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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 September 30, 2023
OR
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.  001-09818
ALLIANCEBERNSTEIN HOLDING L.P.
(Exact name of registrant as specified in its charter)
Delaware13-3434400
(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)
(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.
YesNo
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).
YesNo
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 No






Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Units Rep. Assignments of Beneficial Ownership of LP Interests in AB Holding ("Units")ABNew York Stock Exchange
The number of units representing assignments of beneficial ownership of limited partnership interests outstanding as of September 30, 2023 was 111,796,873.*
*includes 100,000 units of general partnership interest having economic interests equivalent to the economic interests of the units representing assignments of beneficial ownership of limited partnership interests.



ALLIANCEBERNSTEIN HOLDING L.P.

Index to Form 10-Q
  Page
  
 Part I
  
 FINANCIAL INFORMATION
  
Item 1.
  
 
  
 
  
 
  
 
  
 
  
Item 2.
  
Item 3.
  
Item 4.
  
 Part II
  
 OTHER INFORMATION
  
Item 1.
  
Item 1A.
  
Item 2.
  
Item 3.
  
Item 4.
  
Item 5.
  
Item 6.
  



Part I

FINANCIAL INFORMATION

Item 1.    Financial Statements

ALLIANCEBERNSTEIN HOLDING L.P.
Condensed Statements of Financial Condition
(in thousands, except unit amounts)
(unaudited)
September 30,
2023
December 31,
2022
ASSETS
Investment in AB$1,973,046 $2,074,626 
Total assets$1,973,046 $2,074,626 
LIABILITIES AND PARTNERS’ CAPITAL
Liabilities:
Other liabilities$552 $1,623 
Total liabilities552 1,623 
Commitments and contingencies (See Note 8)
Partners’ capital:
General Partner: 100,000 general partnership units issued and outstanding
1,321 1,355 
Limited partners: 111,696,873 and 113,701,097 limited partnership units issued and outstanding
2,056,961 2,160,207 
AB Holding Units held by AB to fund long-term incentive compensation plans(33,658)(37,551)
Accumulated other comprehensive loss(52,130)(51,008)
Total partners’ capital1,972,494 2,073,003 
Total liabilities and partners’ capital$1,973,046 $2,074,626 

See Accompanying Notes to Condensed Financial Statements.

1

ALLIANCEBERNSTEIN HOLDING L.P.
Condensed Statements of Income
(in thousands, except per unit amounts)
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Equity in net income attributable to AB Unitholders$65,761 $63,905 $211,264 $233,616 
Income taxes8,770 7,589 26,278 23,231 
Net income$56,991 $56,316 $184,986 $210,385 
Net income per unit:
Basic$0.50 $0.56 $1.63 $2.11 
Diluted$0.50 $0.56 $1.63 $2.11 

See Accompanying Notes to Condensed Financial Statements.

2

ALLIANCEBERNSTEIN HOLDING L.P.
Condensed Statements of Comprehensive Income
(in thousands)
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net income$56,991 $56,316 $184,986 $210,385 
Other comprehensive income (loss):
Foreign currency translation adjustments, before tax(5,816)(11,574)(1,580)(27,875)
Income tax (expense) benefit (85)284 (57)544 
Foreign currency translation adjustments, net of tax(5,901)(11,290)(1,637)(27,331)
Changes in employee benefit related items:  
Amortization of prior service cost5 (4)10 4 
Recognized actuarial gain (loss)254 (204)508 237 
Changes in employee benefit related items259 (208)518 241 
Income tax (expense) benefit(1)3 (3)(4)
Employee benefit related items, net of tax258 (205)515 237 
Other comprehensive income (loss)(5,643)(11,495)(1,122)(27,094)
Comprehensive income$51,348 $44,821 $183,864 $183,291 

See Accompanying Notes to Condensed Financial Statements.
3

ALLIANCEBERNSTEIN HOLDING L.P.
Condensed Statements of Changes in Partners’ Capital
(in thousands)
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
General Partner’s Capital
Balance, beginning of period$1,332 $1,376 $1,355 $1,439 
Net income51 56 163 212 
Cash distributions to Unitholders(62)(71)(197)(290)
Balance, end of period1,321 1,361 1,321 1,361 
Limited Partners’ Capital   
Balance, beginning of period2,124,142 1,552,011 2,160,207 1,696,199 
Net income56,940 56,260 184,823 210,173 
Cash distributions to Unitholders(69,271)(71,269)(223,482)(288,698)
Retirement of AB Holding Units(55,168)(2,487)(72,592)(114,794)
Issuance of AB Holding Units to fund long-term incentive compensation plan awards318 995 8,005 32,452 
Issuance of AB Holding Units to fund CarVal acquisition 132,839  132,839 
Exercise of compensatory options to buy AB Holding Units   178 
Balance, end of period2,056,961 1,668,349 2,056,961 1,668,349 
AB Holding Units held by AB to fund long-term incentive compensation plans  
Balance, beginning of period(35,152)(43,546)(37,551)(43,309)
Change in AB Holding Units held by AB to fund long-term incentive compensation plans1,494 3,382 3,893 3,145 
Balance, end of period(33,658)(40,164)(33,658)(40,164)
Accumulated Other Comprehensive (Loss)    
Balance, beginning of period(46,487)(48,304)(51,008)(32,705)
Foreign currency translation adjustment, net of tax(5,901)(11,290)(1,637)(27,331)
Changes in employee benefit related items, net of tax258 (205)515 237 
Balance, end of period(52,130)(59,799)(52,130)(59,799)
Total Partners’ Capital$1,972,494 $1,569,747 $1,972,494 $1,569,747 

See Accompanying Notes to Condensed Financial Statements.

4

ALLIANCEBERNSTEIN HOLDING L.P.
Condensed Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended September 30,
20232022
Cash flows from operating activities:
Net income$184,986 $210,385 
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net income attributable to AB Unitholders(211,264)(233,616)
Cash distributions received from AB248,529 313,438 
Changes in assets and liabilities:
(Decrease) in other liabilities(1,071)(1,531)
Net cash provided by operating activities221,180 288,676 
Cash flows from investing activities:
Acquisition of business, net cash acquired 40,777 
Contribution of CarVal to AB (40,777)
Investments in AB with proceeds from exercise of compensatory options to buy AB Holding Units (178)
Net cash used in investing activities (178)
Cash flows from financing activities:
Cash distributions to Unitholders(223,679)(288,988)
Capital contributions from AB2,499 312 
Proceeds from exercise of compensatory options to buy AB Holding Units 178 
Net cash used in financing activities(221,180)(288,498)
Change in cash and cash equivalents  
Cash and cash equivalents as of beginning of period  
Cash and cash equivalents as of end of period$ $ 
Non-cash investing activities:
Fair value of assets acquired (less cash acquired of $40.8 million in 2022)
$ $1,052,062 
Fair value of liabilities assumed 300,381 
Fair value of redeemable non-controlling interest assumed 13,191 
Fair value of assets contributed to AB (less cash acquired of $40.8 million in 2022)
 (1,052,062)
Fair value of liabilities contributed to AB (300,381)
Fair value of redeemable non-controlling interest contributed to AB (13,191)
Non-cash financing activities:
Payables recorded under contingent payment arrangements 227,071 
Equity consideration issued/to be issued in connection with acquisition 552,196 
Payables contributed to AB under contingent payment arrangements (227,071)
Equity consideration received/to be received from AB in connection with acquisition (552,196)

See Accompanying Notes to Condensed Financial Statements.

5

ALLIANCEBERNSTEIN HOLDING L.P.
Notes to Condensed Financial Statements
September 30, 2023
(unaudited)

The words “we” and “our” refer collectively to AllianceBernstein Holding L.P. (“AB Holding”) and AllianceBernstein L.P.  and its subsidiaries (“AB”), or to their officers and employees. Similarly, the word “company” refers to both AB Holding and AB. Where the context requires distinguishing between AB Holding and AB, we identify which of them is being discussed. These statements should be read in conjunction with the audited consolidated financial statements included in the Form 10-K for the year ended December 31, 2022.

1.    Business Description, Organization and Basis of Presentation

Business Description

AB Holding’s principal source of income and cash flow is attributable to its investment in AB limited partnership interests. The condensed financial statements and notes of AB Holding should be read in conjunction with the condensed consolidated financial statements and notes of AB included as an exhibit to this quarterly report on Form 10-Q and with AB Holding’s and AB’s audited financial statements included in AB Holding’s Form 10-K for the year ended December 31, 2022.

AB provides diversified investment management, research and related services globally to a broad range of clients. Its principal services include:

Institutional Services – servicing its 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 its 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 Services – servicing its 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.

AB also provides distribution, shareholder servicing, transfer agency services and administrative services to certain of the mutual funds it sponsors.

AB’s high-quality, in-depth research is the foundation of its asset management and private wealth management businesses. AB’s research disciplines include economic, fundamental equity, fixed income and quantitative research. In addition, AB has expertise in multi-asset strategies, wealth management, environmental, social and corporate governance ("ESG"), and alternative investments.

AB provides 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;

Actively-managed alternative investments, including hedge funds, fund of funds and direct assets (e.g., direct lending, real estate and private equity);

6

Portfolios with Purpose, including actively managed, impact-focused and Responsible+ (climate-conscious, ESG leaders, change catalysts) equity, fixed income and multi-asset strategies that address the evolving objectives of our clients to invest their capital with purpose while pursuing strong investment returns;

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

Passive management, including index, ESG index and enhanced index strategies.

Organization

As of September 30, 2023, EQH owned approximately 3.6% of the issued and outstanding units representing assignments of beneficial ownership of limited partnership interests in AB Holding (“AB Holding Units”). AllianceBernstein Corporation (an indirect wholly-owned subsidiary of EQH, “General Partner”) is the general partner of both AB Holding and AB. AllianceBernstein Corporation owns 100,000 general partnership units in AB Holding and a 1.0% general partnership interest in AB.

As of September 30, 2023, the ownership structure of AB, expressed as a percentage of general and limited partnership interests, was as follows:
EQH and its subsidiaries60.3 %
AB Holding39.0 
Unaffiliated holders0.7 
100.0 %

Including both the general partnership and limited partnership interests in AB Holding and AB, EQH and its subsidiaries had an approximate 61.7% economic interest in AB as of September 30, 2023.

Basis of Presentation

The interim condensed 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 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 financial statements and the reported amounts of revenues and expenses during the interim reporting periods. Actual results could differ from those estimates. The condensed statement of financial condition as of December 31, 2022 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 SEC.

AB Holding records its investment in AB using the equity method of accounting. AB Holding’s investment is increased to reflect its proportionate share of income of AB and decreased to reflect its proportionate share of losses of AB and cash distributions made by AB to its Unitholders. In addition, AB Holding's investment is adjusted to reflect its proportionate share of certain capital transactions of AB.

Subsequent Events

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

2.    Cash Distributions

AB Holding is required to distribute all of its Available Cash Flow, as defined in the Amended and Restated Agreement of Limited Partnership of AB Holding (“AB Holding Partnership Agreement”), to its Unitholders pro rata in accordance with their percentage interests in AB Holding. Available Cash Flow is defined as the cash distributions AB Holding receives from AB minus such amounts as the General Partner determines, in its sole discretion, should be retained by AB Holding
7

for use in its business (such as the payment of taxes) or plus such amounts as the General Partner determines, in its sole discretion, should be released from previously retained cash flow.

On October 26, 2023, the General Partner declared a distribution of $0.65 per unit, representing a distribution of Available Cash Flow for the three months ended September 30, 2023. Each general partnership unit in AB Holding is entitled to receive distributions equal to those received by each AB Holding Unit. The distribution is payable on November 22, 2023 to holders of record at the close of business on November 6, 2023.
3.    Long-term Incentive Compensation Plans

AB maintains several unfunded, non-qualified long-term incentive compensation plans, under which the company grants awards of restricted AB Holding Units to its employees and members of the Board of Directors, who are not employed by AB or by any of AB’s affiliates (“Eligible Directors”).

AB funds its 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 AB Holding Partnership Agreement, when AB purchases newly-issued AB Holding Units from AB Holding, AB Holding is 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.

Repurchases and retention of AB Holding Units for the three and nine months ended September 30, 2023 and 2022 consisted of the following:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(in millions)
Total amount of AB Holding Units Purchased/Retained (1)
1.8  2.3 2.6 
Total Cash Paid for AB Holding Units Purchased/Retained (1)
$56.9 $1.0 $75.7 $107.7 
Open Market Purchases of AB Holding Units Purchased (1)
1.8  1.8 2.3 
Total Cash Paid for Open Market Purchases of AB Holding Units (1)
$56.9 $ $56.9 $92.7 
(1) Purchased on a trade date basis. The 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 awards.
Each quarter, AB considers 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 selected by AB has the authority under the terms and limitations specified in the plan to repurchase AB Holding Units on AB’s 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 plan adopted during the third quarter of 2023 expired at the close of business on October 25, 2023. AB may adopt plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under its incentive compensation award program and for other corporate purposes.

During the first nine months of 2023 and 2022, AB awarded to employees and Eligible Directors 0.4 million and 0.8 million restricted AB Holding Unit awards, respectively. AB used AB Holding Units repurchased during the applicable period and newly-issued AB Holding Units to fund these restricted AB Holding Unit awards.

During the first nine months of 2023 and 2022, AB Holding issued zero and 5,774 AB Holding Units, respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of zero and $0.1 million, respectively, received from award recipients as payment in cash for the exercise price to purchase the equivalent number of newly-issued AB Units.

8

4.    Net Income per Unit

Basic net income per unit is derived by dividing net income by the basic weighted average number of units outstanding for each period. Diluted net income per unit is derived by adjusting net income for the assumed dilutive effect of compensatory options (“Net income – diluted”) and dividing by the diluted weighted average number of units outstanding for each period.

 Three Months Ended September 30,Nine Months Ended
September 30,
 2023202220232022
 (in thousands, except per unit amounts)
Net income – basic$56,991 $56,316 $184,986 $210,385 
Additional allocation of equity in net income attributable to AB resulting from assumed dilutive effect of compensatory options
   2 
Net income – diluted$56,991 $56,316 $184,986 $210,387 
Weighted average units outstanding – basic113,185 100,466 113,407 99,494 
Dilutive effect of compensatory options   2 
Weighted average units outstanding – diluted113,185 100,466 113,407 99,496 
Basic net income per unit$0.50 $0.56 $1.63 $2.11 
Diluted net income per unit$0.50 $0.56 $1.63 $2.11 

There were no anti-dilutive options excluded from diluted net income in the three and nine months ended September 30, 2023 or 2022.

5. Investment in AB

Changes in AB Holding’s investment in AB during the nine-month period ended September 30, 2023 are as follows (in thousands):

Investment in AB as of December 31, 2022$2,074,626 
Equity in net income attributable to AB Unitholders211,264 
Changes in accumulated other comprehensive income(1,122)
Cash distributions received from AB(248,529)
Capital contributions (from) AB(2,499)
AB Holding Units retired(72,592)
AB Holding Units issued to fund long-term incentive compensation plans8,005 
Change in AB Holding Units held by AB for long-term incentive compensation plans3,893 
Investment in AB as of September 30, 2023$1,973,046 

6. Units Outstanding

Changes in AB Holding Units outstanding during the nine-month period ended September 30, 2023 are as follows:

Outstanding as of December 31, 2022113,801,097 
Units issued226,691 
Units retired(2,230,915)
Outstanding as of September 30, 2023111,796,873 

9

7.    Income Taxes

AB Holding is a publicly-traded partnership (“PTP”) for federal tax purposes and, accordingly, is not subject to federal or state corporate income taxes. However, AB Holding is subject to the 4.0% New York City unincorporated business tax (“UBT”), net of credits for UBT paid by AB, and to a 3.5% federal tax on partnership gross income from the active conduct of a trade or business. AB Holding’s partnership gross income is derived from its interest in AB.

AB Holding’s federal income tax is computed by multiplying certain AB qualifying revenues (primarily U.S. investment advisory fees, research payments and brokerage commissions) by AB Holding’s ownership interest in AB, multiplied by the 3.5% tax rate. AB Holding Units in AB’s consolidated rabbi trust are not considered outstanding for purposes of calculating AB Holding’s ownership interest in AB.
Three Months Ended September 30,Nine Months Ended
September 30,
20232022% Change20232022% Change
(in thousands)
Net income attributable to AB Unitholders$167,404 $175,180 (4.4)%$537,292 $644,676 (16.7)%
Multiplied by: weighted average equity ownership interest39.3 %36.5 %39.3 %36.2 %
Equity in net income attributable to AB Unitholders$65,761 $63,905 2.9 $211,264 $233,616 (9.6)
AB qualifying revenues$689,323 $678,682 1.6 $2,059,866 $2,089,206 (1.4)
Multiplied by: weighted average equity ownership interest for calculating tax
35.6 %31.3 %35.7 %31.1 %
Multiplied by: federal tax3.5 %3.5 %3.5 %3.5 %
Federal income taxes8,593 7,442 25,713 22,748 
State income taxes177 147 565 483 
Total income taxes$8,770 $7,589 15.6 $26,278 $23,231 13.1 
Effective tax rate13.3 %11.9 %12.4 %9.9 %

In order to preserve AB Holding’s status as a PTP for federal income tax purposes, management ensures that AB Holding does not directly or indirectly (through AB) engage in a substantial new line of business. If AB Holding were to lose its status as a PTP, it would be subject to corporate income tax, which would reduce materially AB Holding’s net income and its quarterly distributions to AB Holding Unitholders.

8.    Commitments and Contingencies

Legal and regulatory matters described below pertain to AB and are included here due to their potential significance to AB Holding’s investment in AB.

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 are able to 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.

On December 14, 2022, four individual participants in the Profit Sharing Plan for Employees of AllianceBernstein L.P., (the "Plan") filed a class action complaint (the “Complaint”) in the U.S. District Court for the Southern District of New York against AB, current and former members of the Compensation and Workplace Practices Committee of the Board, and the Investment and Administrative Committees under the Plan. Plaintiffs, who seek to represent a class of all participants in
10

the Plan from December 14, 2016 to the present, allege that defendants violated their fiduciary duties and engaged in prohibited transactions under the Employee Retirement Income Security Act of 1974, as amended ("ERISA") by including proprietary collective investment trusts as investment options offered under the Plan. The Complaint seeks unspecified damages, disgorgement and other equitable relief. AB is prepared to defend itself vigorously against these claims. While the ultimate outcome of this matter is currently not determinable given the matter remains in its early stages, we do not believe this litigation will have a material adverse effect on our results of operations, financial condition or liquidity.

AB may be involved in various other matters, including regulatory inquiries, administrative proceedings and litigation, some of which may allege significant damages. It is reasonably possible that AB could incur losses pertaining to these other matters, but management 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 the 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 operations, financial condition or liquidity in any future reporting period.
11

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

AB Holding’s principal source of income and cash flow is attributable to its investment in AB Units. AB Holding’s interim condensed financial statements and notes and management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read in conjunction with those of AB included as an exhibit to this Form 10-Q. They also should be read in conjunction with AB’s audited financial statements and notes and MD&A included in AB Holding’s Form 10-K for the year ended December 31, 2022.

Results of Operations
Three Months Ended September 30,Nine Months Ended September 30,
20232022% Change20232022% Change
(in thousands, except per unit amounts)
Net income attributable to AB Unitholders$167,404 $175,180 (4.4)%$537,292 $644,676 (16.7)%
Weighted average equity ownership interest39.3 %36.5 %39.3 %36.2 %
Equity in net income attributable to AB Unitholders65,761 63,905 2.9 211,264 233,616 (9.6)
Income taxes8,770 7,589 15.6 26,278 23,231 13.1 
Net income of AB Holding$56,991 $56,316 1.2 $184,986 $210,385 (12.1)
Diluted net income per AB Holding Unit$0.50 $0.56 (10.7)$1.63 $2.11 (22.7)
Distribution per AB Holding Unit(1)
$0.65 $0.64 1.6 $1.92 $2.25 (14.7)
________________________
(1)Distributions reflect the impact of AB’s non-GAAP adjustments.

AB Holding's net income for the three months ended September 30, 2023 increased $0.7 million from the three months ended September 30, 2022, primarily due to a higher weighted average equity ownership interest, partially offset by lower net income attributable to AB Unitholders. AB Holding's net income for the nine months ended September 30, 2023 decreased $25.4 million, compared to the nine months ended September 30, 2022, primarily due to lower net income attributable to AB Unitholders, partially offset by a higher weighted average equity ownership interest.

AB Holding’s partnership gross income is derived from its interest in AB. AB Holding’s income taxes, which reflect a 3.5% federal tax on its partnership gross income from the active conduct of a trade or business, are computed by multiplying certain AB qualifying revenues (primarily U.S. investment advisory fees, research payments and brokerage commissions) by AB Holding’s ownership interest in AB, multiplied by the 3.5% tax rate. AB Holding's effective tax rate was 13.3% during the three months ended September 30, 2023, compared to 11.9% during the three months ended September 30, 2022. AB Holding's effective tax rate was 12.4% during the nine months ended September 30, 2023, compared to 9.9% during the nine months ended September 30, 2022. See Note 7 to the condensed financial statements in Item 1 for the calculation of income tax expense.

Management Operating Metrics

As supplemental information, AB provides the performance measures “adjusted net revenues,” “adjusted operating income” and “adjusted operating margin,” which are the principal metrics management uses in evaluating and comparing the period-to-period operating performance of AB. Management principally uses these metrics in evaluating performance because they present a clearer picture of AB's 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, acquisition-related expenses, interest expense and other adjustment items. Similarly, management believes that these management operating metrics help investors better understand the underlying trends in AB's results and, accordingly, provide a valuable perspective for investors. Such measures are not based on generally accepted accounting principles (“non-GAAP measures”).

We provide the non-GAAP measures "adjusted net income" and "adjusted diluted net income per unit" because our quarterly distribution per unit is typically our adjusted diluted net income per unit (which is derived from adjusted net income).

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 GAAP
12

and non-GAAP measures in evaluating the company’s financial performance. The non-GAAP measures alone may pose limitations because they do not include all of AB’s revenues and expenses. Further, adjusted diluted net income per AB Holding Unit is not a liquidity measure and should not be used in place of cash flow measures. See AB’s MD&A contained in Exhibit 99.1.

The impact of these adjustments on AB Holding’s net income and diluted net income per AB Holding Unit is as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(in thousands, except per Unit amounts)
AB non-GAAP adjustments 1$46,231 $23,961 $87,185 $41,913 
AB income tax (expense) on non-GAAP adjustments(2,761)(1,057)(4,156)(4,865)
AB non-GAAP adjustments, after taxes43,470 22,904 83,029 37,048 
AB Holding’s weighted average equity ownership interest in AB39.3 %36.5 %39.3 %36.2 %
Impact on AB Holding’s net income of AB non-GAAP adjustments $17,077 $8,373 $32,647 $13,441 
Net income – diluted, GAAP basis$56,991 $56,316 $184,986 $210,387 
Impact on AB Holding’s net income of AB non-GAAP adjustments17,077 8,373 32,647 13,441 
Adjusted net income – diluted$74,068 $64,689 $217,633 $223,828 
Diluted net income per AB Holding Unit, GAAP basis$0.50 $0.56 $1.63 $2.11 
Impact of AB non-GAAP adjustments0.15 0.08 0.29 0.14 
Adjusted diluted net income per AB Holding Unit$0.65 $0.64 $1.92 $2.25 

The degree to which AB's non-GAAP adjustments impact AB Holding's net income fluctuates based on AB Holding's ownership percentage in AB.

Cash Distributions

AB Holding is required to distribute all of its Available Cash Flow, as defined in the AB Holding Partnership Agreement, to its Unitholders (including the General Partner). Available Cash Flow typically is the adjusted diluted net income per unit for the quarter multiplied by the number of units outstanding at the end of the quarter. 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 made to adjusted net income should not be made with respect to the Available Cash Flow calculation. See Note 2 to the condensed financial statements in Item 1 for a description of Available Cash Flow.

Capital Resources and Liquidity

During the nine months ended September 30, 2023, net cash provided by operating activities was $221.2 million, compared to $288.7 million during the corresponding 2022 period. The decrease primarily resulted from lower cash distributions received from AB of $64.9 million.

During the nine months ended September 30, 2023, net cash used in investing activities was zero compared to $178 thousand during the corresponding 2022 period. The activity in the prior year period reflects the investments in AB with proceeds from exercises of compensatory options to buy AB Holding Units.

1 Includes all AB non-GAAP adjustments to pre-tax income.
13

During the nine months ended September 30, 2023, net cash used in financing activities was $221.2 million, compared to $288.5 million during the corresponding 2022 period. The decrease was primarily due to lower cash distributions to Unitholders of $65.3 million.

Management believes that AB Holding will have the resources it needs to meet its financial obligations as a result of the cash flow AB Holding realizes from its investment in AB.

Commitments and Contingencies

See Note 8 to the condensed financial statements in Item 1.

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, 2022 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.

Our determination that adjusted employee compensation expense, excluding the impact of performance-based fees, generally should not exceed 50% of our adjusted net revenues on an annual basis: Aggregate employee compensation
14

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.
Item 3.    Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in AB Holding’s market risk from the information provided under “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of AB Holding's Form 10-K for the year ended December 31, 2022.

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 ("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 CFO, of the effectiveness of the design and operation of the disclosure controls and procedures. Based on this evaluation, the CEO and the 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 third quarter of 2023 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

15

Part II

OTHER INFORMATION

Item 1.    Legal Proceedings

See Note 8 to the condensed 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 AB Holding's Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

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

There were no AB Holding Units sold by AB Holding in the period covered by this report that were not registered under the Securities Act.

Each quarter, AB considers 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 ("Exchange Act"). The plan adopted during the third quarter of 2023 expired at the close of business on October 25, 2023. AB may adopt additional plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under the firm's incentive compensation award program and for other corporate purposes. See Note 3 to the condensed financial statements contained in Part 1, Item 1.

AB Holding Units bought by us or one of our affiliates during the third quarter of 2023 are as follows:

ISSUER PURCHASES OF EQUITY SECURITIES
PeriodTotal Number
of AB Holding Units
Purchased
Average Price
Paid Per
AB Holding Unit, net of
Commissions
Total Number of
AB Holding Units Purchased as
Part of Publicly
Announced Plans
or Programs
Maximum Number
(or Approximate
Dollar Value) of
AB Holding Units that May Yet
Be Purchased Under
the Plans or
Programs
7/1/23 - 7/31/23(1)
230 $33.62 — — 
8/1/23 - 8/31/23(2)
714,333 30.71 — — 
9/1/23 - 9/30/23(2)
1,099,556 31.82 — — 
Total1,814,119 $31.39   

(1)During the third quarter of 2023, AB retained from employees 230 AB Holding Units to allow them to fulfill statutory withholding tax requirements at the time of distribution of long-term incentive compensation awards.
(2)During the third quarter of 2023, AB purchased 1,813,889 AB Holding Units on the open market pursuant to a Rule 10b5-1 plan to help fund anticipated obligations under our incentive compensation award program.

16


AB Units bought by us or one of our affiliates during the third quarter of 2023 are as follows:

ISSUER PURCHASES OF EQUITY SECURITIES
 
PeriodTotal Number
of AB Units
Purchased
Average Price
Paid Per
AB Unit, net of
Commissions
Total Number of
AB Units Purchased as
Part of Publicly
Announced Plans
or Programs
Maximum Number
(or Approximate
Dollar Value) of
AB Units that May Yet
Be Purchased Under
the Plans or
Programs
7/1/23 - 7/31/23— — — — 
8/1/23 - 8/31/23— — — — 
9/1/23 - 9/30/23(1)
200 $31.70 — — 
Total200 $31.70   

(1)During the third quarter of 2023, AB purchased 200 AB Units in private transactions and retired them.

Item 3.    Defaults Upon Senior Securities

None.

Item 4.    Mine Safety Disclosures

None.

Item 5.    Other Information

Pursuant to item 408(a) of Regulation S-K there were no directors or officers that had adopted or terminated a 10b5-1 plan or other trading arrangement during the third quarter of 2023.
17

Item 6.    Exhibits
31.1
  
31.2
32.1
  
32.2
99.1
  
101.INSXBRL 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.SCHXBRL Taxonomy Extension Schema.
  
101.CALXBRL Taxonomy Extension Calculation Linkbase.
  
101.LABXBRL Taxonomy Extension Label Linkbase.
  
101.PREXBRL Taxonomy Extension Presentation Linkbase.
101.DEFXBRL Taxonomy Extension Definition Linkbase.
104The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in Inline XBRL (included in Exhibit 101).


18

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: October 26, 2023ALLIANCEBERNSTEIN HOLDING L.P.
By:/s/ Bill Siemers
Bill Siemers
Interim Chief Financial Officer
By:/s/ Thomas Simeone
Thomas Simeone
Controller and Chief Accounting Officer
19

Exhibit 31.1

I, Seth Bernstein, certify that:
1.I have reviewed this quarterly report on Form 10-Q of AllianceBernstein Holding L.P.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 26, 2023/s/ Seth Bernstein
Seth Bernstein
President & Chief Executive Officer
AllianceBernstein Holding L.P.



Exhibit 31.2

I, Bill Siemers, certify that:
1.I have reviewed this quarterly report on Form 10-Q of AllianceBernstein Holding L.P.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial  reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 26, 2023/s/ Bill Siemers
 Bill Siemers
 Interim Chief Financial Officer
 AllianceBernstein Holding L.P. 



Exhibit 32.1
 
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of AllianceBernstein Holding L.P. (the “Company”) on Form 10-Q for the period ending September 30, 2023 to be filed with the Securities and Exchange Commission on or about October 26, 2023 (the “Report”), I, Seth Bernstein, President and Chief Executive Officer of the Company, certify, for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Exchange Act; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 26, 2023/s/ Seth Bernstein
 Seth Bernstein
 President & Chief Executive Officer
 AllianceBernstein Holding L.P.

 




Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of AllianceBernstein Holding L.P. (the “Company”) on Form 10-Q for the period ending September 30, 2023 to be filed with the Securities and Exchange Commission on or about October 26, 2023 (the “Report”), I, Bill Siemers, Interim Chief Financial Officer of the Company, certify, for the purpose of complying with Rule 13a-14(b) or 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Exchange Act; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 26, 2023/s/ Bill Siemers
Bill Siemers
Interim Chief Financial Officer
AllianceBernstein Holding L.P.


Index

Exhibit 99.1
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)
 September 30,
2023
December 31,
2022
ASSETS
Cash and cash equivalents$922,773 $1,130,143 
Cash and securities segregated, at fair value (cost: $916,463 and $1,511,916)
927,934 1,522,431 
Receivables, net:  
Brokers and dealers101,614 112,226 
Brokerage clients1,444,542 1,881,496 
AB funds fees351,063 314,247 
Other fees119,817 127,040 
Investments:  
Long-term incentive compensation-related37,278 47,870 
Other200,936 169,648 
Assets of consolidated company-sponsored investment funds:
   Cash and cash equivalents 13,247 19,751 
   Investments 319,805 516,536 
   Other assets 14,434 44,424 
Furniture, equipment and leasehold improvements, net174,541 189,258 
Goodwill3,598,591 3,598,591 
Intangible assets, net275,913 310,203 
Deferred sales commissions, net73,186 52,250 
Right-of-use assets343,055 371,898 
Assets held for sale681,327 551,351 
Other assets184,065 179,568 
Total assets$9,784,121 $11,138,931 
1

Index

 September 30,
2023
December 31,
2022
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND CAPITAL
Liabilities:  
Payables:  
Brokers and dealers$263,988 $389,828 
Brokerage clients2,321,128 3,322,903 
AB mutual funds1,013 162,291 
Contingent consideration liability251,522 247,309 
Accounts payable and accrued expenses163,972 173,466 
Lease liabilities391,058 427,479 
Liabilities of consolidated company-sponsored investment funds14,301 55,529 
Accrued compensation and benefits753,341 415,878 
Debt900,000 990,000 
Liabilities held for sale216,333 107,952 
Total liabilities5,276,656 6,292,635 
Commitments and contingencies (See Note 12)
Redeemable non-controlling interest of consolidated entities 182,934 368,656 
Capital:  
General Partner44,427 45,985 
Limited partners: 283,971,597 and 285,979,913 units issued and outstanding
4,494,822 4,648,113 
Receivables from affiliates(5,240)(4,270)
AB Holding Units held for long-term incentive compensation plans(86,358)(95,318)
Accumulated other comprehensive (loss)(133,752)(129,477)
Partners’ capital attributable to AB Unitholders4,313,899 4,465,033 
Non-redeemable non-controlling interests in consolidated entities10,632 12,607 
Total capital4,324,531 4,477,640 
Total liabilities, redeemable non-controlling interest and capital$9,784,121 $11,138,931 
 

See Accompanying Notes to Condensed Consolidated Financial Statements.
2

Index

ALLIANCEBERNSTEIN L.P.
AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(in thousands, except per unit amounts)
(unaudited)
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Revenues:
Investment advisory and services fees$748,951 $714,564 $2,199,536 $2,257,822 
Bernstein research services93,875 91,557 285,760 315,806 
Distribution revenues149,049 147,960 434,925 469,431 
Dividend and interest income49,889 30,437 150,761 64,424 
Investment (losses) (6,694)(3,861)(760)(91,105)
Other revenues24,484 27,096 75,349 80,201 
Total revenues1,059,554 1,007,753 3,145,571 3,096,579 
Less: Broker-dealer related interest expense27,498 20,769 80,968 32,464 
Net revenues1,032,056 986,984 3,064,603 3,064,115 
Expenses:    
Employee compensation and benefits453,619 429,842 1,315,861 1,267,535 
Promotion and servicing:  
Distribution-related payments155,620 152,005 454,039 486,781 
Amortization of deferred sales commissions9,585 8,341 26,506 26,678 
Trade execution, marketing, T&E and other52,289 51,594 157,057 163,225 
General and administrative145,388 154,961 434,976 480,441 
Contingent payment arrangements15,364 2,371 20,251 4,047 
Interest on borrowings13,209 5,309 41,594 9,401 
Amortization of intangible assets11,732 12,256 35,148 14,652 
Total expenses856,806 816,679 2,485,432 2,452,760 
Operating income175,250 170,305 579,171 611,355 
Income taxes10,010 5,239 31,253 28,609 
Net income165,240 165,066 547,918 582,746 
Net (loss) income of consolidated entities attributable to non-controlling interests(2,164)(10,114)10,626 (61,930)
Net income attributable to AB Unitholders$167,404 $175,180 $537,292 $644,676 
Net income per AB Unit:    
Basic$0.58 $0.64 $1.86 $2.35 
Diluted$0.58 $0.64 $1.86 $2.35 

See Accompanying Notes to Condensed Consolidated Financial Statements.
3

Index

ALLIANCEBERNSTEIN L.P.
AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
 
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Net income$165,240 $165,066 $547,918 $582,746 
Other comprehensive (loss) income:  
Foreign currency translation adjustments, before tax(15,627)(30,066)(4,971)(76,174)
Income tax benefit(274)907 (211)1,542 
Foreign currency translation adjustments, net of tax(15,901)(29,159)(5,182)(74,632)
Changes in employee benefit related items:  
Amortization of prior service cost18 18 
Recognized actuarial gain 298 324 894 971 
Changes in employee benefit related items304 330 912 989 
Income tax (expense) benefit(1)(5)(12)
Employee benefit related items, net of tax303 333 907 977 
Other comprehensive (loss)(15,598)(28,826)(4,275)(73,655)
Less: Comprehensive (loss) income in consolidated entities attributable to non-controlling interests(2,164)(10,114)10,626 (61,930)
Comprehensive income attributable to AB Unitholders$151,806 $146,354 $533,017 $571,021 
 
See Accompanying Notes to Condensed Consolidated Financial Statements.

4

Index

ALLIANCEBERNSTEIN L.P.
AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Partners' Capital
(in thousands)
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
General Partner’s Capital
Balance, beginning of period$45,233 $40,270 $45,985 $42,850 
Net income1,674 1,752 5,373 6,447 
Cash distributions to General Partner(1,962)(2,149)(6,319)(8,645)
Long-term incentive compensation plans activity31 (11)34 19 
(Retirement) of AB Units, net(549)(14)(646)(823)
Issuance of AB Units for CarVal acquisition— 1,328 — 1,328 
Balance, end of period44,427 41,176 44,427 41,176 
Limited Partners' Capital
Balance, beginning of period4,573,989 4,082,109 4,648,113 4,336,211 
Net income165,730 173,428 531,919 638,229 
Cash distributions to Unitholders(193,614)(212,485)(624,470)(854,213)
Long-term incentive compensation plans activity3,025 (1,099)3,352 1,815 
(Retirement) of AB Units, net(54,308)(1,537)(64,092)(81,626)
Issuance of AB Units for CarVal acquisition— 131,511 — 131,511 
Balance, end of period4,494,822 4,171,927 4,494,822 4,171,927 
Receivables from Affiliates
Balance, beginning of period(5,148)(6,235)(4,270)(8,333)
Long-term incentive compensation awards expense142 134 548 474 
Capital contributions (to) from AB Holding(234)(430)(1,518)1,328 
Balance, end of period(5,240)(6,531)(5,240)(6,531)
AB Holding Units held for Long-term Incentive Compensation Plans
Balance, beginning of period(89,343)(121,697)(95,318)(119,470)
Purchases of AB Holding Units to fund long-term compensation plans, net(52,175)(838)(70,837)(107,295)
Retirement of AB Units, net54,851 2,509 65,607 84,124 
Long-term incentive compensation awards expense3,600 9,176 18,561 35,952 
Re-valuation of AB Holding Units held in rabbi trust(3,291)860 (4,371)(3,301)
Other— (153)— (153)
Balance, end of period(86,358)(110,143)(86,358)(110,143)
Accumulated Other Comprehensive (Loss)
Balance, beginning of period(118,154)(135,164)(129,477)(90,335)
Foreign currency translation adjustment, net of tax(15,901)(29,159)(5,182)(74,632)
Changes in employee benefit related items, net of tax303 333 907 977 
Balance, end of period(133,752)(163,990)(133,752)(163,990)
Total Partners' Capital attributable to AB Unitholders4,313,899 3,932,439 4,313,899 3,932,439 
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Index

Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Non-redeemable Non-controlling Interests in Consolidated Entities   
Balance, beginning of period10,385 — 12,607  
CarVal Acquisition— 11,208 — 11,208 
Net income108 — 623 — 
Distributions to (from) non-controlling interests, net139 — (2,334)— 
Adjustment— — (264)— 
Balance, end of period10,632 11,208 10,632 11,208 
Total Capital$4,324,531 $3,943,647 $4,324,531 $3,943,647 
See Accompanying Notes to Condensed Consolidated Financial Statements.
6

Index

ALLIANCEBERNSTEIN L.P. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended September 30,
 20232022
Cash flows from operating activities:
Net income$547,918 $582,746 
Adjustments to reconcile net income to net cash provided by operating activities:  
Amortization of deferred sales commissions26,506 26,678 
Non-cash long-term incentive compensation expense19,109 36,426 
Depreciation and other amortization68,868 44,702 
Unrealized losses on investments3,892 47,765 
Unrealized (gains) losses on investments of consolidated company-sponsored investment funds(22,413)90,297 
Non-cash lease expense76,745 76,050 
Change in estimate of contingent payment arrangements13,115 — 
Other, net18,102 20,158 
Changes in assets and liabilities:  
Decrease in securities, segregated594,497 168,835 
Decrease (increase) in receivables332,161 (224,089)
(Increase) decrease in investments(24,726)12,253 
Decrease in investments of consolidated company-sponsored investment funds219,144 51,108 
(Increase) in deferred sales commissions(47,442)(6,214)
(Increase) in other assets(53,776)(76,810)
(Decrease) in other assets and liabilities of consolidated company-sponsored investment funds, net(11,238)(41,294)
(Decrease) in payables(1,253,296)(75,629)
(Decrease) increase in accounts payable and accrued expenses(2,656)1,571 
Increase in accrued compensation and benefits366,485 360,817 
Cash payments to relieve operating lease liabilities(80,678)(82,223)
Net cash provided by operating activities790,317 1,013,147 
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Index

Nine Months Ended September 30,
 20232022
Cash flows from investing activities:  
Purchases of furniture, equipment and leasehold improvements(21,399)(36,088)
Acquisition of business, net cash acquired— 40,282 
Net cash (used in) provided by investing activities(21,399)4,194 
Cash flows from financing activities:  
(Repayment of) debt, net(90,000)(65,000)
(Decrease) in overdrafts payable— (19,746)
Distributions to General Partner and Unitholders(630,789)(862,858)
(Redemptions) of non-controlling interest in consolidated company-sponsored investment funds, net(196,348)(47,345)
Capital contributions (to) affiliates(2,499)(312)
Additional investments by AB Holding with proceeds from exercise of compensatory options to buy AB Holding Units— 178 
Purchases of AB Holding Units to fund long-term incentive compensation plan awards, net(70,837)(107,295)
Repayment of acquisition-related debt obligation — (42,661)
Other, net(3,523)(1,268)
Net cash used in financing activities (993,996)(1,146,307)
Effect of exchange rate changes on cash and cash equivalents(2,240)(89,665)
Net (decrease) in cash and cash equivalents(227,318)(218,631)
Cash and cash equivalents as of beginning of the period1,309,017 1,376,026 
Cash and cash equivalents as of end of the period$1,081,699 $1,157,395 
Non-cash investing activities:
Fair value of assets acquired (less cash acquired of $40.8 in 2022)
$— $1,050,234 
Fair value of deferred tax asset recorded— 4,823 
Fair value of liabilities assumed— 300,381 
Fair value of redeemable non-controlling interest assumed— 13,191 
Non-cash financing activities:
Payables recorded under contingent payment arrangements$— $229,571 
Equity consideration issued/to be issued in connection with acquisition— 552,196 

See Accompanying Notes to Condensed Consolidated Financial Statements.
8

Index

ALLIANCEBERNSTEIN L.P.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2023
(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, 2022.

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 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 certain of the mutual funds we sponsor.
 
Our high-quality, in-depth research is the foundation of our asset management and private wealth management businesses. 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;

Actively-managed alternative investments, including hedge funds, fund of funds and direct assets (e.g., direct lending, real estate and private equity);

Portfolios with Purpose, including actively managed, impact-focused and Responsible+ (climate-conscious, ESG leaders, change catalysts) equity, fixed income and multi-asset strategies that address the evolving objectives of our clients to invest their capital with purpose while pursuing strong investment returns;

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

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Index

Passive management, including index, ESG index and enhanced index strategies.

Organization

As of September 30, 2023, EQH owned approximately 3.6% 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 1.0% general partnership interest in AB.

As of September 30, 2023, the ownership structure of AB, including limited partnership units outstanding as well as the general partner's 1.0% interest, was as follows:

EQH and its subsidiaries60.3 %
AB Holding39.0 
Unaffiliated holders0.7 
 100.0 %

Including both the general partnership and limited partnership interests in AB Holding and AB, EQH and its subsidiaries had an approximate 61.7% economic interest in AB as of September 30, 2023.

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, 2022 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 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/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.

Subsequent Events

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

2.     Significant Accounting Policies

Recently Adopted Accounting Pronouncements or Accounting Pronouncements Not Yet Adopted

During the nine months ended September 30, 2023, there have been no recently adopted accounting pronouncements or pronouncements not yet adopted that have or are expected to have a material impact on our consolidated results of operations.

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Index


3. Revenue Recognition

Revenues for the three and nine months ended September 30, 2023 and 2022 consisted of the following:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(in thousands)
Subject to contracts with customers:
    Investment advisory and services fees
        Base fees$720,969 $700,809 $2,116,668 $2,145,307 
        Performance-based fees27,982 13,755 82,868 112,515 
    Bernstein research services93,875 91,557 285,760 315,806 
    Distribution revenues
        All-in-management fees72,240 69,717 211,877 224,337 
        12b-1 fees16,388 16,594 47,321 53,547 
        Other distribution fees60,421 61,649 175,727 191,547 
    Other revenues
        Shareholder servicing fees21,539 21,474 62,633 66,282 
        Other2,861 5,383 12,354 13,210 
1,016,275 980,938 2,995,208 3,122,551 
Not subject to contracts with customers:
    Dividend and interest income, net of broker-dealer related interest expense22,391 9,668 69,793 31,960 
    Investment (losses)(6,694)(3,861)(760)(91,105)
    Other revenues84 239 362 709 
15,781 6,046 69,395 (58,436)
Total net revenues$1,032,056 $986,984 $3,064,603 $3,064,115 

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 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.

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Index

Repurchases and retention of AB Holding Units for the three and nine months ended September 30, 2023 and 2022 consisted of the following:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(in millions)
Total amount of AB Holding Units Purchased/Retained (1)
1.8 — 2.3 2.6 
Total Cash Paid for AB Holding Units Purchased/Retained (1)
$56.9 $1.0 $75.7 $107.7 
Open Market Purchases of AB Holding Units Purchased (1)
1.8 — 1.8 2.3 
Total Cash Paid for Open Market Purchases of AB Holding Units (1)
$56.9 $— $56.9 $92.7 
(1) Purchased on a trade date basis. The 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 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 plan adopted during the third quarter of 2023 expired at the close of business on October 25, 2023. We may adopt 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 nine months of 2023 and 2022, we awarded to employees and Eligible Directors 0.4 million and 0.8 million restricted AB Holding Unit awards, respectively. We use AB Holding Units repurchased during the applicable period and newly-issued AB Holding Units to fund these awards.

During the first nine months of 2023 and 2022, AB Holding issued zero and 5,774 AB Holding Units, respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of zero and $0.1 million, respectively, received from award recipients as payment in cash for the exercise price to purchase the equivalent number of newly-issued AB Units.

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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 September 30,Nine Months Ended September 30,
 2023202220232022
(in thousands, except per unit amounts)
Net income attributable to AB Unitholders$167,404 $175,180 $537,292 $644,676 
Weighted average limited partnership units outstanding – basic285,360 272,646 285,584 271,675 
Dilutive effect of compensatory options to buy AB Holding Units— — — 
Weighted average limited partnership units outstanding – diluted285,360 272,646 285,584 271,677 
Basic net income per AB Unit$0.58 $0.64 $1.86 $2.35 
Diluted net income per AB Unit$0.58 $0.64 $1.86 $2.35 

There were no anti-dilutive options excluded from diluted net income in the three and nine months ended September 30, 2023 or 2022.

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 October 26, 2023, the General Partner declared a distribution of $0.73 per AB Unit, representing a distribution of Available Cash Flow for the three months ended September 30, 2023. 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 November 22, 2023 to holders of record on November 6, 2023.

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

As of September 30, 2023 and December 31, 2022, $0.9 billion and $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.

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Index

8.     Investments

Investments consist of:
 September 30,
2023
December 31,
2022
 (in thousands)
Equity securities:
    Long-term incentive compensation-related$17,176 $21,055 
    Seed capital 126,384 138,012 
Investments in limited partnership hedge funds:  
Long-term incentive compensation-related20,102 26,815 
Seed capital57,331 15,711 
Time deposits7,262 7,750 
Other 9,959 8,175 
Total investments$238,214 $217,518 

Total investments related to long-term incentive compensation obligations of $37.3 million and $47.9 million as of September 30, 2023 and December 31, 2022, 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.

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 September 30, 2023 and December 31, 2022, our total seed capital investments were $333.4 million and $309.6 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 have long positions in corporate equities and long exchange-traded options traded through our options desk.

14

Index

The portion of unrealized gains (losses) related to equity securities, as defined by ASC 321-10, held as of September 30, 2023 and 2022 were as follows:
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
 (in thousands)
Net (losses) gains recognized during the period$(4,991)$2,603 $3,456 $(31,275)
Less: net gains recognized during the period on equity securities sold during the period754 8,197 6,603 17,953 
Unrealized (losses) recognized during the period on equity securities held$(5,745)$(5,594)$(3,147)$(49,228)

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.

The notional value and fair value as of September 30, 2023 and December 31, 2022 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
 Notional ValueDerivative AssetsDerivative Liabilities
 (in thousands)
September 30, 2023:
Exchange-traded futures$155,467 $2,946 $
Currency forwards27,740 5,314 4,494 
Interest rate swaps19,350 671 483 
Credit default swaps170,418 13,130 5,234 
Total return swaps70,403 2,367 
Option swaps50,000 — 499 
Total derivatives$493,378 $24,428 $10,722 
December 31, 2022:
Exchange-traded futures$154,687 $1,768 $162 
Currency forwards34,597 4,446 5,047 
Interest rate swaps16,847 386 262 
Credit default swaps225,671 17,507 7,302 
Total return swaps28,742 605 933 
Option swaps50,000 — 
Total derivatives$510,544 $24,712 $13,712 

As of September 30, 2023 and December 31, 2022, the derivative assets and liabilities are included in both receivables and payables to brokers and dealers on our condensed consolidated statements of financial condition.

15

Index

The gains and losses for derivative instruments (excluding our options desk trading activities discussed below) for the three and nine months ended September 30, 2023 and 2022 recognized in investment gains (losses) in the condensed consolidated statements of income were as follows:
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
 (in thousands)
Exchange-traded futures$4,622 $9,388 $2,022 $23,342 
Currency forwards594 1,318 557 3,600 
Interest rate swaps93 45 144 (7)
Credit default swaps(272)(1,079)(4,513)5,358 
Total return swaps2,858 2,970 (843)18,401 
Option swaps1,041 1,897 214 5,676 
Net gains (losses) on derivative instruments$8,936 $14,539 $(2,419)$56,370 

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 September 30, 2023 and December 31, 2022, we held $13.5 million and $8.4 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 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 September 30, 2023 and December 31, 2022, we delivered $1.6 million and $4.2 million, respectively, of cash collateral into brokerage accounts. We report this cash collateral in cash and cash equivalents in our condensed consolidated statement of financial condition.

As of September 30, 2023 and December 31, 2022, long and short exchange-traded equity options were classified as held for sale on our condensed consolidated statement 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 nine months ended September 30, 2023, we recognized gains of $0.4 million and losses of $3.3 million, respectively, on equity options activity. For the three and nine months ended September 30, 2022, we recognized losses of $3.6 million and $13.4 million, respectively, on equity options activity. These gains and losses are recognized in investment gains (losses) in the condensed consolidated statement of income.
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.

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Offsetting of assets as of September 30, 2023 and December 31, 2022 was as follows:
 
 Gross Amounts of Recognized AssetsGross Amounts Offset in the Statement of Financial ConditionNet Amounts of Assets Presented in the Statement of Financial ConditionFinancial
Instruments Collateral
Cash Collateral
Received
Net
Amount
 (in thousands)
September 30, 2023:
Securities borrowed$47,728 $— $47,728 $(47,728)$— $— 
Derivatives$24,428 $— $24,428 $— $(13,487)$10,941 
December 31, 2022:      
Securities borrowed$62,063 $— $62,063 $(62,058)$— $
Derivatives$24,712 $— $24,712 $— $(8,361)$16,351 
Offsetting of liabilities as of September 30, 2023 and December 31, 2022 was as follows:
 Gross Amounts of Recognized LiabilitiesGross Amounts Offset in the Statement of Financial ConditionNet Amounts of Liabilities Presented in the Statement of Financial ConditionFinancial
Instruments Collateral
Cash Collateral
Pledged
Net Amount
 (in thousands)
September 30, 2023:
Securities loaned$118,713 $— $118,713 $(115,811)$— $2,902 
Derivatives$10,722 $— $10,722 $— $(1,636)$9,086 
December 31, 2022:      
Securities loaned$272,580 $— $272,580 $(267,053)$— $5,527 
Derivatives$13,712 $— $13,712 $— $(4,158)$9,554 

Cash collateral, whether pledged or received on derivative instruments, is not considered material and, accordingly, is not disclosed by counterparty.
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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 September 30, 2023 and December 31, 2022 was as follows (in thousands):
 Level 1Level 2Level 3
NAV Expedient(1)
Other Total
September 30, 2023:
Money markets$171,192 $— $— $— $— $171,192 
Securities segregated (U.S. Treasury Bills)— 927,934 — — — 927,934 
Derivatives 2,945 21,483 — — — 24,428 
Investments:
  Equity securities 116,893 25,077 122 1,468 — 143,560 
   Limited partnership hedge funds(2)
— — — — 77,433 77,433 
   Time deposits(3)
— — — — 7,262 7,262 
   Other investments6,987 — — — 2,972 9,959 
Total investments123,880 25,077 122 1,468 87,667 238,214 
Total assets measured at fair value$298,017 $974,494 $122 $1,468 $87,667 $1,361,768 
Derivatives$10 $10,712 $— $— $— $10,722 
Contingent payment arrangements— — 251,522 — — 251,522 
Total liabilities measured at fair value$10 $10,712 $251,522 $ $ $262,244 
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 Level 1Level 2Level 3
NAV Expedient(1)
Other Total
December 31, 2022:
Money markets$95,521 $— $— $— $— $95,521 
Securities segregated (U.S. Treasury Bills)— 1,521,705 — — — 1,521,705 
Derivatives 1,768 22,944 — — — 24,712 
Investments:
  Equity securities129,655 27,799 129 1,484 — 159,067 
    Limited partnership hedge funds(2)
— — — — 42,526 42,526 
    Time deposits(3)
— — — — 7,750 7,750 
    Other investments6,689 — — — 1,486 8,175 
Total investments136,344 27,799 129 1,484 51,762 217,518 
Total assets measured at fair value$233,633 $1,572,448 $129 $1,484 $51,762 $1,859,456 
Derivatives$162 $13,550 $— $— $— $13,712 
Contingent payment arrangements— — 247,309 — — 247,309 
Total liabilities measured at fair value$162 $13,550 $247,309 $ $ $261,021 

(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 our investment in a mutual fund measured at fair value ($7.0 million and $6.7 million as of September 30, 2023 and December 31, 2022, respectively). Other investments not measured at fair value include (i) investment in a start-up company that does not have a readily available fair value (this investment was $0.3 million as of both September 30, 2023 and December 31, 2022) and (ii) broker dealer exchange memberships that are not measured at fair value in accordance with GAAP ($2.7 million and $1.2 million as of September 30, 2023 and December 31, 2022, respectively).
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 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.

•    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.
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During the nine months ended September 30, 2023 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 September 30,Nine Months Ended September 30,
 2023202220232022
 (in thousands)
Balance as of beginning of period$121 $119 $129 $126 
Unrealized gains (losses), net(7)(6)
Balance as of end of period$122 $120 $122 $120 

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.
Our acquisitions may include 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 September 30,Nine Months Ended September 30,
 2023202220232022
 (in thousands)
Balance as of beginning of period$249,854 $42,436 $247,309 $38,260 
Addition— 227,071 — 229,571 
Accretion2,249 3,638 7,136 5,314 
Change in estimate (1)
13,115 — 13,115 — 
Payments— — (792)— 
Held for sale reclassification (1)
(13,696)— (15,246)— 
Balance as of end of period$251,522 $273,145 $251,522 $273,145 
(1) For the three months ended September 30, 2023 we recorded a $13.1 million change in estimate associated with the acquisition of Autonomous LLC which is included in held for sale liabilities on the condensed consolidated statement of financial condition.

As of September 30, 2023, the expected revenue growth rates ranged from 2.0% to 83.9%, with a weighted average of 10.3%, calculated using cumulative revenues and range of revenue growth rates. The discount rates range from 1.9% to 10.4%, with a weighted average of 4.6%, calculated using total contingent liabilities and range of discount rates. In the third quarter of 2022 we acquired CarVal and recorded a contingent consideration liability of $227.1 million. As of September 30, 2022, including the CarVal acquisition, the expected revenue growth rates ranged from 2.0% to 83.9%, with a weighted average of 11.5%, calculated using cumulative revenues and a range of revenue growth rates (excluding revenue growth from additional AUM contributed in the year of acquisition). The discount rates ranged from 1.9% to 10.4%, with a weighted average of 4.5%, calculated using total contingent liabilities and range of discount rates.

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 nine months ended September 30, 2023 or during the year ended December 31, 2022.


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
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estimated loss for the expected outcome of the litigation. If the likelihood of a negative outcome is reasonably possible and we are able to 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.

On December 14, 2022, four individual participants in the Profit Sharing Plan for Employees of AllianceBernstein L.P., (the "Plan") filed a class action complaint (the “Complaint”) in the U.S. District Court for the Southern District of New York against AB, current and former members of the Compensation and Workplace Practices Committee of the Board, and the Investment and Administrative Committees under the Plan. Plaintiffs, who seek to represent a class of all participants in the Plan from December 14, 2016 to the present, allege that defendants violated their fiduciary duties and engaged in prohibited transactions under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), by including proprietary collective investment trusts as investment options offered under the Plan. The Complaint seeks unspecified damages, disgorgement and other equitable relief. AB is prepared to defend itself vigorously against these claims. While the ultimate outcome of this matter is currently not determinable given the matter remains in its early stages, we do not believe this litigation will have a material adverse effect on our results of operations, financial condition or liquidity.

AB may be involved in various other 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 other matters, but we cannot currently estimate any such losses. Management, after consultation with legal counsel, currently believes that the outcome of any other 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 other 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 one million square feet of office space.
Leases included in the condensed consolidated statement of financial condition as of September 30, 2023 and December 31, 2022 were as follows:
ClassificationSeptember 30, 2023December 31, 2022
(in thousands)
Operating Leases
Operating lease right-of-use assetsRight-of-use assets$331,269 $360,092 
Operating lease liabilitiesLease liabilities379,212 415,539 
Finance Leases
Property and equipment, grossRight-of-use assets20,732 18,116 
Amortization of right-of-use assetsRight-of-use assets(8,946)(6,310)
Property and equipment, net11,786 11,806 
Finance lease liabilities Lease liabilities11,846 11,940 
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The components of lease expense included in the condensed consolidated statement of income as of September 30, 2023 and September 30, 2022 were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
Classification2023202220232022
(in thousands)
Operating lease costGeneral and administrative$23,611 $24,491 $70,895 $73,076 
Financing lease cost:
Amortization of right-of-use assetsGeneral and administrative1,248 1,021 3,527 2,845 
Interest on lease liabilitiesInterest expense96 50 249 143 
Total finance lease cost1,344 1,071 3,776 2,988 
Variable lease cost (1)
General and administrative9,445 9,970 25,744 30,125 
Sublease incomeGeneral and administrative(8,300)(8,296)(25,301)(26,167)
Net lease cost$26,100 $27,236 $75,114 $80,022 
(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. The vast majority of sub-tenant income is derived 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 LeasesFinancing LeasesTotal
Year ending December 31,(in thousands)
2023 (excluding the nine months ended September 30, 2023)
$24,167 $1,117 $25,284 
2024110,237 4,265 114,502 
202541,901 3,836 45,737 
202640,076 2,405 42,481 
202737,444 741 38,185 
Thereafter163,211 67 163,278 
Total lease payments417,036 12,431 429,467 
Less interest(37,824)(585)
Present value of lease liabilities$379,212 $11,846 
We have signed a lease that 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 leases7.30
Finance leases3.07
Weighted average discount rate:
Operating leases2.8 %
Finance leases3.0 %
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Supplemental non-cash activity related to leases was as follows:
Nine Months Ended September 30,
20232022
(in thousands)
Right-of-use assets obtained in exchange for lease obligations(1):
Operating leases32,867 32,862 
Finance leases3,516 6,414 
(1) Represents non-cash activity and, accordingly, is not reflected in the condensed consolidated statement of cash flows.
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:
September 30, 2023December 31, 2022
(in thousands)
VIEsVOEsTotalVIEsVOEsTotal
Cash and cash equivalents$13,247 $— $13,247 $19,751 $— $19,751 
Investments297,386 22,419 319,805 516,536 — 516,536 
Other assets13,516 918 14,434 44,424 — 44,424 
Total assets$324,149 $23,337 $347,486 $580,711 $ $580,711 
Liabilities$13,363 $938 $14,301 $55,529 $— $55,529 
Redeemable non-controlling interest176,307 6,627 182,934 368,656 — 368,656 
Partners' capital attributable to AB Unitholders134,479 15,772 150,251 156,526 — 156,526 
Total liabilities, redeemable non-controlling interest and partners' capital$324,149 $23,337 $347,486 $580,711 $ $580,711 
During the nine-month period ended September 30, 2023, we deconsolidated three funds in which we had a seed investment of approximately $40.6 million as of December 31, 2022, due to no longer having a controlling financial interest.

Changes in the redeemable non-controlling interest balance during the nine-month period ended September 30, 2023 are as follows (in thousands):
Redeemable non-controlling interest as of December 31, 2022
$368,656 
Deconsolidated funds(196,277)
Changes in third-party seed investments in consolidated funds10,555 
Redeemable non-controlling interest as of September 30, 2023
$182,934 


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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.

Valuation of consolidated company-sponsored investment funds' financial instruments by pricing observability levels as of September 30, 2023 and December 31, 2022 was as follows (in thousands):
 Level 1Level 2Level 3Total
September 30, 2023:
  Investments - VIEs$50,467 $246,919 $— $297,386 
  Investments - VOEs22,419 — — 22,419 
  Derivatives - VIEs343 1,568 — 1,911 
Total assets measured at fair value$73,229 $248,487 $ $321,716 
Derivatives - VIEs1,192 2,549 — 3,741 
Total liabilities measured at fair value$1,192 $2,549 $ $3,741 
December 31, 2022:
  Investments - VIEs$129,706 $386,830 $— $516,536 
  Derivatives - VIEs1,529 6,023 — 7,552 
Total assets measured at fair value$131,235 $392,853 $ $524,088 
Derivatives - VIEs$14,932 $6,608 $— $21,540 
Total liabilities measured at fair value$14,932 $6,608 $ $21,540 

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 September 30,Nine Months Ended September 30,
 2023202220232022
 (in thousands)
Balance as of beginning of period$— $— $— $3,357 
Deconsolidated funds— — — (3,351)
Transfers (out)— — — (6)
Purchases— — — 248 
Sales— — — (248)
Balance as of end of period$ $ $ $ 

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.

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.

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Derivative Instruments
As of September 30, 2023 and December 31, 2022, the VIEs held $1.8 million and $14.0 million (net), respectively, of futures, forwards and swaps within their portfolios. For the three and nine months ended September 30, 2023, we recognized $3.3 million and $2.9 million of losses, respectively, on these derivatives. For the three and nine months ended September 30, 2022, we recognized $4.9 million and $10.1 million of losses, respectively, on these derivatives. These gains and losses are recognized in investment gains (losses) in the condensed consolidated statements of income.
As of September 30, 2023 and December 31, 2022, the VIEs held $0.6 million and $2.7 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 September 30, 2023 and December 31, 2022, the VIEs delivered $3.3 million and $5.4 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 September 30, 2023, the VOEs held no futures, forwards, options or swaps within their portfolios.
As of September 30, 2023, the VOEs held no cash collateral payable to trade counterparties.
As of September 30, 2023, the VOEs delivered no cash collateral in brokerage accounts.
Offsetting Assets and Liabilities
Offsetting of derivative assets of consolidated company-sponsored investment funds as of September 30, 2023 and December 31, 2022 was as follows:
 
 Gross Amounts of Recognized AssetsGross Amounts Offset in the Statement of Financial ConditionNet Amounts of Assets Presented in the Statement of Financial ConditionFinancial
Instruments Collateral
Cash Collateral
Received
Net
Amount
 (in thousands)
September 30, 2023:
Derivatives - VIEs$1,911 $— $1,911 $— $(621)$1,290 
December 31, 2022:     
Derivatives - VIEs$7,552 $— $7,552 $— $(2,731)$4,821 

Offsetting of derivative liabilities of consolidated company-sponsored investment funds as of September 30, 2023 and December 31, 2022 was as follows:
 Gross Amounts of Recognized LiabilitiesGross Amounts Offset in the Statement of Financial ConditionNet Amounts of Liabilities Presented in the Statement of Financial ConditionFinancial
Instruments Collateral
Cash Collateral
Pledged
Net Amount
 (in thousands)
September 30, 2023:
Derivatives - VIEs$3,741 $— $3,741 $— $(3,337)$404 
December 31, 2022:     
Derivatives - VIEs$21,540 $— $21,540 $— $(5,444)$16,096 

Cash collateral, whether pledged or received on derivative instruments, is not considered material and, accordingly, is not disclosed by counterparty.
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Non-Consolidated VIEs
As of September 30, 2023, the net assets of company-sponsored investment products that are non-consolidated VIEs are approximately $54.9 billion, and our maximum risk of loss is our investment of $11.0 million in these VIEs and our advisory fee receivables from these VIEs is $99.3 million. As of December 31, 2022, the net assets of company-sponsored investment products that were non-consolidated VIEs was approximately $46.4 billion; our maximum risk of loss was our investment of $5.7 million in these VIEs and our advisory fees receivable from these VIEs was $54.2 million.
15.     Units Outstanding

Changes in AB Units outstanding during the nine-month period ended September 30, 2023 were as follows:
 
Outstanding as of December 31, 2022285,979,913 
Units issued226,691 
Units retired(1)
(2,235,007)
Outstanding as of September 30, 2023283,971,597 
(1) During the nine months ended September 30, 2023, we purchased 4,092 AB Units in private transactions and retired them.

16.     Debt

Credit Facility
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 October 13, 2026. The Credit Facility was amended and restated on February 9, 2023, to reflect the transition from US LIBOR, which was retired June 30, 2023, to the term Secured Overnight Financial Rate or "SOFR". Other than this immaterial change, there were no other significant changes included in the amendment. 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 September 30, 2023, 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.

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: SOFR; a Prime rate; or the Federal Funds rate.

As of September 30, 2023 and December 31, 2022, we had no amounts outstanding under the Credit Facility. Furthermore, during the first nine months of 2023 and the full year 2022, we did not draw upon the Credit Facility.

EQH 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. As of September 30, 2023, we were in compliance with these covenants. The EQH Facility also
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Index

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 both September 30, 2023 and December 31, 2022, AB had $900.0 million outstanding under the EQH Facility, with interest rates of approximately 5.3% and 4.3%, respectively. Average daily borrowings on the EQH Facility for the first nine months of 2023 and the full year 2022 were $778.7 million and $655.2 million, respectively, with weighted average interest rates of approximately 4.8% and 1.7%, respectively.

EQH Uncommitted Facility
In addition to the EQH Facility, AB has a $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 Uncommitted 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 September 30, 2023, we were in compliance with these covenants. As of September 30, 2023, we had no amounts outstanding under the EQH Uncommitted Facility. As of December 31, 2022, we had $90.0 million outstanding under the EQH Uncommitted Facility, with an interest rate of approximately 4.3%. Average daily borrowing on the EQH Uncommitted Facility for the first nine months of 2023 and the full year 2022 were $4.8 million and $0.7 million, respectively, with weighted average interest rates of approximately 4.6% and 4.3%, respectively.

Commercial Paper
As of September 30, 2023 and December 31, 2022, we had no 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 nine months of 2023 and full year 2022 were $277.1 million and $189.9 million, respectively, with weighted average interest rates of approximately 5.1% and 1.5%, respectively.

SCB Lines of Credit
SCB LLC currently has five uncommitted lines of credit with five financial institutions. Four of these lines of credit permit us to borrow up to an aggregate of approximately $315.0 million, with AB named as an additional borrower, 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 September 30, 2023 and December 31, 2022, SCB LLC had no outstanding balance on these lines of credit. Average daily borrowings during the first nine months of 2023 and full year 2022 were $1.5 million and $1.4 million, respectively, with weighted average interest rates of approximately 7.8% and 3.7%, respectively.

17. Divestitures

On November 22, 2022, AB and Société Générale (EURONEXT: SCGLY, “SocGen”), a leading European bank, announced plans to form a joint venture combining their respective cash equities and research businesses. Upon closing, AB will own a 49% interest in the joint venture and SocGen will own a 51% interest, with an option to reach 100% ownership after five years. The consummation of the joint venture is subject to customary closing conditions, including regulatory clearances. Due to the expected timing of regulatory approvals, we now expect the closing to occur in the first half of 2024.

The assets and liabilities of AB's research services business (“the disposal group”) continue to be classified as held for sale on the condensed consolidated statement of financial condition and recorded at fair value, less cost to sell. As a result of classifying these assets as held for sale, we recognized a non-cash valuation adjustment of $2.1 million and $7.6 million in general and administrative expenses on the condensed consolidated statement of income for the three and nine months ended September 30, 2023, respectively, as well as $7.4 million for the three months ended December 31, 2022, to recognize the net carrying value at lower of cost or fair value, less estimated costs to sell. Approximately $4.9 million in costs to sell have been paid as of September 30, 2023.




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Index



The following table summarizes the assets and liabilities of the disposal group classified as held for sale on the condensed consolidated statement of financial condition as of September 30, 2023 and December 31, 2022:
(in thousands)September 30, 2023December 31, 2022
Cash and cash equivalents$145,679 $159,123 
Receivables, net:
Brokers and dealers96,768 44,717 
Brokerage clients77,765 29,243 
Other fees19,860 22,988 
Investments23,941 24,507 
Furniture and equipment, net4,947 4,128 
Other assets153,127 107,764 
Right-of-use assets5,293 1,552 
Intangible assets4,271 4,903 
Goodwill159,826 159,826 
Valuation adjustment (allowance) on disposal group(10,150)(7,400)
Total assets held for sale$681,327 $551,351 
Payables:
Brokers and dealers$70,927 $32,983 
Brokerage clients29,281 10,232 
Other liabilities75,177 50,884 
Accrued compensation and benefits40,948 13,853 
Total liabilities held for sale$216,333 $107,952 
As of September 30, 2023 and December 31, 2022, cash and cash equivalents classified as held for sale included in the condensed consolidated statement of cash flows was $145.7 million and $159.1 million, respectively.
We have determined that the exit from the sell-side research business does not represent a strategic shift that has had, or is likely to have a major effect on our consolidated results of operations. Accordingly, we have not classified the disposal group as discontinued operations. The results of operations of the disposal group up to the respective dates of sale will be included in our consolidated results of operations for all periods presented. The lower of amortized cost or fair value adjustment upon transferring these assets to held for sale was not material.

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Index

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

Executive Overview
Our total assets under management (“AUM”) as of September 30, 2023 were $669.0 billion, down $22.5 billion, or 3.3%, compared to June 30, 2023, and up $56.3 billion, or 9.2%, compared to September 30, 2022. During the third quarter of 2023, AUM decreased due to market depreciation of $20.6 billion and net outflows of $1.9 billion (Institutional net outflows of $3.5 billion offset by Retail net inflows of $1.6 billion, while Private Wealth flows were flat).

Institutional AUM decreased $12.3 billion, or 4.0%, to $296.9 billion during the third quarter of 2023, due to market depreciation of $8.8 billion and net outflows of $3.5 billion. Gross sales increased sequentially from $1.5 billion during the second quarter of 2023 to $4.3 billion during the third quarter of 2023. Redemptions and terminations decreased sequentially from $4.0 billion to $2.7 billion.

Retail AUM decreased $7.4 billion, or 2.8%, to $259.2 billion during the third quarter of 2023, due to market depreciation of $9.0 billion, offset by net inflows of $1.6 billion. Gross sales increased sequentially from $16.5 billion during the second quarter of 2023 to $16.9 billion during the third quarter of 2023. Redemptions and terminations decreased sequentially from $14.6 billion to $13.6 billion.

Private Wealth AUM decreased $2.8 billion, or 2.4%, to $112.9 billion during the third quarter of 2023, due to market depreciation of $2.8 billion. Gross sales decreased sequentially from $4.4 billion during the second quarter of 2023 to $4.0 billion during the third quarter of 2023. Redemptions and terminations decreased sequentially from $4.5 billion to $4.0 billion.

Bernstein Research Services revenue for the third quarter of 2023 was $93.9 million, up $2.3 million, or 2.5%, compared to the third quarter of 2022. The increase was driven by a modest growth in research payments.

Net revenues for the third quarter of 2023 increased $45.1 million, or 4.6%, to $1.0 billion from $987.0 million in the third quarter of 2022. The increase was primarily due to higher investment advisory base fees of $20.2 million, higher performance-based fees of $14.2 million and higher net dividend and interest income of $12.7 million. Operating expenses for the third quarter of 2023 increased $40.1 million, or 4.9%, to $856.8 million from $816.7 million in the third quarter of 2022. The increase was primarily due to higher employee compensation and benefits expense of $23.8 million, higher contingent payment arrangements expense of $13.0 million, higher promotion and servicing expenses of $5.6 million and higher interest on borrowings of $7.9 million, partially offset by lower general and administrative expenses of $9.6 million. Our operating income increased $4.9 million, or 2.9%, to $175.3 million from $170.3 million in the third quarter of 2022 and our operating margin decreased to 17.2% in the third quarter of 2023 from 18.3% in the third quarter of 2022.

Market Commentary

Equity and fixed income markets posted declines in the third quarter as interest rates continued to rise, with the U.S. Federal Reserve raising rates yet again signaling less easing in 2024. Thirty year mortgage rates hit their highest level since 2000 and the 10-year Treasury yield rose to its highest level since 2007. The U.S. economy has weathered higher interest rates well, emboldening the Federal Reserve to tighten monetary policies aggressively. While inflation is trending lower, core inflation remains over 4%, well above the Federal Reserve’s 2% target. Meanwhile, U.S. Congress agreed on a short term government funding measure as September came to a close, postponing a government shutdown.

In the U.K., inflation remains high and interest rates are likely to rise further in the fourth quarter. The European Central Bank raised rates in September and regional recession fears are acute, particularly as German manufacturing suffers from sluggish Chinese demand. China’s growth continues to disappoint, primarily reflecting a longer term secular slowdown amid waning consumer and business confidence, housing sector imbalances and little sign of government stimulus.
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Relationship with EQH and its Subsidiaries

EQH (our parent company) and its subsidiaries are our largest client. EQH is collaborating with AB in order to improve the risk-adjusted yield for the General Accounts of EQH's insurance subsidiaries by investing additional assets at AB, including the utilization of AB's higher-fee, longer-duration alternative offerings. In mid-2021, Equitable Financial Life Insurance Company, a subsidiary of EQH ("Equitable Financial"), agreed to provide an initial $10 billion in permanent capital1 to build out AB's private illiquid offerings, including private alternatives and private placements. Deployment of this initial capital commitment is approximately 80% completed and is expected to continue over the next year. In addition, during the second quarter of 2023, EQH committed to provide an additional $10 billion in permanent capital, which will begin following the completion of the initial $10 billion commitment. We expect this anticipated capital from Equitable Financial will continue to accelerate both organic and inorganic growth in our private alternatives business, allowing us to continue to deliver for our clients, employees, unitholders and other stakeholders. For example, included in the initial $10 billion commitment by EQH is $750 million in capital to be deployed through AB CarVal.

Assets Under Management

Assets under management by distribution channel are as follows:
 As of September 30,
 20232022$ Change% Change
 (in billions)
Institutions$296.9 $279.4 $17.5 6.3 %
Retail259.2 232.3 26.9 11.6 
Private Wealth112.9 101.0 11.9 11.7 
Total$669.0 $612.7 $56.3 9.2 %

Assets under management by investment service are as follows:
 As of September 30,
 20232022$ Change% Change
 (in billions)
Equity
Actively Managed$226.8 $202.9 $23.9 11.8 %
Passively Managed(1)
56.0 52.1 3.9 7.5 
Total Equity282.8 255.0 27.8 10.9 
Fixed Income   
Actively Managed   
Taxable195.0 187.2 7.8 4.2 
Tax–exempt55.6 51.9 3.7 7.0 
 250.6 239.1 11.5 4.8 
Passively Managed(1)
9.4 9.5 (0.1)(0.9)
Total Fixed Income260.0 248.6 11.4 4.6 
Alternatives/Multi-Asset Solutions(2)
 Actively Managed118.6 103.8 14.8 14.2 
Passively Managed(1)
7.6 5.3 2.3 41.8 
Total Alternatives/Multi-Asset Solutions126.2 109.1 17.1 15.6 
Total$669.0 $612.7 $56.3 9.2 %
(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity or fixed income services.
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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Index


Changes in assets under management for the three-month, nine-month and twelve-month periods ended September 30, 2023 are as follows:
 Distribution Channel
 InstitutionsRetailPrivate
Wealth
Total
 (in billions)
Balance as of June 30, 2023$309.2 $266.6 $115.7 $691.5 
Long-term flows:    
Sales/new accounts4.3 16.9 4.0 25.2 
Redemptions/terminations(2.7)(13.6)(4.0)(20.3)
Cash flow/unreinvested dividends(5.1)(1.7)— (6.8)
Net long-term (outflows) inflows(3.5)1.6 — (1.9)
Market depreciation(8.8)(9.0)(2.8)(20.6)
Net change(12.3)(7.4)(2.8)(22.5)
Balance as of September 30, 2023$296.9 $259.2 $112.9 $669.0 
Balance as of December 31, 2022$297.3 $242.9 $106.2 $646.4 
Long-term flows:    
Sales/new accounts8.8 50.2 14.2 73.2 
Redemptions/terminations(10.1)(41.5)(12.5)(64.1)
Cash flow/unreinvested dividends(8.1)(6.2)— (14.3)
Net long-term (outflows) inflows(9.4)2.5 1.7 (5.2)
Transfers0.1 (0.1)— — 
Market appreciation8.9 13.9 5.0 27.8 
Net change(0.4)16.3 6.7 22.6 
Balance as of September 30, 2023$296.9 $259.2 $112.9 $669.0 
Balance as of September 30, 2022$279.4 $232.3 $101.0 $612.7 
Long-term flows:
Sales/new accounts21.4 64.4 18.4 104.2 
Redemptions/terminations(13.6)(56.9)(16.8)(87.3)
Cash flow/unreinvested dividends(15.5)(8.5)— (24.0)
Net long-term (outflows) inflows(7.7)(1.0)1.6 (7.1)
Transfers0.1 (0.1)— — 
Market appreciation25.1 28.0 10.3 63.4 
Net change17.5 26.9 11.9 56.3 
Balance as of September 30, 2023$296.9 $259.2 $112.9 $669.0 





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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 June 30, 2023$235.9 $60.5 $202.3 $56.1 $9.4 $127.3 $691.5 
Long-term flows:       
Sales/new accounts10.3 0.4 7.6 3.8 0.4 2.7 25.2 
Redemptions/terminations(9.3)— (7.4)(2.6)(0.1)(0.9)(20.3)
Cash flow/unreinvested dividends(1.2)(2.8)(2.6)0.1 0.1 (0.4)(6.8)
Net long-term (outflows) inflows(0.2)(2.4)(2.4)1.3 0.4 1.4 (1.9)
Market (depreciation)(8.9)(2.1)(4.9)(1.8)(0.4)(2.5)(20.6)
Net change(9.1)(4.5)(7.3)(0.5)— (1.1)(22.5)
Balance as of September 30, 2023$226.8 $56.0 $195.0 $55.6 $9.4 $126.2 $669.0 
Balance as of December 31, 2022$217.9 $53.8 $190.3 $52.5 $9.4 $122.5 $646.4 
Long-term flows:       
Sales/new accounts28.0 1.1 26.2 11.0 0.5 6.4 73.2 
Redemptions/terminations(32.8)(0.2)(18.9)(7.5)(0.3)(4.4)(64.1)
Cash flow/unreinvested dividends(5.7)(4.4)(1.3)0.3 0.1 (3.3)(14.3)
Net long-term (outflows) inflows(10.5)(3.5)6.0 3.8 0.3 (1.3)(5.2)
Market appreciation (depreciation)19.4 5.7 (1.3)(0.7)(0.3)5.0 27.8 
Net change8.9 2.2 4.7 3.1 — 3.7 22.6 
Balance as of September 30, 2023$226.8 $56.0 $195.0 $55.6 $9.4 $126.2 $669.0 
Balance as of September 30, 2022$202.9 $52.1 $187.2 $51.9 $9.5 $109.1 $612.7 
Long-term flows:   
Sales/new accounts37.3 1.2 34.5 14.7 0.5 16.0 104.2 
Redemptions/terminations(42.3)(1.7)(25.2)(12.1)(0.3)(5.7)(87.3)
Cash flow/unreinvested dividends(8.1)(5.3)(7.3)0.1 (0.2)(3.2)(24.0)
Net long-term (outflows) inflows(13.1)(5.8)2.0 2.7 — 7.1 (7.1)
Market appreciation (depreciation)37.0 9.7 5.8 1.0 (0.1)10.0 63.4 
Net change23.9 3.9 7.8 3.7 (0.1)17.1 56.3 
Balance as of September 30, 2023$226.8 $56.0 $195.0 $55.6 $9.4 $126.2 $669.0 
(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity or fixed income services
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Index

Net long-term inflows (outflows) for actively managed investment services as compared to passively managed investment services for the three-month, nine-month and twelve-month periods ended September 30, 2023 are as follows:
 Periods Ended September 30, 2023
 Three-monthsNine-monthsTwelve-months
 (in billions)
Actively Managed
  Equity$(0.2)$(10.5)$(13.1)
 Fixed Income
(1.1)9.8 4.7 
Alternatives/Multi-Asset Solutions1.2 (1.7)5.9 
(0.1)(2.4)(2.5)
Passively Managed   
  Equity(2.4)(3.5)(5.8)
 Fixed Income
0.4 0.3 — 
Alternatives/Multi-Asset Solutions0.2 0.4 1.2 
 (1.8)(2.8)(4.6)
Total net long-term (outflows)$(1.9)$(5.2)$(7.1)

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

 Three Months Ended September 30,Nine Months Ended September 30,
 20232022$ Change% Change20232022$ Change% Change
 (in billions)(in billions)
Distribution Channel:
Institutions$307.0 $297.0 $10.0 3.4 %$305.1 $312.8 $(7.7)(2.5)%
Retail266.8 250.9 15.9 6.3 259.2 274.9 (15.7)(5.7)
Private Wealth115.8 106.0 9.8 9.2 112.9 111.6 1.3 1.2 
Total$689.6 $653.9 $35.7 5.5 %$677.2 $699.3 $(22.1)(3.2)%
Investment Service:
Equity Actively Managed$235.8 $222.8 $13.0 5.9 %$230.7 $245.7 $(15.0)(6.1)%
Equity Passively Managed(1)
59.3 56.7 2.6 4.7 57.5 61.8 (4.3)(7.0)
Fixed Income Actively Managed – Taxable200.3 198.9 1.4 0.7 197.9 216.4 (18.5)(8.5)
Fixed Income Actively Managed – Tax-exempt56.3 53.7 2.6 4.8 55.2 54.7 0.5 0.9 
Fixed Income Passively Managed(1)
9.4 11.3 (1.9)(17.0)9.5 12.1 (2.6)(21.9)
Alternatives/Multi-Asset Solutions(2)
128.5 110.5 18.0 16.3 126.4 108.6 17.8 16.4 
Total$689.6 $653.9 $35.7 5.5 %$677.2 $699.3 $(22.1)(3.2)%
(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity of fixed income services.

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Index

Our Institutional channel third quarter average AUM of $307.0 billion increased $10.0 billion, or 3.4%, compared to the third quarter of 2022, primarily due to ending AUM increasing $17.5 billion, or 6.3%, to $296.9 billion from September 30, 2022. The $17.5 billion increase in AUM resulted primarily from market appreciation of $25.1 billion, partially offset by net outflows of $7.7 billion.
Our Retail channel third quarter average AUM of $266.8 billion increased $15.9 billion, or 6.3%, compared to the third quarter of 2022, primarily due to ending AUM increasing $26.9 billion, or 11.6%, to $259.2 billion from September 30, 2022. The $26.9 billion increase resulted primarily from market appreciation of $28.0 billion, partially offset by net outflows of $1.0 billion.
Our Private Wealth channel third quarter average AUM of $115.8 billion increased $9.8 billion, or 9.2%, compared to the third quarter of 2022, primarily due to ending AUM increasing $11.9 billion, or 11.7%, to $112.9 billion from September 30, 2022. The $11.9 billion increase resulted from market appreciation of $10.3 billion and net inflows of $1.6 billion.
Absolute investment composite returns, gross of fees, and relative performance as of September 30, 2023 compared to benchmarks for certain representative Institutional equity and fixed income services are as follows:
 1-Year
3-Year(1)
5-Year(1)
Global High Income - Hedged (fixed income)
Absolute return12.9 %2.5 %2.6 %
Relative return (vs. Bloomberg Barclays Global High Yield Index - Hedged)0.7 1.6 0.4 
Global Plus - Hedged (fixed income)
Absolute return2.4 (3.2)0.7 
Relative return (vs. Bloomberg Barclays Global Aggregate Index - Hedged)0.3 0.5 0.2 
Intermediate Municipal Bonds (fixed income)
Absolute return3.4 (0.4)1.7 
Relative return (vs. Lipper Short/Int. Blended Muni Fund Avg)0.8 0.7 0.8 
U.S. Strategic Core Plus (fixed income)
Absolute return1.1 (4.7)0.4 
Relative return (vs. Bloomberg Barclays U.S. Aggregate Index)0.5 0.5 0.3 
Emerging Market Debt (fixed income)
Absolute return10.2 (4.4)(0.1)
Relative return (vs. JPM EMBI Global/JPM EMBI)1.6 (0.2)— 
Sustainable Global Thematic (equity)
Absolute return16.2 2.9 9.1 
Relative return (vs. MSCI ACWI Index)(4.7)(4.0)2.7 
International Strategic Core Equity (equity)
Absolute return18.5 3.2 2.3 
Relative return (vs. MSCI EAFE Index)(7.1)(2.6)(0.9)
U.S. Small & Mid Cap Value (equity)
Absolute return12.1 15.5 4.3 
Relative return (vs. Russell 2500 Value Index)0.8 2.2 0.3 
U.S. Strategic Value (equity)
Absolute return21.1 15.7 6.8 
Relative return (vs. Russell 1000 Value Index)6.7 4.6 0.5 
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Index

 1-Year
3-Year(1)
5-Year(1)
U.S. Small Cap Growth (equity)
Absolute return11.2 (2.4)4.0 
Relative return (vs. Russell 2000 Growth Index)1.6 (3.5)2.5 
U.S. Large Cap Growth (equity)
Absolute return25.3 7.0 12.2 
Relative return (vs. Russell 1000 Growth Index)(2.4)(0.9)(0.2)
U.S. Small & Mid Cap Growth (equity)
Absolute return10.6 (2.0)3.9 
Relative return (vs. Russell 2500 Growth Index)— (3.0)(0.1)
Concentrated U.S. Growth (equity)
Absolute return 16.1 6.6 10.0 
Relative return (vs. S&P 500 Index)(5.5)(3.6)0.1 
Select U.S. Equity (equity)
Absolute return17.7 11.3 10.2 
Relative return (vs. S&P 500 Index)(3.9)1.1 0.3 
Strategic Equities (equity)
Absolute return19.9 10.1 9.4 
Relative return (vs. Russell 3000 Index)(0.6)0.8 0.2 
Global Core Equity (equity)
Absolute return 22.7 6.2 6.3 
Relative return (vs. MSCI ACWI Index)1.9 (0.7)(0.2)
U.S. Strategic Core Equity (equity)
Absolute return21.4 10.4 9.8 
Relative return (vs. S&P 500 Index)(0.2)0.2 (0.1)
Select U.S. Equity Long/Short (alternatives)
Absolute return 7.6 7.1 7.0 
Relative return (vs. S&P 500 Index)(14.0)(3.0)(2.9)
Global Strategic Core Equity (equity)
Absolute return20.4 8.6 7.3 
Relative return (vs. S&P 500 Index)(1.5)0.6 0.1 

(1)Reflects annualized returns.
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Consolidated Results of Operations
 Three Months Ended September 30,Nine Months Ended September 30,
 20232022$ Change% Change20232022$ Change% Change
 (in thousands, except per unit amounts)
Net revenues$1,032,056 $986,984 $45,072 4.6 %$3,064,603 $3,064,115 $488 — %
Expenses856,806 816,679 40,127 4.9 2,485,432 2,452,760 32,672 1.3 
Operating income175,250 170,305 4,945 2.9 579,171 611,355 (32,184)(5.3)
Income taxes10,010 5,239 4,771 91.1 31,253 28,609 2,644 9.2 
Net income165,240 165,066 174 0.1 547,918 582,746 (34,828)(6.0)
Net (loss) income of consolidated entities attributable to non-controlling interests(2,164)(10,114)7,950 (78.6)10,626 (61,930)72,556 n/m
Net income attributable to AB Unitholders$167,404 $175,180 $(7,776)(4.4)$537,292 $644,676 $(107,384)(16.7)
Diluted net income per AB Unit$0.58 $0.64 $(0.06)(9.4)$1.86 $2.35 $(0.49)(20.9)
Distributions per AB Unit$0.73 $0.72 $0.01 1.4 $2.15 $2.49 $(0.34)(13.7)
Operating margin (1)
17.2 %18.3 % 18.6 %22.0 % 
(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 September 30, 2023 decreased $7.8 million, or 4.4%, from the three months ended September 30, 2022. The decrease primarily is due to (in millions):
Higher employee compensation and benefits expense$(23.8)
Higher contingent payment arrangements(13.0)
Lower net loss of consolidated entities attributable to non-controlling interest(8.0)
Higher interest on borrowings(7.9)
Higher promotion and servicing expense(5.6)
Higher income taxes(4.8)
Higher investment losses(2.8)
Lower other revenues(2.6)
Higher base advisory fees20.2 
Higher performance-based fees14.2 
Higher net dividend and interest income12.7 
Lower general and administrative expenses9.6 
Higher Bernstein Research Services revenue2.3 
Other1.7 
 $(7.8)
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Net income attributable to AB Unitholders for the nine months ended September 30, 2023 decreased $107.4 million, or 16.7%, from the nine months ended September 30, 2022. The decrease primarily is due to (in millions):
Higher net gain of consolidated entities attributable to non-controlling interest$(72.6)
Higher employee compensation and benefits expense(48.3)
Lower distribution revenues(34.5)
Higher interest on borrowings(32.2)
Lower Bernstein Research Services revenue(30.0)
Lower performance-based fees(29.6)
Lower base advisory fees(28.6)
Higher amortization of intangible assets(20.5)
Higher contingent payment arrangements(16.2)
Lower investment losses90.3 
Lower general and administrative expenses45.5 
Lower promotion and servicing expenses39.1 
Higher net dividend and interest income37.8 
Other(7.6)
 $(107.4)

Units Outstanding; Unit Repurchases

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 to repurchase AB Holding Units on our behalf in accordance with the terms and limitations specified in the 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 plan adopted during the third quarter of 2023 expired at the close of business on October 25, 2023. We may adopt 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.

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, acquisition-related expenses, interest expense 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.

We provide the non-GAAP measures "adjusted net income" and "adjusted diluted net income per unit" because our quarterly distribution per unit is typically our adjusted diluted net income per unit (which is derived from adjusted net income).

These non-GAAP measures are provided in addition to, and not as substitutes for, net revenues, operating income and operating
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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 September 30,Nine Months Ended September 30,
 2023202220232022
 (in thousands, except per unit amounts)
Net revenues, US GAAP basis$1,032,056 $986,984 $3,064,603 $3,064,115 
Adjustments:    
Distribution-related adjustments:
Distribution revenues(149,049)(147,960)(434,925)(469,431)
Investment advisory services fees(16,156)(12,385)(45,619)(44,027)
Pass-through adjustments:
Investment advisory services fees(14,567)(11,367)(35,376)(57,386)
Other revenues(8,661)(10,505)(26,098)(28,905)
Impact of consolidated company-sponsored funds1,931 8,837 (11,452)59,948 
Incentive compensation-related items238 427 (10,111)9,806 
Adjusted net revenues$845,792 $814,031 $2,501,022 $2,534,120 
Operating income, US GAAP basis$175,250 $170,305 $579,171 $611,355 
Adjustments:    
Real estate(206)(206)(618)(618)
Incentive compensation-related items1,354 622 4,064 3,030 
EQH award compensation142 133 548 472 
Acquisition-related expenses44,941 23,412 83,191 39,029 
Total of non-GAAP adjustments before interest on borrowings46,231 23,961 87,185 41,913 
Interest on borrowings 113,209 5,309 41,594 9,401 
Sub-total of non-GAAP adjustments59,440 29,270 128,779 51,314 
Less: Net (loss) income of consolidated entities attributable to non-controlling interests(2,164)(10,114)10,626 (61,930)
Adjusted operating income 1
236,854 209,689 697,324 724,599 
Less: Interest on borrowings13,209 5,309 41,594 9,401 
Adjusted pre-tax income223,645 204,380 655,730 715,198 
Less: Adjusted income taxes12,770 6,296 35,409 33,474 
Adjusted net income $210,875 $198,084 $620,321 $681,724 
Diluted net income per AB Unit, GAAP basis$0.58 $0.64 $1.86 $2.35 
Impact of non-GAAP adjustments0.15 0.08 0.29 0.13 
Adjusted diluted net income per AB Unit$0.73 $0.72 $2.15 $2.48 
Operating margin, GAAP basis17.2 %18.3 %18.6 %22.0 %
Impact of non-GAAP adjustments10.8 7.5 9.3 6.6 
Adjusted operating margin28.0 %25.8 %27.9 %28.6 %

Adjusted operating income for the three months ended September 30, 2023 increased $27.2 million, or 13.0%, from the three months ended September 30, 2022, primarily due to higher performance-based fees of $17.5 million, higher net dividend and
1 During the second quarter of 2023, we revised adjusted operating income to exclude interest on borrowings in order to align with our industry peer group. We have recast prior periods presentation to align with the current period presentation.
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interest income of $12.5 million and higher investment advisory base fees of $10.1 million, partially offset by investment losses in the current year compared to investment gains in the prior year of $10.0 million and higher promotion and servicing expenses of $2.5 million.

Adjusted operating income for the nine months ended September 30, 2023 decreased $27.3 million, or 3.8%, from the nine months ended September 30, 2022, primarily due to lower investment advisory base fees of $47.3 million, lower Bernstein Research Services revenue of $30.0 million and higher general and administrative expenses of $3.4 million, partially offset by higher net dividend and interest income of $42.7 million, lower employee compensation and benefits expense (excluding the impact of long-term incentive compensation-related items) of $5.6 million, lower promotion and servicing expenses of $3.4 million and higher performance-based fees of $2.6 million,

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. Also, we adjust for certain investment advisory and services fees passed through to our investment advisors. These fees do not affect operating income, 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.
Adjusted net revenues exclude investment gains and losses and dividends and interest on employee long-term incentive compensation-related investments. Also, we adjust for certain acquisition-related pass-through performance-based fees and performance related compensation.
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) the equity compensation paid by EQH to certain AB executives, (4) acquisition-related expenses, (5) interest on borrowings and (6) the impact of consolidated company-sponsored investment funds.
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.
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The board of directors of EQH granted to Seth Bernstein, our CEO, equity awards in connection with EQH's IPO. Additionally, equity awards have been granted to Mr. Bernstein and other AB executives for their membership on the EQH Management Committee. These individuals may receive additional equity or cash compensation from EQH in the future related to their service on the Management Committee. Any awards granted to 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.
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, amortization of acquired intangible assets and certain compensation-related expenses. These expenses also include the recording of accretion expense and changes in estimates to acquisition related contingent payment arrangements. During the three months ended September 30, 2023 we recorded an expense of $26.9 million due to a change in estimate related to the contingent consideration associated with the acquisition of Autonomous LLC in 2019. The change in estimate was based upon better than expected revenues during the 2023 performance evaluation period. We recorded $13.1 million as contingent payment arrangement expense and $13.8 million as compensation and benefits expense in the condensed consolidated statement of income. The charges to compensation and benefits expense are due to certain service conditions and special awards included in the acquisition agreement.
We adjust operating income to exclude interest on borrowings in order to align with our industry peer group.
We adjust 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 exclude 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 outstanding at the end of the quarter. Adjusted net income is derived from adjusted operating income less interest expense and adjusted income taxes. 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.

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Net Revenues

The components of net revenues are as follows:
 Three Months Ended September 30,Nine Months Ended September 30,
 20232022$ Change% Change20232022$ Change% Change
 (in thousands)(in thousands)
Investment advisory and services fees:
Institutions:
Base fees$154,080 $155,846 $(1,766)(1.1)%$461,129 $426,904 $34,225 8.0 %
Performance-based fees4,447 3,895 552 14.229,660 53,734 (24,074)(44.8)
 158,527 159,741 (1,214)(0.8)490,789 480,638 10,151 2.1 
Retail:       
Base fees326,391 319,358 7,033 2.2 953,347 1,017,999 (64,652)(6.4)
Performance-based fees90 30 60 200.0 97 1,080 (983)(91.0)
 326,481 319,388 7,093 2.2 953,444 1,019,079 (65,635)(6.4)
Private Wealth:       
Base fees240,498 225,605 14,893 6.6 702,192 700,404 1,788 0.3 
Performance-based fees23,445 9,830 13,615 138.5 53,111 57,701 (4,590)(8.0)
 263,943 235,435 28,508 12.1 755,303 758,105 (2,802)(0.4)
Total:       
Base fees720,969 700,809 20,160 2.9 2,116,668 2,145,307 (28,639)(1.3)
Performance-based fees27,982 13,755 14,227 103.4 82,868 112,515 (29,647)(26.3)
 748,951 714,564 34,387 4.8 2,199,536 2,257,822 (58,286)(2.6)
Bernstein Research Services93,875 91,557 2,318 2.5 285,760 315,806 (30,046)(9.5)
Distribution revenues149,049 147,960 1,089 0.7 434,925 469,431 (34,506)(7.4)
Dividend and interest income49,889 30,437 19,452 63.9 150,761 64,424 86,337 134.0 
Investment (losses)(6,694)(3,861)(2,833)73.4 (760)(91,105)90,345 (99.2)
Other revenues24,484 27,096 (2,612)(9.6)75,349 80,201 (4,852)(6.0)
Total revenues1,059,554 1,007,753 51,801 5.1 3,145,571 3,096,579 48,992 1.6 
Less: broker-dealer related interest expense27,498 20,769 6,729 32.480,968 32,464 48,504 149.4
Net revenues$1,032,056 $986,984 $45,072 4.6 $3,064,603 $3,064,115 $488  

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-managed equity services, 10 to 70 basis points for actively-managed fixed income services and 2 to 50 basis points for
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passively-managed services. Average basis points realized for other services could range from 3 basis points for certain Institutional third party managed services to over 190 basis points for certain Private Wealth alternative services. These ranges include all-inclusive fee arrangements (covering investment management, trade execution and other services) for our Private Wealth clients.

We calculate AUM using established policies and procedures in accordance with applicable rules. Market-based and fair 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; and mid prices derived from market standard models with inputs from recognized pricing vendors for OTC derivatives. Internally derived fair valuation methods are used only when AUM cannot be valued using any of above valuation methods, and include discounted cash flow models or any other methodology that is validated and approved by our Valuation Committee.

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 9.7%, 8.8% and 0.4% of the assets we manage for institutional clients, private wealth clients and retail clients, respectively (in total, 5.9% of our AUM).

For the three months ended September 30, 2023, our investment advisory and services fees increased by $34.4 million, or 4.8%, from the three months ended September 30, 2022, due to a $20.2 million, or 2.9%, increase in base fees and a $14.2 million increase in performance-based fees. The increase in base fees is primarily due a 5.5% increase in average AUM, partially offset by a lower portfolio fee rate. Performance-based fees increased primarily due to higher performance fees earned on our Private Credit Funds, partially offset by lower performance fees earned on our U.S. Real Estate Funds.

For the nine months ended September 30, 2023, our investment advisory and services fees decreased by $58.3 million, or 2.6%, from the nine months ended September 30, 2022, due to a $29.6 million, or 26.3%, decrease in performance-based fees and a $28.6 million, or 1.3%, decrease in base fees. The decrease in base fees is primarily due to an 3.2% decrease in average AUM, partially offset by a higher portfolio fee rate. Performance-based fees decreased primarily due to lower performance fees earned on our U.S. Real Estate Funds, partially offset by higher performance fees earned on our Private Credit Funds and Global Opportunistic Credit Fund.

Institutional base fees for the three months ended September 30, 2023 increased $1.8 million, or 1.1%, from the three months ended September 30, 2022, primarily due to a 3.4% increase in average AUM, partially offset by a lower portfolio fee rate. Retail base fees for the three months ended September 30, 2023 increased $7.0 million, or 2.2%, from the three months ended September 30, 2022, primarily due to a 6.3% increase in average AUM, partially offset by a lower portfolio fee rate. Private Wealth base fees for the three months ended September 30, 2023 increased $14.9 million, or 6.6%, from the three months ended September 30, 2022, primarily due to a 9.2% increase in average AUM, partially offset by a lower portfolio fee rate.

Institutional base fees for the nine months ended September 30, 2023 increased $34.2 million, or 8.0%, from the nine months ended September 30, 2022, primarily due to a higher portfolio fee rate, partially offset by a 2.5% decrease in average AUM. Retail base fees for the nine months ended September 30, 2023 decreased $64.7 million, or 6.4%, from the nine months ended September 30, 2022, primarily due to a 5.7% decrease in average AUM. Private Wealth base fees for the nine months ended September 30, 2023 increased $1.8 million, or 0.3%, from the nine months ended September 30, 2022, primarily due to a 1.2% increase in average AUM.

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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. In the fourth quarter of 2022, AB and Société Générale (EURONEXT: SCGLY, “SocGen”), a leading European bank, announced plans to form a joint venture combining their respective cash equities and research businesses. As a result, the Bernstein Research Services business has been classified as held for sale on the condensed consolidated statement of financial condition. For further discussion, see Note 17 Divestitures.
Revenues from Bernstein Research Services for the three months ended September 30, 2023 increased $2.3 million, or 2.5%, from the three months ended September 30, 2022. The increase was driven by a modest growth in research payments. For the nine months ended September 30, 2023, Bernstein Research Services revenue decreased by $30.0 million, or 9.5%, compared to the nine months ended September 30, 2022. The decrease was driven by a significant decline in customer trading activity, partially offset by higher research payments.

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.

Distribution revenues for the three months ended September 30, 2023 increased $1.1 million, or 0.7%, from the three months ended September 30, 2022, primarily due to the corresponding average AUM of these mutual funds increasing 4.1%, partially offset by a decrease in the overall portfolio fee rate. For the nine months ended September 30, 2023, distribution revenues decreased $34.5 million, or 7.4%, compared to the nine months ended September 30, 2022, primarily due to a decrease in the overall portfolio fee rate.

Dividend and Interest Income and Broker-Dealer Related 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. Broker-dealer related interest expense principally reflects interest accrued on cash balances in customers’ brokerage accounts.

Dividend and interest income for the three months ended September 30, 2023 increased $19.5 million, or 63.9%, from the three months ended September 30, 2022, primarily due to higher interest earned on customer margin balances and higher interest earned on U.S. Treasury Bills. Broker-dealer related interest expense for the three months ended September 30, 2023 increased $6.7 million from the three months ended September 30, 2022, due to higher interest paid on cash balances in customers' brokerage accounts.

For the nine months ended September 30, 2023, dividend and interest income increased $86.3 million, or 134.0%, compared to the nine months ended September 30, 2022, primarily due to higher interest earned on customer margin balances and higher interest earned on U.S. Treasury Bills, partially offset by lower dividend and interest income in our consolidated company-sponsored investment funds. Broker-dealer related interest expense for the nine months ended September 30, 2023 increased $48.5 million compared to the nine months ended September 30, 2022, due to higher 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.
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Investment gains (losses) are as follows:
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
 (in thousands)
Long-term incentive compensation-related investments:
Realized gains (losses)$16 $(11)$6,577 $1,328 
Unrealized (losses)(724)(1,121)(4,095)(11,945)
Investments held by consolidated company-sponsored investment funds:
  Realized (losses)(6,375)(11,564)(24,295)(25,732)
  Unrealized (losses) gains(4,614)(10,206)22,413 (90,297)
Seed capital investments:
Realized gains (losses):
Seed capital and other717 8,348 536 17,274 
Derivatives(452)9,858 (10,411)40,493 
Unrealized (losses) gains:
Seed capital and other(4,929)(4,408)974 (37,275)
Derivatives9,475 4,712 8,124 15,922 
Brokerage-related investments:
Realized (losses)— (183)(466)(1,265)
Unrealized gains (losses)192 714 (117)392 
 $(6,694)$(3,861)$(760)$(91,105)

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 September 30, 2023 decreased $2.6 million, or 9.6%, compared to the three months ended September 30, 2022, primarily due to lower brokerage income and mutual fund reimbursements. Other revenues for the nine months ended September 30, 2023 decreased $4.9 million, or 6.0%, compared to the nine months ended September 30, 2022, primarily due to lower shareholder servicing fees.
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Expenses

The components of expenses are as follows:
 Three Months Ended September 30,Nine Months Ended September 30,
 20232022$ Change% Change20232022$ Change% Change
 (in thousands)(in thousands)
Employee compensation and benefits$453,619 $429,842 $23,777 5.5 %$1,315,861 $1,267,535 $48,326 3.8 %
Promotion and servicing:    
Distribution-related payments155,620 152,005 3,615 2.4 454,039 486,781 (32,742)(6.7)
Amortization of deferred sales commissions9,585 8,341 1,244 14.9 26,506 26,678 (172)(0.6)
Trade execution, marketing, T&E and other52,289 51,594 695 1.3 157,057 163,225 (6,168)(3.8)
 217,494 211,940 5,554 2.6 637,602 676,684 (39,082)(5.8)
General and administrative145,388 154,961 (9,573)(6.2)434,976 480,441 (45,465)(9.5)
Contingent payment arrangements15,364 2,371 12,993 n/m20,251 4,047 16,204 n/m
Interest on borrowings13,209 5,309 7,900 148.8 41,594 9,401 32,193 n/m
Amortization of intangible assets11,732 12,256 (524)(4.3)35,148 14,652 20,496 139.9 
Total$856,806 $816,679 $40,127 4.9 $2,485,432 $2,452,760 $32,672 1.3 

Employee Compensation and Benefits

Employee compensation and benefits expense consists 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 44.0% and 43.6% for the three months ended September 30, 2023 and September 30, 2022, respectively. Compensation expense as a percentage of net revenues was 42.9% and 41.4% for the nine months ended September 30, 2023 and 2022, 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”), 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 annual 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 1.0% of adjusted net revenues for the three and nine months ended September 30, 2023, and 1.3% and 1.1% of adjusted net revenues for the three and nine months ended September 30, 2022, respectively), and excludes the impact of mark-to-market vesting expense, as well as dividends and interest expense, associated with employee incentive compensation-related investments and the amortization expense associated with the awards issued by EQH to some of our firm's executive officers relating to their roles as 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, excluding the impact of performance-based fees, generally should not exceed 50.0% of our adjusted net revenues in any year, except in unexpected or unusual circumstances. Our ratio of adjusted compensation expense as a percentage of adjusted net revenues was 49.5% for the three and nine months ended September 30, 2023 and 51.0% and 49.0% for the three and nine months ended September 30, 2022, respectively.
45

Index


For the three months ended September 30, 2023, employee compensation and benefits expense increased $23.8 million, or 5.5%, compared to the three months ended September 30, 2022, primarily due to higher incentive compensation of $22.0 million and higher base compensation of $9.1 million, partially offset by lower commissions of $5.8 million. For the nine months ended September 30, 2023, employee compensation and benefits expense increased $48.3 million, or 3.8%, compared to the nine months ended September 30, 2022, primarily due to higher base compensation of $58.0 million, higher fringes of $9.2 million and higher incentive compensation of $9.0 million, partially offset by lower commissions of $25.3 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.

Promotion and servicing expenses increased $5.6 million, or 2.6%, during the three months ended September 30, 2023 compared to the three months ended September 30, 2022. The increase was primarily due to higher distribution-related payments of $3.6 million, higher travel and entertainment expenses of $2.7 million and higher amortization of deferred sales commissions of $1.2 million, partially offset by lower trade execution expenses of $2.0 million. Promotion and servicing expenses decreased $39.1 million, or 5.8%, during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. The decrease was primarily due to lower distribution-related payments of $32.7 million, lower trade execution expenses of $7.0 million and lower transfer fees of $4.5 million, partially offset by higher travel and entertainment expenses of $5.3 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 14.1% and 15.7% for the three months ended September 30, 2023 and 2022, respectively. General and administrative expenses decreased $9.6 million, or 6.2%, during the three months ended September 30, 2023 compared to the corresponding period in 2022, primarily due to lower professional fees of $6.3 million, lower portfolio servicing fees of $3.6 million, a favorable foreign exchange translation impact of $1.9 million and lower technology expenses of $1.3 million, partially offset by higher valuation adjustments related to the classification of Bernstein Research Services as held for sale of $2.3 million and higher office-related expenses of $1.0 million. General and administrative expenses as a percentage of net revenues were 14.2% and 15.7% for the nine months ended September 30, 2023 and 2022, respectively. General and administrative expenses decreased $45.5 million, or 9.5%, during the nine months ended September 30, 2023 compared to the corresponding period in 2022, primarily due to lower portfolio servicing fees of $43.8 million, lower professional fees of $12.7 million and a favorable foreign exchange translation impact of $5.3 million, partially offset by higher valuation adjustments related to the classification of Bernstein Research Services as held for sale of $8.2 million and higher office-related expenses of $5.5 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. During the three months ended September 30, 2023 we recorded a change in estimate related to the contingent consideration liability associated with the acquisition of Autonomous LLC in 2019 of $13.1 million. The change in estimate was based upon better than expected revenues during the 2023 performance evaluation period. This expense resulting from changes to expected payments and the accretion of this obligation to its expected payment amount is reflected within contingent payment arrangements in our condensed consolidated statements of income.

There were no changes in our estimates during the nine months ended September 30, 2022.

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 September 30, 2023 interest on borrowings increased $7.9 million compared to the three months ended September 30, 2022. The increase was due to higher average borrowings and higher interest rates. For the nine months ended
46

Index

September 30, 2023 interest on borrowings increased $32.2 million compared to the nine months ended September 30, 2022. The increase was due to higher average borrowings and higher interest rates.

Amortization of 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 $0.5 million during the three months ended September 30, 2023 compared to the three months ended September 30, 2022. Amortization of intangible assets increased $20.5 million during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. This increase was primarily due to acquired intangible assets associated with the CarVal acquisition.

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 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 September 30, 2023 increased $4.8 million, or 91.1%, compared to the three months ended September 30, 2022. The increase was primarily due to a one-time discrete item in the three months ended September 30, 2022. Income tax expense for the nine months ended September 30, 2023 increased $2.6 million, or 9.2%, compared to the nine months ended September 30, 2022. The increase was primarily due to higher foreign income in jurisdictions that carry a higher tax rate. There were no material changes to uncertain tax positions (FIN 48 reserves) or valuation allowances against deferred tax assets for the three and nine months ended September 30, 2023.

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 three months ended September 30, 2023, we had $2.2 million of net losses of consolidated entities attributable to non-controlling interests compared to $10.1 million of net losses for the three months ended September 30, 2022. For the nine months ended September 30, 2023, we had $10.6 million of net gains of consolidated entities attributable to non-controlling interests compared to net losses of $61.9 million for the nine months ended September 30, 2022. Period-to-period fluctuations result primarily from the number of consolidated company-sponsored investment funds and their respective market performance.

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 nine months of 2023, net cash provided by operating activities was $790.3 million compared to $1.0 billion during the corresponding 2022 period. The change is primarily due to lower earnings of $173.0 million (after non-cash reconciling items), an increase in fees receivable of $168.5 million, an increase in deferred sales commissions of $41.2 million and an increase in investments of $37.0 million, partially offset by net activity of our consolidated funds of $198.1 million.

During the first nine months of 2023, net cash used in investing activities was $21.4 million, compared to net cash provided by investing activities of $4.2 million during the corresponding 2022 period. The change is primarily due to the acquisition of CarVal, net of cash acquired, of $40.3 million in the corresponding 2022 period, offset by lower purchases of furniture, equipment and leasehold improvements of $14.7 million.

During the first nine months of 2023, net cash used in financing activities was $994.0 million, compared to $1.1 billion during the corresponding 2022 period. The change is primarily due to lower distributions to the General Partner and Unitholders of
47

Index

$232.1 million, repayment of CarVal debt subsequent to acquisition in 2022 of $42.7 million and a decrease in the net purchases of AB Holding Units to fund long-term incentive compensation plans of $36.5 million, partially offset by higher net redemptions of non-controlling interests of consolidated company-sponsored investment funds of $149.0 million.

As of September 30, 2023, AB had $1.1 billion of cash and cash equivalents (including cash and cash equivalents of consolidated company-sponsored investment funds and cash held-for-sale), 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 $546.2 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” for a discussion of credit markets and our ability to renew our credit facilities at expiration.

COMMITMENTS AND CONTINGENCIES

AB’s capital commitments, which consist primarily of operating leases for office space, generally are funded from future operating cash flows. See Note 13 for discussion of lease commitments.

See Note 12 for discussion of commitments and contingencies.

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, 2022.

ACCOUNTING PRONOUNCEMENTS

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

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, 2022 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.

48

Index

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.

Our determination that adjusted employee compensation expense, excluding the impact of performance-based fees, generally should not exceed 50% of our adjusted net revenues on an annual basis: 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.


49

Index

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, 2022.
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 ("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 CFO, of the effectiveness of the design and operation of the disclosure controls and procedures. Based on this evaluation, the CEO and the 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 third quarter of 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
50
v3.23.3
Cover Page
9 Months Ended
Sep. 30, 2023
shares
Cover [Abstract]  
Document Type 10-Q
Document Quarterly Report true
Document Period End Date Sep. 30, 2023
Document Transition Report false
Entity File Number 001-09818
Entity Registrant Name ALLIANCEBERNSTEIN HOLDING L.P.
Entity Incorporation, State or Country Code DE
Entity Tax Identification Number 13-3434400
Entity Address, Address Line One 501 Commerce Street
Entity Address, City or Town Nashville
Entity Address, State or Province TN
Entity Address, Postal Zip Code 37203
City Area Code 615
Local Phone Number 622-0000
Entity Current Reporting Status Yes
Entity Interactive Data Current Yes
Entity Filer Category Large Accelerated Filer
Entity Small Business false
Entity Emerging Growth Company false
Entity Shell Company false
Title of 12(b) Security Units Rep. Assignments of Beneficial Ownership of LP Interests in AB Holding ("Units")
Trading Symbol AB
Security Exchange Name NYSE
Entity Common Stock, Shares Outstanding 111,796,873
Entity Central Index Key 0000825313
Current Fiscal Year End Date --12-31
Document Fiscal Year Focus 2023
Document Fiscal Period Focus Q3
Amendment Flag false
v3.23.3
Condensed Statements of Financial Condition - USD ($)
$ in Thousands
Sep. 30, 2023
Dec. 31, 2022
ASSETS    
Investment in AB $ 1,973,046 $ 2,074,626
Total assets 1,973,046 2,074,626
Liabilities:    
Other liabilities 552 1,623
Total liabilities 552 1,623
Commitments and contingencies (See Note 8)
Partners’ capital:    
General Partner: 100,000 general partnership units issued and outstanding 1,321 1,355
Limited partners: 111,696,873 and 113,701,097 limited partnership units issued and outstanding 2,056,961 2,160,207
AB Holding Units held by AB to fund long-term incentive compensation plans (33,658) (37,551)
Accumulated other comprehensive loss (52,130) (51,008)
Total partners’ capital 1,972,494 2,073,003
Total liabilities and partners’ capital $ 1,973,046 $ 2,074,626
v3.23.3
Condensed Statements of Financial Condition (Parenthetical) - shares
Sep. 30, 2023
Dec. 31, 2022
Statement of Financial Position [Abstract]    
General partner units issued (in shares) 100,000 100,000
General partner units outstanding (in units) 100,000 100,000
Limited partners units issued (in shares) 111,696,873 111,696,873
Limited partners units outstanding (in shares) 113,701,097 113,701,097
v3.23.3
Condensed Statements of Income - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Income Statement [Abstract]        
Equity in net income attributable to AB Unitholders $ 65,761 $ 63,905 $ 211,264 $ 233,616
Income taxes 8,770 7,589 26,278 23,231
Net income $ 56,991 $ 56,316 $ 184,986 $ 210,385
Net income per unit:        
Basic (in dollars per share) $ 0.50 $ 0.56 $ 1.63 $ 2.11
Diluted (in dollars per share) $ 0.50 $ 0.56 $ 1.63 $ 2.11
v3.23.3
Condensed Statements of Comprehensive Income - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Statement of Comprehensive Income [Abstract]        
Net income $ 56,991 $ 56,316 $ 184,986 $ 210,385
Other comprehensive income (loss):        
Foreign currency translation adjustments, before tax (5,816) (11,574) (1,580) (27,875)
Income tax (expense) benefit (85) 284 (57) 544
Foreign currency translation adjustments, net of tax (5,901) (11,290) (1,637) (27,331)
Changes in employee benefit related items:        
Amortization of prior service cost 5 (4) 10 4
Recognized actuarial gain (loss) 254 (204) 508 237
Changes in employee benefit related items 259 (208) 518 241
Income tax (expense) benefit (1) 3 (3) (4)
Employee benefit related items, net of tax 258 (205) 515 237
Other comprehensive income (loss) (5,643) (11,495) (1,122) (27,094)
Comprehensive income $ 51,348 $ 44,821 $ 183,864 $ 183,291
v3.23.3
Condensed Statements of Changes in Partners’ Capital - USD ($)
$ in Thousands
Total
AB Holding Units held by AB to fund long-term incentive compensation plans
Accumulated Other Comprehensive (Loss)
General Partner’s Capital
Limited Partners’ Capital
Balance, beginning of period at Dec. 31, 2021   $ (43,309) $ (32,705) $ 1,439 $ 1,696,199
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Net income $ 210,385     212 210,173
Cash distributions to Unitholders       (290) (288,698)
AB Holding Units retired         (114,794)
Issuance of AB Holding Units to fund long-term incentive compensation plan awards         32,452
Issuance of AB Holding Units to fund CarVal acquisition         132,839
Exercise of compensatory options to buy AB Holding Units         178
Change in AB Holding Units held by AB to fund long-term incentive compensation plans   3,145      
Foreign currency translation adjustment, net of tax (27,331)   (27,331)    
Changes in employee benefit related items, net of tax 237   237    
Balance, end of period at Sep. 30, 2022 1,569,747 (40,164) (59,799) 1,361 1,668,349
Balance, beginning of period at Jun. 30, 2022   (43,546) (48,304) 1,376 1,552,011
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Net income 56,316     56 56,260
Cash distributions to Unitholders       (71) (71,269)
AB Holding Units retired         (2,487)
Issuance of AB Holding Units to fund long-term incentive compensation plan awards         995
Issuance of AB Holding Units to fund CarVal acquisition         132,839
Exercise of compensatory options to buy AB Holding Units         0
Change in AB Holding Units held by AB to fund long-term incentive compensation plans   3,382      
Foreign currency translation adjustment, net of tax (11,290)   (11,290)    
Changes in employee benefit related items, net of tax (205)   (205)    
Balance, end of period at Sep. 30, 2022 1,569,747 (40,164) (59,799) 1,361 1,668,349
Balance, beginning of period at Dec. 31, 2022 2,073,003 (37,551) (51,008) 1,355 2,160,207
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Net income 184,986     163 184,823
Cash distributions to Unitholders       (197) (223,482)
AB Holding Units retired (72,592)       (72,592)
Issuance of AB Holding Units to fund long-term incentive compensation plan awards 8,005       8,005
Issuance of AB Holding Units to fund CarVal acquisition         0
Exercise of compensatory options to buy AB Holding Units         0
Change in AB Holding Units held by AB to fund long-term incentive compensation plans   3,893      
Foreign currency translation adjustment, net of tax (1,637)   (1,637)    
Changes in employee benefit related items, net of tax 515   515    
Balance, end of period at Sep. 30, 2023 1,972,494 (33,658) (52,130) 1,321 2,056,961
Balance, beginning of period at Jun. 30, 2023   (35,152) (46,487) 1,332 2,124,142
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Net income 56,991     51 56,940
Cash distributions to Unitholders       (62) (69,271)
AB Holding Units retired         (55,168)
Issuance of AB Holding Units to fund long-term incentive compensation plan awards         318
Issuance of AB Holding Units to fund CarVal acquisition         0
Exercise of compensatory options to buy AB Holding Units         0
Change in AB Holding Units held by AB to fund long-term incentive compensation plans   1,494      
Foreign currency translation adjustment, net of tax (5,901)   (5,901)    
Changes in employee benefit related items, net of tax 258   258    
Balance, end of period at Sep. 30, 2023 $ 1,972,494 $ (33,658) $ (52,130) $ 1,321 $ 2,056,961
v3.23.3
Condensed Statements of Cash Flows - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Cash flows from operating activities:    
Net income $ 184,986 $ 210,385
Adjustments to reconcile net income to net cash provided by operating activities:    
Equity in net income attributable to AB Unitholders (211,264) (233,616)
Cash distributions received from AB 248,529 313,438
Changes in assets and liabilities:    
(Decrease) in other liabilities (1,071) (1,531)
Net cash provided by operating activities 221,180 288,676
Cash flows from investing activities:    
Acquisition of business, net cash acquired 0 40,777
Contribution of CarVal to AB 0 (40,777)
Investments in AB with proceeds from exercise of compensatory options to buy AB Holding Units 0 (178)
Net cash used in investing activities 0 (178)
Cash flows from financing activities:    
Cash distributions to Unitholders (223,679) (288,988)
Capital contributions from AB 2,499 312
Proceeds from exercise of compensatory options to buy AB Holding Units 0 178
Net cash used in financing activities (221,180) (288,498)
Change in cash and cash equivalents 0 0
Cash and cash equivalents as of beginning of period 0 0
Cash and cash equivalents as of end of period 0 0
Non-cash investing activities:    
Fair value of assets acquired (less cash acquired of $40.8 million in 2022) 0 1,052,062
Fair value of liabilities assumed 0 300,381
Fair value of redeemable non-controlling interest assumed 0 13,191
Fair value of assets contributed to AB (less cash acquired of $40.8 million in 2022) 0 (1,052,062)
Fair value of liabilities contributed to AB 0 (300,381)
Fair value of redeemable non-controlling interest contributed to AB 0 (13,191)
Non-cash financing activities:    
Payables recorded under contingent payment arrangements 0 227,071
Equity consideration issued/to be issued in connection with acquisition 0 552,196
Payables contributed to AB under contingent payment arrangements 0 (227,071)
Equity consideration received/to be received from AB in connection with acquisition $ 0 $ (552,196)
v3.23.3
Condensed Statements of Cash Flows (Parenthetical) - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Statement of Cash Flows [Abstract]    
Acquisition of business, net cash acquired $ 0 $ 40,777
v3.23.3
Business Description, Organization and Basis of Presentation
9 Months Ended
Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Business Description, Organization and Basis of Presentation Business Description, Organization and Basis of Presentation
Business Description

AB Holding’s principal source of income and cash flow is attributable to its investment in AB limited partnership interests. The condensed financial statements and notes of AB Holding should be read in conjunction with the condensed consolidated financial statements and notes of AB included as an exhibit to this quarterly report on Form 10-Q and with AB Holding’s and AB’s audited financial statements included in AB Holding’s Form 10-K for the year ended December 31, 2022.

AB provides diversified investment management, research and related services globally to a broad range of clients. Its principal services include:

Institutional Services – servicing its 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 its 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 Services – servicing its 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.

AB also provides distribution, shareholder servicing, transfer agency services and administrative services to certain of the mutual funds it sponsors.

AB’s high-quality, in-depth research is the foundation of its asset management and private wealth management businesses. AB’s research disciplines include economic, fundamental equity, fixed income and quantitative research. In addition, AB has expertise in multi-asset strategies, wealth management, environmental, social and corporate governance ("ESG"), and alternative investments.

AB provides 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;

Actively-managed alternative investments, including hedge funds, fund of funds and direct assets (e.g., direct lending, real estate and private equity);
Portfolios with Purpose, including actively managed, impact-focused and Responsible+ (climate-conscious, ESG leaders, change catalysts) equity, fixed income and multi-asset strategies that address the evolving objectives of our clients to invest their capital with purpose while pursuing strong investment returns;

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

Passive management, including index, ESG index and enhanced index strategies.

Organization

As of September 30, 2023, EQH owned approximately 3.6% of the issued and outstanding units representing assignments of beneficial ownership of limited partnership interests in AB Holding (“AB Holding Units”). AllianceBernstein Corporation (an indirect wholly-owned subsidiary of EQH, “General Partner”) is the general partner of both AB Holding and AB. AllianceBernstein Corporation owns 100,000 general partnership units in AB Holding and a 1.0% general partnership interest in AB.

As of September 30, 2023, the ownership structure of AB, expressed as a percentage of general and limited partnership interests, was as follows:
EQH and its subsidiaries60.3 %
AB Holding39.0 
Unaffiliated holders0.7 
100.0 %

Including both the general partnership and limited partnership interests in AB Holding and AB, EQH and its subsidiaries had an approximate 61.7% economic interest in AB as of September 30, 2023.

Basis of Presentation

The interim condensed 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 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 financial statements and the reported amounts of revenues and expenses during the interim reporting periods. Actual results could differ from those estimates. The condensed statement of financial condition as of December 31, 2022 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 SEC.

AB Holding records its investment in AB using the equity method of accounting. AB Holding’s investment is increased to reflect its proportionate share of income of AB and decreased to reflect its proportionate share of losses of AB and cash distributions made by AB to its Unitholders. In addition, AB Holding's investment is adjusted to reflect its proportionate share of certain capital transactions of AB.

Subsequent Events

We have evaluated subsequent events through the date that these financial statements were filed with the SEC and did not identify any subsequent events that would require disclosure in these financial statements.
v3.23.3
Cash Distributions
9 Months Ended
Sep. 30, 2023
Equity [Abstract]  
Cash Distributions Cash Distributions AB Holding is required to distribute all of its Available Cash Flow, as defined in the Amended and Restated Agreement of Limited Partnership of AB Holding (“AB Holding Partnership Agreement”), to its Unitholders pro rata in accordance with their percentage interests in AB Holding. Available Cash Flow is defined as the cash distributions AB Holding receives from AB minus such amounts as the General Partner determines, in its sole discretion, should be retained by AB Holding for use in its business (such as the payment of taxes) or plus such amounts as the General Partner determines, in its sole discretion, should be released from previously retained cash flow.On October 26, 2023, the General Partner declared a distribution of $0.65 per unit, representing a distribution of Available Cash Flow for the three months ended September 30, 2023. Each general partnership unit in AB Holding is entitled to receive distributions equal to those received by each AB Holding Unit. The distribution is payable on November 22, 2023 to holders of record at the close of business on November 6, 2023.
v3.23.3
Long-term Incentive Compensation Plans
9 Months Ended
Sep. 30, 2023
Share-Based Payment Arrangement [Abstract]  
Long-term Incentive Compensation Plans Long-term Incentive Compensation Plans
AB maintains several unfunded, non-qualified long-term incentive compensation plans, under which the company grants awards of restricted AB Holding Units to its employees and members of the Board of Directors, who are not employed by AB or by any of AB’s affiliates (“Eligible Directors”).

AB funds its 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 AB Holding Partnership Agreement, when AB purchases newly-issued AB Holding Units from AB Holding, AB Holding is 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.

Repurchases and retention of AB Holding Units for the three and nine months ended September 30, 2023 and 2022 consisted of the following:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(in millions)
Total amount of AB Holding Units Purchased/Retained (1)
1.8 — 2.3 2.6 
Total Cash Paid for AB Holding Units Purchased/Retained (1)
$56.9 $1.0 $75.7 $107.7 
Open Market Purchases of AB Holding Units Purchased (1)
1.8 — 1.8 2.3 
Total Cash Paid for Open Market Purchases of AB Holding Units (1)
$56.9 $— $56.9 $92.7 
(1) Purchased on a trade date basis. The 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 awards.
Each quarter, AB considers 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 selected by AB has the authority under the terms and limitations specified in the plan to repurchase AB Holding Units on AB’s 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 plan adopted during the third quarter of 2023 expired at the close of business on October 25, 2023. AB may adopt plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under its incentive compensation award program and for other corporate purposes.

During the first nine months of 2023 and 2022, AB awarded to employees and Eligible Directors 0.4 million and 0.8 million restricted AB Holding Unit awards, respectively. AB used AB Holding Units repurchased during the applicable period and newly-issued AB Holding Units to fund these restricted AB Holding Unit awards.

During the first nine months of 2023 and 2022, AB Holding issued zero and 5,774 AB Holding Units, respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of zero and $0.1 million, respectively, received from award recipients as payment in cash for the exercise price to purchase the equivalent number of newly-issued AB Units.
v3.23.3
Net Income per Unit
9 Months Ended
Sep. 30, 2023
Earnings Per Unit [Abstract]  
Net Income per Unit Net Income per Unit
Basic net income per unit is derived by dividing net income by the basic weighted average number of units outstanding for each period. Diluted net income per unit is derived by adjusting net income for the assumed dilutive effect of compensatory options (“Net income – diluted”) and dividing by the diluted weighted average number of units outstanding for each period.

 Three Months Ended September 30,Nine Months Ended
September 30,
 2023202220232022
 (in thousands, except per unit amounts)
Net income – basic$56,991 $56,316 $184,986 $210,385 
Additional allocation of equity in net income attributable to AB resulting from assumed dilutive effect of compensatory options
— — — 
Net income – diluted$56,991 $56,316 $184,986 $210,387 
Weighted average units outstanding – basic113,185 100,466 113,407 99,494 
Dilutive effect of compensatory options— — — 
Weighted average units outstanding – diluted113,185 100,466 113,407 99,496 
Basic net income per unit$0.50 $0.56 $1.63 $2.11 
Diluted net income per unit$0.50 $0.56 $1.63 $2.11 

There were no anti-dilutive options excluded from diluted net income in the three and nine months ended September 30, 2023 or 2022.
v3.23.3
Investment in AB
9 Months Ended
Sep. 30, 2023
Equity Method Investments and Joint Ventures [Abstract]  
Investment in AB Investment in AB
Changes in AB Holding’s investment in AB during the nine-month period ended September 30, 2023 are as follows (in thousands):

Investment in AB as of December 31, 2022$2,074,626 
Equity in net income attributable to AB Unitholders211,264 
Changes in accumulated other comprehensive income(1,122)
Cash distributions received from AB(248,529)
Capital contributions (from) AB(2,499)
AB Holding Units retired(72,592)
AB Holding Units issued to fund long-term incentive compensation plans8,005 
Change in AB Holding Units held by AB for long-term incentive compensation plans3,893 
Investment in AB as of September 30, 2023$1,973,046 
v3.23.3
Units Outstanding
9 Months Ended
Sep. 30, 2023
Equity [Abstract]  
Units Outstanding Units Outstanding
Changes in AB Holding Units outstanding during the nine-month period ended September 30, 2023 are as follows:

Outstanding as of December 31, 2022113,801,097 
Units issued226,691 
Units retired(2,230,915)
Outstanding as of September 30, 2023111,796,873 
v3.23.3
Income Taxes
9 Months Ended
Sep. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
AB Holding is a publicly-traded partnership (“PTP”) for federal tax purposes and, accordingly, is not subject to federal or state corporate income taxes. However, AB Holding is subject to the 4.0% New York City unincorporated business tax (“UBT”), net of credits for UBT paid by AB, and to a 3.5% federal tax on partnership gross income from the active conduct of a trade or business. AB Holding’s partnership gross income is derived from its interest in AB.

AB Holding’s federal income tax is computed by multiplying certain AB qualifying revenues (primarily U.S. investment advisory fees, research payments and brokerage commissions) by AB Holding’s ownership interest in AB, multiplied by the 3.5% tax rate. AB Holding Units in AB’s consolidated rabbi trust are not considered outstanding for purposes of calculating AB Holding’s ownership interest in AB.
Three Months Ended September 30,Nine Months Ended
September 30,
20232022% Change20232022% Change
(in thousands)
Net income attributable to AB Unitholders$167,404 $175,180 (4.4)%$537,292 $644,676 (16.7)%
Multiplied by: weighted average equity ownership interest39.3 %36.5 %39.3 %36.2 %
Equity in net income attributable to AB Unitholders$65,761 $63,905 2.9 $211,264 $233,616 (9.6)
AB qualifying revenues$689,323 $678,682 1.6 $2,059,866 $2,089,206 (1.4)
Multiplied by: weighted average equity ownership interest for calculating tax
35.6 %31.3 %35.7 %31.1 %
Multiplied by: federal tax3.5 %3.5 %3.5 %3.5 %
Federal income taxes8,593 7,442 25,713 22,748 
State income taxes177 147 565 483 
Total income taxes$8,770 $7,589 15.6 $26,278 $23,231 13.1 
Effective tax rate13.3 %11.9 %12.4 %9.9 %

In order to preserve AB Holding’s status as a PTP for federal income tax purposes, management ensures that AB Holding does not directly or indirectly (through AB) engage in a substantial new line of business. If AB Holding were to lose its status as a PTP, it would be subject to corporate income tax, which would reduce materially AB Holding’s net income and its quarterly distributions to AB Holding Unitholders.
v3.23.3
Commitments and Contingencies
9 Months Ended
Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Legal and regulatory matters described below pertain to AB and are included here due to their potential significance to AB Holding’s investment in AB.

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 are able to 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.

On December 14, 2022, four individual participants in the Profit Sharing Plan for Employees of AllianceBernstein L.P., (the "Plan") filed a class action complaint (the “Complaint”) in the U.S. District Court for the Southern District of New York against AB, current and former members of the Compensation and Workplace Practices Committee of the Board, and the Investment and Administrative Committees under the Plan. Plaintiffs, who seek to represent a class of all participants in
the Plan from December 14, 2016 to the present, allege that defendants violated their fiduciary duties and engaged in prohibited transactions under the Employee Retirement Income Security Act of 1974, as amended ("ERISA") by including proprietary collective investment trusts as investment options offered under the Plan. The Complaint seeks unspecified damages, disgorgement and other equitable relief. AB is prepared to defend itself vigorously against these claims. While the ultimate outcome of this matter is currently not determinable given the matter remains in its early stages, we do not believe this litigation will have a material adverse effect on our results of operations, financial condition or liquidity.

AB may be involved in various other matters, including regulatory inquiries, administrative proceedings and litigation, some of which may allege significant damages. It is reasonably possible that AB could incur losses pertaining to these other matters, but management 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 the 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 operations, financial condition or liquidity in any future reporting period.
v3.23.3
Pay vs Performance Disclosure - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Pay vs Performance Disclosure        
Net income $ 56,991 $ 56,316 $ 184,986 $ 210,385
v3.23.3
Insider Trading Arrangements
3 Months Ended
Sep. 30, 2023
Trading Arrangements, by Individual  
Rule 10b5-1 Arrangement Adopted false
Non-Rule 10b5-1 Arrangement Adopted false
Rule 10b5-1 Arrangement Terminated false
Non-Rule 10b5-1 Arrangement Terminated false
v3.23.3
Business Description, Organization and Basis of Presentation (Policies)
9 Months Ended
Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation
Basis of Presentation

The interim condensed 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 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 financial statements and the reported amounts of revenues and expenses during the interim reporting periods. Actual results could differ from those estimates. The condensed statement of financial condition as of December 31, 2022 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 SEC.

AB Holding records its investment in AB using the equity method of accounting. AB Holding’s investment is increased to reflect its proportionate share of income of AB and decreased to reflect its proportionate share of losses of AB and cash distributions made by AB to its Unitholders. In addition, AB Holding's investment is adjusted to reflect its proportionate share of certain capital transactions of AB.
Subsequent Events
Subsequent Events

We have evaluated subsequent events through the date that these financial statements were filed with the SEC and did not identify any subsequent events that would require disclosure in these financial statements.
v3.23.3
Business Description, Organization and Basis of Presentation (Tables)
9 Months Ended
Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Summary of Ownership Structure of AllianceBernstein
As of September 30, 2023, the ownership structure of AB, expressed as a percentage of general and limited partnership interests, was as follows:
EQH and its subsidiaries60.3 %
AB Holding39.0 
Unaffiliated holders0.7 
100.0 %
v3.23.3
Long-term Incentive Compensation Plans (Tables)
9 Months Ended
Sep. 30, 2023
Share-Based Payment Arrangement [Abstract]  
Schedule of Unit Award Repurchase Activity
Repurchases and retention of AB Holding Units for the three and nine months ended September 30, 2023 and 2022 consisted of the following:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(in millions)
Total amount of AB Holding Units Purchased/Retained (1)
1.8 — 2.3 2.6 
Total Cash Paid for AB Holding Units Purchased/Retained (1)
$56.9 $1.0 $75.7 $107.7 
Open Market Purchases of AB Holding Units Purchased (1)
1.8 — 1.8 2.3 
Total Cash Paid for Open Market Purchases of AB Holding Units (1)
$56.9 $— $56.9 $92.7 
(1) Purchased on a trade date basis. The 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 awards.
v3.23.3
Net Income per Unit (Tables)
9 Months Ended
Sep. 30, 2023
Earnings Per Unit [Abstract]  
Schedule of Earnings Per Unit, Basic and Diluted
Basic net income per unit is derived by dividing net income by the basic weighted average number of units outstanding for each period. Diluted net income per unit is derived by adjusting net income for the assumed dilutive effect of compensatory options (“Net income – diluted”) and dividing by the diluted weighted average number of units outstanding for each period.

 Three Months Ended September 30,Nine Months Ended
September 30,
 2023202220232022
 (in thousands, except per unit amounts)
Net income – basic$56,991 $56,316 $184,986 $210,385 
Additional allocation of equity in net income attributable to AB resulting from assumed dilutive effect of compensatory options
— — — 
Net income – diluted$56,991 $56,316 $184,986 $210,387 
Weighted average units outstanding – basic113,185 100,466 113,407 99,494 
Dilutive effect of compensatory options— — — 
Weighted average units outstanding – diluted113,185 100,466 113,407 99,496 
Basic net income per unit$0.50 $0.56 $1.63 $2.11 
Diluted net income per unit$0.50 $0.56 $1.63 $2.11 
v3.23.3
Investment in AB (Tables)
9 Months Ended
Sep. 30, 2023
Equity Method Investments and Joint Ventures [Abstract]  
Summary of Changes in Investment in AB
Changes in AB Holding’s investment in AB during the nine-month period ended September 30, 2023 are as follows (in thousands):

Investment in AB as of December 31, 2022$2,074,626 
Equity in net income attributable to AB Unitholders211,264 
Changes in accumulated other comprehensive income(1,122)
Cash distributions received from AB(248,529)
Capital contributions (from) AB(2,499)
AB Holding Units retired(72,592)
AB Holding Units issued to fund long-term incentive compensation plans8,005 
Change in AB Holding Units held by AB for long-term incentive compensation plans3,893 
Investment in AB as of September 30, 2023$1,973,046 
v3.23.3
Units Outstanding (Tables)
9 Months Ended
Sep. 30, 2023
Equity [Abstract]  
Changes in Holding Units Outstanding
Changes in AB Holding Units outstanding during the nine-month period ended September 30, 2023 are as follows:

Outstanding as of December 31, 2022113,801,097 
Units issued226,691 
Units retired(2,230,915)
Outstanding as of September 30, 2023111,796,873 
v3.23.3
Income Taxes (Tables)
9 Months Ended
Sep. 30, 2023
Income Tax Disclosure [Abstract]  
Computation of Effective Income Tax Rate and Changes in Components of Income Tax
Three Months Ended September 30,Nine Months Ended
September 30,
20232022% Change20232022% Change
(in thousands)
Net income attributable to AB Unitholders$167,404 $175,180 (4.4)%$537,292 $644,676 (16.7)%
Multiplied by: weighted average equity ownership interest39.3 %36.5 %39.3 %36.2 %
Equity in net income attributable to AB Unitholders$65,761 $63,905 2.9 $211,264 $233,616 (9.6)
AB qualifying revenues$689,323 $678,682 1.6 $2,059,866 $2,089,206 (1.4)
Multiplied by: weighted average equity ownership interest for calculating tax
35.6 %31.3 %35.7 %31.1 %
Multiplied by: federal tax3.5 %3.5 %3.5 %3.5 %
Federal income taxes8,593 7,442 25,713 22,748 
State income taxes177 147 565 483 
Total income taxes$8,770 $7,589 15.6 $26,278 $23,231 13.1 
Effective tax rate13.3 %11.9 %12.4 %9.9 %
v3.23.3
Business Description, Organization and Basis of Presentation (Details) - shares
9 Months Ended
Sep. 30, 2023
Dec. 31, 2022
Ownership structure of AB Holding    
Units outstanding (in shares) 100,000 100,000
AB Holding | EQH    
Ownership structure of AB Holding    
General partnership interest (percent) 3.60%  
AB Holding | AllianceBernstein Corporation    
Ownership structure of AB Holding    
General partnership interest (percent) 1.00%  
Units outstanding (in shares) 100,000  
AB | EQH and its subsidiaries    
Ownership structure of AB Holding    
General partnership interest (percent) 61.70%  
v3.23.3
Business Description, Organization and Basis of Presentation - Limited Partnership Interests in AB Holdings (Details) - AllianceBernstein Corporation
9 Months Ended
Sep. 30, 2023
EQH and its subsidiaries  
Distribution Made to Limited Partner [Line Items]  
Limited partners or members ownership interest in Company (percent) 60.30%
AB Holding  
Distribution Made to Limited Partner [Line Items]  
Limited partners or members ownership interest in Company (percent) 39.00%
Unaffiliated holders  
Distribution Made to Limited Partner [Line Items]  
Limited partners or members ownership interest in Company (percent) 0.70%
AB  
Distribution Made to Limited Partner [Line Items]  
Limited partners or members ownership interest in Company (percent) 100.00%
v3.23.3
Cash Distributions (Details)
Oct. 26, 2023
$ / shares
Subsequent Event  
Subsequent Event [Line Items]  
Subsequent cash distribution, distribution declared (in dollars per unit) $ 0.65
v3.23.3
Long-term Incentive Compensation Plans - Unit Purchase Activity (Details) - USD ($)
shares in Millions, $ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Share-Based Payment Arrangement [Abstract]        
Total amount of AB Holding Units Purchased/Retained (in shares) 1.8 0.0 2.3 2.6
Total Cash Paid for AB Holding Units Purchased/Retained $ 56.9 $ 1.0 $ 75.7 $ 107.7
Open Market Purchases of AB Holding Units Purchased (in shares) 1.8 0.0 1.8 2.3
Total Cash Paid for Open Market Purchases of AB Holding Units $ 56.9 $ 0.0 $ 56.9 $ 92.7
v3.23.3
Long-term Incentive Compensation Plans (Details) - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Proceeds from exercise of compensatory options to buy AB Holding Units $ 0 $ 178
AB Holding Units    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Units issued upon options exercised (in shares) 0 5,774
Proceeds from exercise of compensatory options to buy AB Holding Units $ 0 $ 100
Employees and Eligible Directors | AB Holding Units    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Restricted AB Holding Unit awards granted to employees and Eligible Directors (in shares) 400,000 800,000
v3.23.3
Net Income per Unit (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Earnings Per Unit [Abstract]        
Net income – basic $ 56,991 $ 56,316 $ 184,986 $ 210,385
Additional allocation of equity in net income attributable to AB resulting from assumed dilutive effect of compensatory options 0 0 0 2
Net income – diluted $ 56,991 $ 56,316 $ 184,986 $ 210,387
Weighted average units outstanding – basic (in shares) 113,185,000 100,466,000 113,407,000 99,494,000
Dilutive effect of compensatory options (in shares) 0 0 0 2,000
Weighted average units outstanding – diluted (in shares) 113,185,000 100,466,000 113,407,000 99,496,000
Basic net income per unit (in dollars per share) $ 0.50 $ 0.56 $ 1.63 $ 2.11
Diluted net income per unit (in dollars per share) $ 0.50 $ 0.56 $ 1.63 $ 2.11
Anti-dilutive units excluded from diluted net income (in shares) 0 0 0 0
v3.23.3
Investment in AB (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Change in Equity Method Investment [Roll Forward]        
Beginning balance     $ 2,074,626  
Equity in net income attributable to AB Unitholders $ 65,761 $ 63,905 211,264 $ 233,616
Changes in accumulated other comprehensive income (5,643) $ (11,495) (1,122) (27,094)
Cash distributions received from AB     (248,529) $ (313,438)
Capital contributions (from) AB     (2,499)  
AB Holding Units retired     (72,592)  
AB Holding Units issued to fund long-term incentive compensation plans     8,005  
Change in AB Holding Units held by AB for long-term incentive compensation plans     3,893  
Ending balance $ 1,973,046   $ 1,973,046  
v3.23.3
Units Outstanding (Details)
9 Months Ended
Sep. 30, 2023
shares
Units Outstanding  
Outstanding, beginning balance (in shares) 113,801,097
Units issued (in shares) 226,691
Units retired (in shares) (2,230,915)
Outstanding, ending balance (in shares) 111,796,873
v3.23.3
Income Taxes (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Income Tax Disclosure [Abstract]        
New York City unincorporated business tax (percent)     4.00%  
Federal tax rate on partnership gross income (percent)     3.50%  
Income Tax Contingency [Line Items]        
Multiplied by: weighted average equity ownership interest (percent) 39.30% 36.50% 39.30% 36.20%
Equity in net income attributable to AB Unitholders $ 65,761 $ 63,905 $ 211,264 $ 233,616
Computation of income tax [Abstract]        
AB qualifying revenues $ 689,323 $ 678,682 $ 2,059,866 $ 2,089,206
Multiplied by: weighted average equity ownership interest for calculating tax (percent) 35.60% 31.30% 35.70% 31.10%
Multiplied by: federal tax (percent) 3.50% 3.50% 3.50% 3.50%
Federal income taxes $ 8,593 $ 7,442 $ 25,713 $ 22,748
State income taxes 177 147 565 483
Total income taxes $ 8,770 $ 7,589 $ 26,278 $ 23,231
Effective tax rate (percent) 13.30% 11.90% 12.40% 9.90%
Changes in components for calculation of income tax [Abstract]        
Change in net income attributable to AB Unitholders (percent) (4.40%)   (16.70%)  
Change in equity in net income attributable to AB Unitholders (percent) 2.90%   (9.60%)  
Change in AB qualifying revenues (percent) 1.60%   (1.40%)  
Change in income taxes (percent) 15.60%   13.10%  
Variable Interest Entity, Primary Beneficiary        
Income Tax Contingency [Line Items]        
Net income attributable to AB Unitholders $ 167,404 $ 175,180 $ 537,292 $ 644,676
v3.23.3
Commitments and Contingencies (Details)
Dec. 14, 2022
plaintiff
Commitments and Contingencies Disclosure [Abstract]  
Number of participants that filed a class action complaint 4

AllianceBernstein (NYSE:AB)
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