379		n/m
		138,551		109,979		28,572		26.0		272,411		222,631		49,780		22.4			179,882		133,860		46,022		34.4
Retail:	Retail:																	Retail:
Base fees	Base fees	348,193		271,844		76,349		28.1		678,590		568,215		110,375		19.4		Base fees	366,174		330,397		35,777		10.8
Performance-based fees	Performance-based fees	31,511		7,180		24,331		n/m		34,477		7,930		26,547		n/m		Performance-based fees	556		2,965		(2,409)		(81.2)
		379,704		279,024		100,680		36.1		713,067		576,145		136,922		23.8			366,730		333,362		33,368		10.0
Private Wealth Management:
Private Wealth:																		Private Wealth:
Base fees	Base fees	239,457		188,172		51,285		27.3		467,321		395,025		72,296		18.3		Base fees	243,566		227,864		15,702		6.9
Performance-based fees	Performance-based fees	19,912		1,028		18,884		n/m		28,291		6,127		22,164		n/m		Performance-based fees	33,604		8,380		25,224		n/m
		259,369		189,200		70,169		37.1		495,612		401,152		94,460		23.5			277,170		236,244		40,926		17.3
Total:	Total:																	Total:
Base fees	Base fees	723,717		569,296		154,421		27.1		1,411,408		1,182,883		228,525		19.3		Base fees	747,813		687,691		60,122		8.7
Performance-based fees	Performance-based fees	53,907		8,907		45,000		n/m		69,682		17,045		52,637		n/m		Performance-based fees	75,969		15,775		60,194		n/m
		777,624		578,203		199,421		34.5		1,481,090		1,199,928		281,162		23.4			823,782		703,466		120,316		17.1

Bernstein Research Services	Bernstein Research Services	105,655		113,609		(7,954)		(7.0)		224,676		242,832		(18,156)		(7.5)		Bernstein Research Services	117,807		119,021		(1,214)		(1.0)
Distribution revenues	Distribution revenues	155,538		120,099		35,439		29.5		303,138		250,956		52,182		20.8		Distribution revenues	168,341		147,600		20,741		14.1
Dividend and interest income	Dividend and interest income	8,658		12,692		(4,034)		(31.8)		17,342		33,157		(15,815)		(47.7)		Dividend and interest income	11,475		8,684		2,791		32.1
Investment gains (losses)	Investment gains (losses)	4,181		24,189		(20,008)		(82.7)		6,109		(20,117)		26,226		n/m		Investment gains (losses)	(39,024)		1,928		(40,952)		n/m
Other revenues	Other revenues	25,900		26,092		(192)		(0.7)		53,611		51,603		2,008		3.9		Other revenues	26,155		27,711		(1,556)		(5.6)
Total revenues	Total revenues	1,077,556		874,884		202,672		23.2		2,085,966		1,758,359		327,607		18.6		Total revenues	1,108,536		1,008,410		100,126		9.9
Less: Interest expense	Less: Interest expense	734		3,435		(2,701)		(78.6)		1,878		12,754		(10,876)		(85.3)		Less: Interest expense	2,849		1,144		1,705		149.0
Net revenues	Net revenues	$	1,076,822	$	871,449	$	205,373	23.6		$	2,084,088	$	1,745,605	$	338,483	19.4		Net revenues	$	1,105,687	$	1,007,266	$	98,421	9.8

Investment Advisory and Services Fees

Investment advisory and services fees are the largest component of our revenues. These fees generally are calculated as a percentage of the value of AUM as of a specified date, or as a percentage of the value of average AUM for the applicable billing period, and vary with the type of investment service, the size of account and the total amount of assets we manage for a particular client. Accordingly, fee income generally increases or decreases as AUM increase or decrease and is affected by market appreciation or depreciation, the addition of new client accounts or client contributions of additional assets to existing accounts, withdrawals of assets from and termination of client accounts, purchases and redemptions of mutual fund shares, shifts of assets between accounts or products with different fee structures, and acquisitions. Our average basis points realized (investment advisory and services fees divided by average AUM) generally approximate 30 to 105 basis points for ~~actively-~~

~~Index~~

~~managed~~actively-managed equity services, 10 to 70 basis points for actively-managed fixed income services and 2 to 2040 basis points for passively-managed services. Average basis points realized for other services could range from 4 basis points for certain Institutional third party managed services to over 100 basis points for certain Retail and Private Wealth ~~Management~~ alternative services. These ranges include all-inclusive fee arrangements (covering investment management, trade execution and other services) for our Private Wealth ~~Management~~ clients.

We calculate AUM using established market-based valuation methods and fair valuation (non-observable market) methods. Market-based valuation methods include: last sale/settle prices from an exchange for actively-traded listed equities, options and futures; evaluated bid prices from recognized pricing vendors for fixed income, asset-backed or mortgage-backed issues; mid

Index

prices from recognized pricing vendors and brokers for credit default swaps; and quoted bids or spreads from pricing vendors and brokers for other derivative products. Fair valuation methods include: discounted cash flow models or any other methodology that is validated and approved by our Valuation Committee (see paragraph immediately below for more information regarding our Valuation Committee). Fair valuation methods are used only where AUM cannot be valued using market-based valuation methods, such as in the case of private equity or illiquid securities.

The Valuation Committee, which consists of senior officers and employees, is responsible for overseeing the pricing and valuation of all investments held in client and AB portfolios. The Valuation Committee has adopted a Statement of Pricing Policies describing principles and policies that apply to pricing and valuing investments held in these portfolios. We also have a Pricing Group, which reports to the Valuation Committee and is responsible for overseeing the pricing process for all investments.

We sometimes charge our clients performance-based fees. In these situations, we charge a base advisory fee and are eligible to earn an additional performance-based fee or incentive allocation that is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. Some performance-based fees include a high-watermark provision, which generally provides that if a client account underperforms relative to its performance target (whether absolute or relative to a specified benchmark), it must gain back such underperformance before we can collect future performance-based fees. Therefore, if we fail to achieve our performance target for a particular period, we will not earn a performance-based fee for that period and, for accounts with a high-watermark provision, our ability to earn future performance-based fees will be impaired. We are eligible to earn performance-based fees on ~~6.3%~~6.7%, ~~8.6%~~9.1% and ~~0.8%~~0.6% of the assets we manage for institutional clients, private wealth clients and retail clients, respectively (in total, ~~4.5%~~4.6% of our AUM).

For the three months ended ~~June 30, 2021,~~March 31, 2022, our investment advisory and services fees increased by ~~$199.4~~$120.3 million, or ~~34.5%~~17.1%, from the three months ended ~~June 30, 2020,~~March 31, 2021, due to a ~~$154.4~~$60.2 million increase in performance-based fees and a $60.1 million, or ~~27.1%~~8.7%, increase in base ~~fees and a $45.0 million increase in performance-based~~ fees. The increase in base fees is primarily due to a ~~24.9%~~9.1% increase in average AUM. ~~For the six months ended June 30, 2021, our investment advisory and services~~Performance-based fees increased by $281.2 million, or 23.4%, from the six months ended June 30, 2020, due to a $228.5 million, or 19.3%, increase in base fees and a $52.6 million increase in performance-based fees. The increase in base fees is primarily due to ~~an 18.3% increase in average AUM.~~higher performance fees earned on our U.S. Real Estate Funds and International Small Cap Fund.

Institutional investment advisory and services fees for the three months ended ~~June 30, 2021~~March 31, 2022 increased by ~~$28.6~~$46.0 million, or ~~26.0%~~34.4%, from the three months ended ~~June 30, 2020,~~March 31, 2021, due to a ~~$26.8 million, or 24.5%, increase in base fees and a $1.8~~$37.4 million increase in performance-based ~~fees. The increase in base~~ fees ~~is primarily due a 19.7% increase in average AUM, as well as a higher portfolio fee rate. Institutional investment advisory~~ and ~~service fees for the six months ended June 30, 2021 increased by $49.8~~an $8.6 million, or ~~22.4%, from the six months ended June 30, 2020, due to a $45.9 million, or 20.9%~~6.7%, increase in base ~~fees and a $3.9 million increase in performance-based~~ fees. The increase in base fees is primarily due to a ~~15.6%~~5.8% increase in average ~~AUM, as well as a shift in product mix to active equities, which generally have higher fees.~~AUM.

Retail investment advisory and services fees for the three months ended ~~June 30, 2021~~March 31, 2022 increased by ~~$100.7~~$33.4 million, or ~~36.1%~~10.0%, from the three months ended ~~June 30, 2020,~~March 31, 2021, due to a ~~$76.3~~$35.8 million, or ~~28.1%~~10.8%, increase in base fees, ~~and~~partially offset by a ~~$24.3~~$2.4 million ~~increase~~decrease in performance-based fees. The increase in base fees is primarily due to a ~~31.7%~~12.5% increase in average ~~AUM, partially offset by a lower portfolio fee rate. Retail~~AUM.

Private Wealth investment advisory and ~~service~~services fees for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 increased by ~~$136.9~~$40.9 million, or ~~23.8%~~17.3%, from the ~~six~~three months ended ~~June 30, 2020, primarily~~March 31, 2021, due to ~~an increase in base fees of $110.4 million, or 19.4% and~~ a ~~$26.5~~$25.2 million increase in performance-based fees and a $15.7 million, or 6.9%, increase in base fees. The increase in base fees is primarily due to a ~~22.5%~~10.2% increase in average AUM, partially offset by a lower ~~portfolio fee rate.~~

Private Wealth Management investment advisory and services fees for the three months ended June 30, 2021 increased by $70.2 million, or 37.1%, from the three months ended June 30, 2020, due to a $51.3 million, or 27.3%, increase in base fees and a $18.9 million increase in performance-based fees. The increase in base fees is primarily due to a 24.4% increase in average AUM, as well as a higher portfolio fee rate. Private Wealth Management investment and advisory services fees for the

~~Index~~

six months ended June 30, 2021 increased by $94.5 million, or 23.5%, from the six months ended June 30, 2020, due to an increase in base fees of $72.3 million, or 18.3%, and a $22.2 million increase in performance-based fees. The increase in base fees is primarily due to a 16.3% increase in average AUM, as well as a higher portfolio fee rate.

Bernstein Research Services

We earn revenues for providing investment research to, and executing brokerage transactions for, institutional clients. These clients compensate us principally by directing us to execute brokerage transactions on their behalf, for which we earn commissions, and to a lesser extent, but increasingly, by paying us directly for research through commission sharing agreements or cash payments.

Revenues from Bernstein Research Services for the three months ended ~~June 30, 2021~~March 31, 2022 decreased ~~$8.0~~$1.2 million, or ~~7.0%~~1.0%, from the three months ended ~~June 30, 2020,~~March 31, 2021. The slight decrease was due to ~~reduced~~lower customer trading activity ~~driven~~in Asia partially offset by ~~decreased~~higher market volatility ~~as compared to the significant COVID-related surge in~~and trading volume experienced during the three months ended June 30, 2020. For the six months ended June 30, 2021, Bernstein Research Services revenue decreased $18.2 million, or 7.5%, compared to the six months ended June 30, 2020 due to decreased customer trading activity driven by lower global market volatility as compared to the COVID-related surgevolumes in the ~~six months ended June 30, 2020.~~U.S. and U.K.

Distribution Revenues

Two of our subsidiaries act as distributors and/or placement agents of company-sponsored mutual funds and receive distribution services fees from certain of those funds as full or partial reimbursement of the distribution expenses they incur. Period-over-period fluctuations of distribution revenues typically are in line with fluctuations of the corresponding average AUM of these mutual funds.

Index

Distribution revenues for the three months ended ~~June 30, 2021~~March 31, 2022 increased ~~$35.4~~$20.7 million, or ~~29.5%~~14.1%, from the three months ended ~~June 30, 2020,~~March 31, 2021, primarily due to the corresponding average AUM of these mutual funds increasing ~~22.8%. For the six months ended June 30, 2021, distribution revenues increased $52.2 million, or 20.8%~~9.6%, ~~compared~~as well as a shift in product mix from Asia fixed income to ~~the six months ended June 30, 2020, primarily due to the corresponding average AUM of these mutual funds increasing 14.3%.~~equities, which generally earn higher fees.

Dividend and Interest Income and Interest Expense

Dividend and interest income consists primarily of investment income and interest earned on customer margin balances and U.S. Treasury Bills as well as dividend and interest income in our consolidated company-sponsored investment funds. Interest expense principally reflects interest accrued on cash balances in customers’ brokerage accounts.

Dividend and interest income for the three months ended ~~June 30, 2021 decreased $4.0~~March 31, 2022 increased $2.8 million, or ~~31.8%~~32.1%, from the three months ended ~~June 30, 2020,~~March 31, 2021, primarily due to ~~lower interest on U.S Treasury Bills and lower~~higher dividend and interest income in our consolidated company-sponsored investment ~~funds.~~funds and higher interest earned on customer margin balances. Interest expense for the three months ended ~~June 30, 2021 decreased $2.7~~March 31, 2022 increased $1.7 million, or ~~78.6%~~149.0%, from the three months ended ~~June 30, 2020,~~March 31, 2021, due to lower interest paid on cash balances in customers' brokerage accounts. For the six months ended June 30, 2021, dividend and interest income decreased $15.8 million, or 47.7%, compared to the six months ended June 30, 2020, primarily due to lower interest earned on U.S. Treasury bills and customer margin balances and lower dividend and interest income in our consolidated company-sponsored investment funds. Interest expense for the six months ended June 30, 2021 decreased $10.9 million, or 85.3%, compared to the six months ended June 30, 2020, due to lowerhigher interest paid on cash balances in customers' brokerage accounts.

Investment Gains (Losses)

Investment gains (losses) consist primarily of realized and unrealized investment gains or losses on: (i) employee long-term incentive compensation-related investments, (ii) U.S. Treasury Bills, (iii) market-making in exchange-traded options and equities, (iv) seed capital investments, (v) derivatives and (vi) investments in our consolidated company-sponsored investment funds. Investment gains (losses) also include equity in earnings of proprietary investments in limited partnership hedge funds that we sponsor and manage.

4541

Index

Investment (losses) gains ~~(losses)~~ are as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
		(in thousands)									(in thousands)
Long-term incentive compensation-related investments:	Long-term incentive compensation-related investments:									Long-term incentive compensation-related investments:
Realized gains (losses)		$	49	$	(5)	$	2,100	$	1,407
Unrealized gains (losses)		2,153		5,262		2,113		(3,249)
Realized gains										Realized gains	$	1,335	$	2,052
Unrealized (losses)										Unrealized (losses)	(5,485)		(40)

Investments held by consolidated company-sponsored investment funds:	Investments held by consolidated company-sponsored investment funds:									Investments held by consolidated company-sponsored investment funds:
Realized gains (losses)		317		1,792		1,659		(1,402)
Unrealized gains (losses)		7,877		40,177		936		(11,938)
Realized (losses) gains										Realized (losses) gains	(989)		1,342
Unrealized (losses)										Unrealized (losses)	(40,898)		(6,941)

Seed capital investments:	Seed capital investments:									Seed capital investments:
Realized gains (losses)	Realized gains (losses)									Realized gains (losses)
Seed capital and other	Seed capital and other	12,126		7,541		14,683		4,889		Seed capital and other	3,576		2,557
Derivatives	Derivatives	(10,622)		(32,073)		(18,469)		(890)		Derivatives	16,628		(7,847)
Unrealized gains (losses)
Unrealized (losses) gains										Unrealized (losses) gains
Seed capital and other	Seed capital and other	(6,398)		2,585		(5,830)		(9,340)		Seed capital and other	(15,537)		567
Derivatives	Derivatives	(790)		1,155		9,376		(446)		Derivatives	3,104		10,166

Brokerage-related investments:	Brokerage-related investments:									Brokerage-related investments:
Realized (losses) gains	Realized (losses) gains	(311)		1,928		(189)		1,475		Realized (losses) gains	(667)		122
Unrealized (losses)	Unrealized (losses)	(220)		(4,173)		(270)		(623)		Unrealized (losses)	(91)		(50)
		$	4,181	$	24,189	$	6,109	$	(20,117)		$	(39,024)	$	1,928

Other Revenues

Other revenues consist of fees earned for transfer agency services provided to company-sponsored mutual funds, fees earned for administration and recordkeeping services provided to company-sponsored mutual funds and the general accounts of EQH and its subsidiaries, and other miscellaneous revenues. Other revenues for the three months ended ~~June 30, 2021~~March 31, 2022 decreased ~~$0.2~~$1.6 million, or ~~0.7%~~5.6%, compared to the three months ended ~~June 30, 2020,~~March 31, 2021, primarily due to lower brokerage income and mutual fund reimbursements, partially offset by higher shareholder servicing fees. Other revenues for the six months ended June 30, 2021 increased $2.0 million, or 3.9%, compared to the six months ended June 30, 2020, primarily due to higher shareholder servicing fees, partially offset by lower brokerage income.

4642

Index

Expenses

The components of expenses are as follows:


		Three Months Ended June 30,								Six Months Ended June 30,									Three Months Ended March 31,
		2021		2020		$ Change		% Change		2021		2020		$ Change		% Change			2022		2021		$ Change		% Change
		(in thousands)								(in thousands)									(in thousands)
Employee compensation and benefits	Employee compensation and benefits	$	435,707	$	349,638	$	86,069	24.6	%	$	841,766	$	711,910	$	129,856	18.2	%	Employee compensation and benefits	$	439,420	$	406,059	$	33,361	8.2	%
Promotion and servicing:	Promotion and servicing:																	Promotion and servicing:
Distribution-related payments	Distribution-related payments	167,761		125,678		42,083		33.5		330,015		265,823		64,192		24.1		Distribution-related payments	176,244		162,254		13,990		8.6
Amortization of deferred sales commissions	Amortization of deferred sales commissions	8,236		6,622		1,614		24.4		16,135		12,148		3,987		32.8		Amortization of deferred sales commissions	9,383		7,899		1,484		18.8
Trade execution, marketing, T&E and other	Trade execution, marketing, T&E and other	46,571		44,288		2,283		5.2		93,249		99,898		(6,649)		(6.7)		Trade execution, marketing, T&E and other	51,227		46,678		4,549		9.7
		222,568		176,588		45,980		26.0		439,399		377,869		61,530		16.3			236,854		216,831		20,023		9.2
General and administrative:

General and administrative	General and administrative	131,324		121,424		9,900		8.2		251,547		243,691		7,856		3.2		General and administrative	177,625		120,223		57,402		47.7
Real estate charges		—		5,526		(5,526)		(100.0)		—		5,526		(5,526)		(100.0)

		131,324		126,950		4,374		3.4		251,547		249,217		2,330		0.9
Contingent payment arrangements	Contingent payment arrangements	838		807		31		3.8		1,634		1,600		34		2.1		Contingent payment arrangements	838		796		42		5.3
Interest on borrowings	Interest on borrowings	1,241		1,096		145		13.2		2,535		3,930		(1,395)		(35.5)		Interest on borrowings	1,411		1,294		117		9.0
Amortization of intangible assets	Amortization of intangible assets	1,521		6,723		(5,202)		(77.4)		3,000		13,209		(10,209)		(77.3)		Amortization of intangible assets	1,136		1,479		(343)		(23.2)
Total	Total	$	793,199	$	661,802	$	131,397	19.9		$	1,539,881	$	1,357,735	$	182,146	13.4		Total	$	857,284	$	746,682	$	110,602	14.8

Employee Compensation and Benefits

Employee compensation and benefits consist of base compensation (including salaries and severance), annual short-term incentive compensation awards (cash bonuses), annual long-term incentive compensation awards, commissions, fringe benefits and other employment costs (including recruitment, training, temporary help and meals).

Compensation expense as a percentage of net revenues was ~~40.5%~~39.7% and ~~40.1%~~40.3% for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, respectively. Compensation expense as a percentage of net revenues was 40.4% and 40.8% for the six months ended June 30, 2021 and 2020,~~ respectively. Compensation expense generally is determined on a discretionary basis and is primarily a function of our firm’s current-year financial performance. The amounts of incentive compensation we award are designed to motivate, reward and retain top talent while aligning our executives' interests with the interests of our Unitholders. Senior management, with the approval of the Compensation and Workplace Practices Committee of the Board of Directors of AllianceBernstein Corporation (“Compensation ~~Committee”~~Committee”), periodically confirms that the appropriate metric to consider in determining the amount of incentive compensation is the ratio of adjusted employee compensation and benefits expense to adjusted net revenues. Adjusted net revenues used in the adjusted compensation ratio are the same as the adjusted net revenues presented as a non-GAAP measure (discussed earlier in this Item 2). Adjusted employee compensation and benefits expense is total employee compensation and benefits expense minus other employment costs such as recruitment, training, temporary help and meals (which was 0.9% and 0.7% of adjusted net revenues for the three ~~and six~~ months ended ~~June 30, 2021)~~March 31, 2022 and 2021, respectively), and excludes the impact of mark-to-market vesting expense, as well as dividends and interest expense, associated with employee long-term incentive compensation-related investments and the amortization expense associated with the awards issued by EQH to some of our firm's ~~CEO~~senior management relating to ~~his role~~their roles as ~~a member~~members of the EQH Management Committee. Senior management, with the approval of the Compensation Committee, has established as an objective that adjusted employee compensation and benefits expense generally should not exceed 50% of our adjusted net revenues, except in unexpected or unusual circumstances. ~~Also, our adjusted~~

~~Index~~

compensation ratio reflects a balancing of the need to keep compensation levels competitive with industry peers in order to attract, motivate and retain highly-qualified talent with the need to maintain strong operating leverage in our business. The Compensation Committee works with management to help ensure both needs are sufficiently addressed. Our ratio of adjusted compensation expense as a percentage of adjusted net revenues was 48.0% and 48.5% for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020.~~respectively.

For the three months ended ~~June 30, 2021,~~March 31, 2022, employee compensation and benefits expense increased ~~$86.1~~$33.4 million, or ~~24.6%~~8.2%, compared to the three months ended ~~June 30, 2020,~~March 31, 2021, primarily due to higher incentive compensation of ~~$59.2~~$13.2 million, higher base compensation of ~~$13.8~~$9.6 million, higher commissions of ~~$6.7~~$6.4 million and higher fringes of $5.5 million. For the six months ended June 30, 2021, employee compensation and benefits expense increased $129.9 million, or 18.2%, compared to the six months ended June 30, 2020, primarily due to higher incentive compensation of $98.4 million, higher base compensation of $15.7 million, higher fringes of $9.7 million and higher commissions of $6.9$2.3 million.

Promotion and Servicing

Promotion and servicing expenses include distribution-related payments to financial intermediaries for distribution of AB mutual funds and amortization of deferred sales commissions paid to financial intermediaries for the sale of back-end load shares of AB mutual funds. Also included in this expense category are costs related to trade execution and clearance, travel and entertainment, advertising and promotional materials.

Index

Promotion and servicing expenses increased ~~$46.0~~$20.0 million, or ~~26.0%~~9.2%, during the three months ended ~~June 30, 2021~~March 31, 2022 compared to the three months ended ~~June 30, 2020.~~March 31, 2021. The increase primarily was due to higher distribution-related payments of ~~$42.0~~$14.0 million, higher ~~transfer fees~~travel and entertainment expenses of ~~$3.1~~$3.4 million and higher marketing and communication expenses of $2.1 ~~million, higher amortization of deferred sales commissions of $1.6 million and higher travel and entertainment expenses of $1.2 million, offset by lower trade execution expenses of $4.1~~ million. During the three months ended June 30, 2020, we experienced cost savings in travel and entertainment and marketing expense primarily driven by COVID-19. These expense items have since increased as business activity has started to normalize, and we expect business activity, and these expenses, to continue to normalize in the second half of 2021 and future periods, assuming the pandemic continues to recede.Promotion and servicing expenses increased $61.5 million, or 16.3%, during the six months ended June 30, 2021 compared to the six months ended June 30, 2020. The increase primarily was due to higher distribution-related payments of $64.2 million, higher amortization of deferred sales commissions of $4.0 million, higher transfer fees of $3.8 million, partially offset by lower travel and entertainment expenses of $5.6 million and lower trade execution expenses of $4.1 million.

General and Administrative

General and administrative expenses include portfolio services expenses, technology expenses, professional fees and office-related expenses (occupancy, communications and similar expenses). General and administrative expenses as a percentage of net revenues were ~~12.2%~~16.1% and ~~14.6% (13.9% excluding real estate charges)~~11.9% for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. General and administrative expenses increased ~~$4.4~~$57.4 million, or ~~3.4%~~47.7%, during the three months ended ~~June 30, 2021~~March 31, 2022 compared to the corresponding period in ~~2020,~~2021, primarily due to higher portfolio servicing fees of ~~$4.0 million, higher trading errors of $1.8~~$35.5 million, higher professional fees of ~~$1.4~~$9.8 million, and an unfavorable foreign exchange translation impact of $1.4 million, partially offset by lower office expenses of $3.9 million. General and administrative expenses as a percentage of net revenues were 12.1% and 14.3% (14.0% excluding real estate charges) for the six months ended June 30, 2021 and 2020, respectively. General and administrative expenses increased $2.3 million, or 0.9%, during the first six months of 2021 compared to the six months ended June 30, 2020, primarily due to an unfavorable foreign exchange translation impact of $2.2 million, higher portfolio servicing fees of $1.9 million, higher professional fees of $1.6, higher technology fees of ~~$1.2~~$5.0 million and higher ~~trading errors of $1.2 million, partially offset by lower office~~office-related expenses of ~~$4.8~~$3.9 million.

Contingent Payment Arrangements

Contingent payment arrangements reflect changes in estimates of contingent payment liabilities associated with acquisitions in previous periods, as well as accretion expense of these liabilities. There were no changes in our estimates during the first ~~six~~three months ended March 31, 2022 or 2021.

Interest on Borrowings

Interest on borrowings reflects interest expense related to our debt and credit facilities. See Note 16 to AB's condensed consolidated financial statements contained in Item 1, for disclosures relating to our debt and credit facilities. For the three months ended March 31, 2022 interest on borrowings increased $0.1 million, or 9.0%, compared to the three months ended March 31, 2021.

Amortization of ~~2021~~Intangible Assets

Amortization of intangible assets reflects our amortization of costs assigned to acquired investment management contracts with a finite life. These assets are recognized at fair value and generally are amortized on a straight-line basis over their estimated useful life. Amortization of intangible assets decreased $0.3 million, or ~~2020.~~23.2%, during the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

Income Taxes

AB, a private limited partnership, is not subject to federal or state corporate income taxes. However, AB is subject to a 4.0% New York City unincorporated business tax (“UBT”). Our domestic corporate subsidiaries are subject to federal, state and local income taxes and generally are included in the filing of a consolidated federal income tax return. Separate state and local

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income tax returns also are filed. Foreign corporate subsidiaries generally are subject to taxes in the jurisdictions where they are located.

Income tax expense for the three months ended ~~June 30, 2021 increased $1.1~~March 31, 2022 decreased $4.0 million, or ~~9.6%~~24.0%, compared to the three months ended ~~June 30, 2020. Income~~March 31, 2021. The decrease was primarily due to a lower effective tax ~~expense~~rate for the ~~six~~three months ended ~~June 30, 2021 increased $8.4 million, or 40.1%,~~March 31, 2022 of 5.1% compared to 6.4% for the ~~six months ended June 30, 2020. The increase~~corresponding period in ~~income tax expense is due to higher pre-tax income~~2021, driven by a decrease in ~~both the three and six months ended June 30, 2021.~~one-time discrete items. There were no material changes to uncertain tax positions (FIN 48 reserves) or valuation allowances against deferred tax assets for the three ~~and six~~ months ended ~~June 30, 2021.~~March 31, 2022.

Net Income (Loss) of Consolidated Entities Attributable to Non-Controlling Interests

Net income (loss) of consolidated entities attributable to non-controlling interests primarily consists of limited partner interests owned by other investors in our consolidated company-sponsored investment funds. For the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, we had ~~$3.3~~$25.0 million of net ~~gains~~losses of consolidated entities attributable to non-controlling interests compared to net losses of ~~$4.6~~$0.3 million for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. Fluctuations period-to-period result primarily from the number of consolidated company-sponsored investment funds and their respective market performance.

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CAPITAL RESOURCES AND LIQUIDITY

Cash flows from operating activities primarily include the receipt of investment advisory and services fees and other revenues offset by the payment of operating expenses incurred in the normal course of business. Our cash flows from operating activities have historically been positive and sufficient in supporting our operations. We do not anticipate this to change in the foreseeable future. Cash flows from investing activities generally consist of small capital expenditures and, when applicable, business acquisitions. Cash flows from financing activities primarily consist of issuance and repayment of debt and the repurchase of AB Holding units to fund our long-term deferred compensation plans. We are required to distribute all of our Available Cash Flow to our Unitholders and the General Partner.

During the first ~~six~~three months of ~~2021,~~2022, net cash provided by operating activities was ~~$848.7~~$150.2 million, compared to ~~$820.5~~$328.8 million during the corresponding ~~2020~~2021 period. The change reflects ~~higher earnings of $147.0 million,~~ an increase in ~~accrued compensation~~broker-dealer related receivables (net of payables and ~~benefits~~segregated U.S. treasury bills activity) of ~~$62.7~~$177.6 million, ~~and lower~~higher net purchases of broker-dealer investments of ~~$62.2~~$45.1 million and an increase in other assets of $43.0 million, partially offset by higher earnings of $45.2 million (after non-cash reconciling items) and the net activity of our consolidated funds of ~~$222.9M.~~$43.6 million.

During the first ~~six~~three months of ~~2021,~~2022, net cash used in investing activities was ~~$29.7~~$6.2 million, compared to ~~$20.1~~$19.4 million during the corresponding ~~2020~~2021 period. The change is ~~primarily~~ due to ~~higher~~lower purchases of furniture, equipment and leasehold improvements of ~~$19.4~~$9.4 million ~~offset by~~and lower cash paid for acquisitions of ~~$9.8~~$3.8 million.

During the first ~~six~~three months of ~~2021,~~2022, net cash used in financing activities was ~~$768.1~~$371.2 million, compared to ~~$622.5~~$382.7 million during the corresponding ~~2020~~2021 period. The change reflects higher net ~~repayments~~borrowings of debt of ~~$210.0~~$145.0 million, partially offset by higher distributions to the General Partner and Unitholders of ~~$85.2~~$88.1 million as a result of higher earnings (distributions on earnings are paid one quarter in arrears), and ~~an increase in the net purchases of AB Holding Units~~higher distributions to ~~fund long-term incentive compensation plans of $28.1 million, partially offset by lower redemptions of~~ non-controlling interests of consolidated company-sponsored investment funds of ~~$182.0~~$44.6 million.

As of ~~June 30, 2021,~~March 31, 2022, AB had $1.1 billion of cash and cash equivalents (excluding cash and cash equivalents of consolidated company-sponsored investment funds), all of which is available for liquidity but consist primarily of cash on deposit for our broker-dealers related to various customer clearing activities, and cash held by foreign subsidiaries of ~~$699.8~~$687.1 million.

Debt and Credit Facilities

See Note 16 to AB’s condensed consolidated financial statements contained in Item 1, for disclosures relating to our debt and credit facilities.

Our financial condition and access to public and private debt markets should provide adequate liquidity for our general business needs. Management believes that cash flow from operations and the issuance of debt and AB Units or AB Holding Units will provide us with the resources we need to meet our financial obligations. See “Cautions Regarding Forward-Looking ~~Statements.~~Statements” for a discussion of credit markets and our ability to renew our credit facilities at expiration.

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COMMITMENTS AND CONTINGENCIES

AB’s capital commitments, which consist primarily of operating leases for office space, generally are funded from future operating cash flows.

During 2010, as general partner of AllianceBernstein U.S. Real Estate L.P. (“Real Estate Fund”), we committed to invest $25.0 million in the Real Estate Fund. As of ~~June 30, 2021,~~March 31, 2022, we had funded $22.4 million of this commitment. During 2014, as general partner of AllianceBernstein U.S. Real Estate II L.P. (“Real Estate Fund II”), we committed to invest $27.3 million, as amended in 2020, in Real Estate Fund II. As of ~~June 30, 2021,~~March 31, 2022, we had funded ~~$20.8~~$21.3 million of this commitment.

See Note 12 for discussion of contingencies.

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CRITICAL ACCOUNTING ESTIMATES

The preparation of the condensed consolidated financial statements and notes to condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.

There have been no updates to our critical accounting estimates from those disclosed in “Management’s Discussion and Analysis of Financial Condition” in our Form 10-K for the year ended December 31, ~~2020.~~2021.

ACCOUNTING PRONOUNCEMENTS

See Note 2 to AB’s condensed consolidated financial statements contained in Item 1.

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CAUTIONS REGARDING FORWARD-LOOKING STATEMENTS

Certain statements provided by management in this report and in the portion of AB’s Form 10-Q attached hereto as Exhibit 99.1 are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. The most significant of these factors include, but are not limited to, the following: the performance of financial markets, the investment performance of sponsored investment products and separately-managed accounts, general economic conditions, industry trends, future acquisitions, integration of acquired companies, competitive conditions and government regulations, including changes in tax regulations and rates and the manner in which the earnings of publicly-traded partnerships are taxed. We caution readers to carefully consider such factors. Further, these forward-looking statements speak only as of the date on which such statements are made; we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. For further information regarding these forward-looking statements and the factors that could cause actual results to differ, see “Risk Factors” in Part I, Item 1A of our Form 10-K for the year ended December 31, ~~2020~~2021 and Part II, Item 1A in this Form 10-Q. Any or all of the forward-looking statements that we make in our Form 10-K, this Form 10-Q, other documents we file with or furnish to the SEC, and any other public statements we issue, may turn out to be wrong. It is important to remember that other factors besides those listed in “Risk Factors” and those listed below could also adversely impact our revenues, financial condition, results of operations and business prospects.

The forward-looking statements referred to in the preceding paragraph, most of which directly affect AB but also affect AB Holding because AB Holding’s principal source of income and cash flow is attributable to its investment in AB, include statements regarding:

•Our belief that the cash flow AB Holding realizes from its investment in AB will provide AB Holding with the resources it needs to meet its financial obligations: AB Holding’s cash flow is dependent on the quarterly cash distributions it receives from AB. Accordingly, AB Holding’s ability to meet its financial obligations is dependent on AB’s cash flow from its operations, which is subject to the performance of the capital markets and other factors beyond our control.

•Our financial condition and ability to access the public and private capital markets providing adequate liquidity for our general business needs: Our financial condition is dependent on our cash flow from operations, which is subject to the performance of the capital markets, our ability to maintain and grow client assets under management and other factors beyond our control. Our ability to access public and private capital markets on reasonable terms may be limited by adverse market conditions, our firm’s credit ratings, our profitability and changes in government regulations, including tax rates and interest rates.

•The outcome of litigation: Litigation is inherently unpredictable, and excessive damage awards do occur. Though we have stated that we do not expect any pending legal proceedings to have a material adverse effect on our results of operations, financial condition or liquidity, any settlement or judgment with respect to a legal proceeding could be significant and could have such an effect.

•The possibility that we will engage in open market purchases of AB Holding Units to help fund anticipated obligations under our incentive compensation award program: The number of AB Holding Units AB may decide to buy in future periods, if any, to help fund incentive compensation awards depends on various factors, some of which are beyond our control, including the fluctuation in the price of an AB Holding Unit (NYSE: AB) and the availability of cash to make these purchases.

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•Our determination that adjusted employee compensation expense should not exceed 50% of our adjusted net revenues: Aggregate employee compensation reflects employee performance and competitive compensation levels. Fluctuations in our revenues and/or changes in competitive compensation levels could result in adjusted employee compensation expense exceeding 50% of our adjusted net revenues.

•~~Our Relocation Strategy:~~ While the expenses, expense savings and EPU impact we expect will result from our Relocation Strategy are presented with numerical specificity, and we believe these figures to be reasonable as of the date of this report, the uncertainties surrounding the assumptions on which our estimates are based create a significant risk that our current estimates may not be realized. These assumptions include:

•~~the amount and timing of employee relocation costs, severance and overlapping compensation and occupancy costs we experience; and~~

•~~the timing for execution of each phase of our relocation implementation plan.~~

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•The Adverse Impact of COVID-19: The ~~severity of any possible adverse impact on our AUM~~aggregate extent to which COVID-19, including existing and ~~revenues of any~~ new ~~economic downturn caused by a resurgence of the COVID-19 pandemic will depend on the depth and length of any such downturn~~variants and its impact on the ~~companies~~global economy, affects AB’s business, liquidity, results of operations and financial condition, will depend on future COVID-19 developments that are highly uncertain, including the scope and duration of the pandemic and any recovery period, the emergence, spread and seriousness of COVID-19 variants, the continuing prevalence of severe, unconstrained and/or escalating rates of infection and hospitalization in ~~which we invest. Our conclusions about~~various countries and regions, the ~~possible adverse impact on us is based on~~availability, adoption and efficacy of treatments and vaccines, and future actions taken by governmental authorities, central banks and other parties in response to COVID-19.

•The probability that our acquisition of CarVal Investors, LP will close as anticipated. These statements concern expected growth, client and stockholder benefits, key assumptions, timing of closing of the transaction, revenue realization, financial benefits or returns, accretion and integration costs. The most significant transaction-related and other risk factors that may cause actual results to differ materially from future results expressed or implied by our forward-looking statements include: (i) the ~~recovery from~~occurrence of any ~~such new economic downturn will be gradual and~~event, change or other circumstances that ~~there~~ could ~~again be significant, lasting high unemployment and economic damage. We believe that these assumptions are reasonable, but they~~give rise to the termination of the acquisition agreement; (ii) the transaction closing conditions may not be ~~correct~~satisfied in a timely manner or at all, including due to the failure to obtain regulatory and ~~economic conditions likely will differ from our assumptions.~~client approvals; (iii) the announcement and pendency of the acquisition may disrupt CarVal’s business operations (including the threatened or actual loss of employees, clients or suppliers); (iv) CarVal could experience financial or other setbacks if the transaction encounters unanticipated problems; and (v) anticipated benefits of the transaction, including the realization of revenue, accretion, and financial benefits or returns, may not be fully realized or may take longer to realize than expected, including if AB Holding units to be issued after the closing trade at a price below anticipated levels. We caution readers to carefully consider such factors.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in AB’s market risk from the information provided under “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of AB's Form 10-K for the year ended December 31, ~~2020.~~2021.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Each of AB Holding and AB maintains a system of disclosure controls and procedures that is designed to ensure that information required to be disclosed in our reports under the Exchange Act is (i) recorded, processed, summarized and reported in a timely manner, and (ii) accumulated and communicated to management, including the Chief Executive Officer ("CEO") and the Interim Chief Financial Officer ("Interim CFO"), to permit timely decisions regarding our disclosure.

As of the end of the period covered by this report, management carried out an evaluation, under the supervision and with the participation of the CEO and the Interim CFO, of the effectiveness of the design and operation of the disclosure controls and procedures. Based on this evaluation, the CEO and the Interim CFO concluded that the disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during the ~~second~~first quarter of ~~2021~~2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II

OTHER INFORMATION

Item 1. Legal Proceedings

See Note 12 to the condensed consolidated financial statements contained in Part I, Item 1.

Item 1A. Risk Factors

There have been no material changes to the risk factors from those appearing in our Annual Report on Form 10-K ("AB 10-K") for the fiscal year ended December 31, ~~2020.~~2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

These were no AB Units bought or sold by AB in the period covered by this report that were not registered under the Securities Act. Neither we nor our affiliates bought any AB Units during the first quarter of 2022.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

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Item 6. Exhibits


10.1			Transaction Agreement among CarVal Investors, AB and AB Holding dated as of March 17, 2022.

31.1			Certification of Mr. Bernstein furnished pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Certification of Mr. ~~Dibadj~~Siemers furnished pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1			Certification of Mr. Bernstein furnished for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2			Certification of Mr. ~~Dibadj~~Siemers furnished for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH			XBRL Taxonomy Extension Schema.

101.CAL			XBRL Taxonomy Extension Calculation Linkbase.

101.LAB			XBRL Taxonomy Extension Label Linkbase.

101.PRE			XBRL Taxonomy Extension Presentation Linkbase.

101.DEF			XBRL Taxonomy Extension Definition Linkbase.

104			The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2021,~~March 31, 2022, formatted in Inline XBRL (included in Exhibit 101).

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:

~~July~~April 29, ~~2021~~2022

ALLIANCEBERNSTEIN L.P.

~~By:~~

~~/s/ Ali Dibadj~~

~~Ali Dibadj~~

~~Chief Financial Officer & Head of Strategy~~

By:

/s/ William R. Siemers

William R. Siemers

Interim Chief Financial Officer; Controller and Chief Accounting Officer

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