Sprott (SII) Q3 2026 earnings review
Sprott raises its dividend 25%, but October assets drop 9%
Sprott earned higher fees from last year's metal rally, but clients pulled money out and October prices dropped. Management fees at the precious metals and critical materials fund manager rose 40% from a year ago to $71 million, while net income climbed 67% to $22 million. However, clients withdrew a net $207 million during the third quarter, and chief executive Whitney George reported that assets under management fell 9% in October to $52.1 billion.
| Management fees | $70.8M +40% from a year ago (-7% from Q2) |
|---|---|
| Assets under management (Oct 30) | $52.1B -9% from Sep 30 ($57.3B) |
| Net client flows | -$207M second straight quarter of outflows |
| Quarterly dividend outlook | Raised 25% to $0.50 per share |
⚖️ Verdict: 🔴 Bearish
The story got worse because a post-quarter selloff in gold and silver cut the asset base that generates fourth-quarter fees, while overall client flows stayed negative for a second straight quarter. By our math, October's asset level points to fourth-quarter management fees falling about 11% from the third quarter. On the positive side, a debt-free balance sheet with $202 million in cash let the board raise the quarterly dividend by 25% and spend over $20 million on share buybacks through October.
The question now is whether demand for critical materials ETFs—such as uranium, copper and rare earths—can grow fast enough to offset withdrawals and price swings in the much larger gold and silver trusts. Either critical materials inflows accelerate and stabilize total assets, or precious metals deleveraging pulls fourth-quarter fees and margins down with it. Fourth-quarter net flows and average assets under management in February's annual report will tell.
🐂 Bull Case
Exchange-Listed Scale Lifts Operating Margins
Sprott earns most of its money from exchange-listed products, which are physical metal trusts and exchange-traded funds (ETFs) that trade on stock markets. Because running these funds costs almost the same whether they hold $30 billion or $50 billion, rising assets push profit margins up. In the third quarter, average assets under management (AUM) rose 39% from a year ago to $58.8 billion, lifting management fees 40% to $70.8 million.
- Adjusted EBITDA (operating profit excluding one-offs and stock pay): $46.0 million, up 44% from a year ago
- Adjusted EBITDA margin: 69% of net revenue, up 4 percentage points from 65% a year ago
- Net compensation (base pay and bonuses): 33% of net revenue, down 6 percentage points from 39% a year ago
- Active ETFs (GBUG and METL): combined assets passed $250 million
Exchange-listed products generated an 84% Adjusted EBITDA margin this quarter. That scale absorbed a 27% rise in selling, general and administrative costs, which reached $5.7 million on higher marketing and professional fees. Still, sequential numbers show how fast this reverses: average AUM fell 8% from the second quarter, so Adjusted EBITDA dropped 9% from $50.8 million.
What to watch: the net compensation ratio in the fourth quarter. If October's lower asset base pushes employee pay back above 35% of net revenue, operating leverage is working in reverse.
Cash Pile Fuels a 25% Dividend Increase
With zero debt on its credit line and $202.1 million in cash, the Toronto-based asset manager is returning more cash to owners. Chief executive Whitney George said that "on November 3, 2026 our board of directors approved a 25% increase to our regular quarterly dividend", lifting the payout from $0.40 to $0.50 per share.
Sprott also disclosed the size of its share buybacks after leaving the figure out last quarter. The firm spent $10.0 million to cancel 84,056 shares during the first nine months of 2026, and George wrote that cumulative buybacks passed $20 million through October. That implies roughly $10 million of repurchases in October alone as metal prices fell.
What to watch: fourth-quarter share count in the annual report. It will show whether October's $10 million buyback meaningfully reduced diluted shares or merely offset employee stock grants.
🐻 Bear Case
October Metal Selloff Cuts the Fee Base
"Stronger precious metals and critical materials prices contributed to market value appreciation across most of our fund products during the quarter," chief executive Whitney George said. Market gains added $2.0 billion to assets under management in the third quarter, lifting the September 30 total 3% from June to $57.3 billion.
That quarter-end bounce already reversed. In September, rising US bond yields pushed gold down 6.3% and silver down 9.2%, and the selling worsened after the quarter closed. By October 30, Sprott's assets under management dropped 9% to $52.1 billion, with George warning of "downside pressure likely to persist until positioning is sufficiently reduced and liquidity conditions stabilize".
Because Sprott charges a percentage of daily fund assets, October's $52.1 billion level sits 11% below the third quarter's $58.8 billion average. By our math, if assets stay near $52.1 billion, fourth-quarter management fees will fall to about $63 million, down 11% from this quarter's $70.8 million.
What to watch: fourth-quarter average assets under management in February's annual report. An average near or below $52 billion would confirm a second straight quarterly drop in management fees.
Precious Metals Outflows Outweigh Critical Materials Inflows
Sprott wants its critical materials funds—covering uranium, copper and rare earths—to bring in steady client money when gold and silver cool off. Critical materials ETFs brought in $236 million of net new money this quarter and $1.6 billion over the first nine months, helped by the April launch of the Sprott Rare Earths Ex-China ETF (REXC).
- Total net redemptions in Q3: $207 million, following $377 million of net redemptions in Q2
- Physical Silver Trust net redemptions: $542 million in Q3
- Physical Gold and Silver Trust net redemptions: $208 million in Q3 and $1.01 billion year-to-date
- Physical Uranium Trust net inflows: $0 in Q3, down from $703 million in the first half
Those critical materials inflows were not enough because investors pulled $399 million from precious metals trusts and the Physical Uranium Trust raised no new cash at all. As a result, Sprott suffered a second straight quarter of overall client withdrawals.
What to watch: fourth-quarter net flows across physical trusts. A third straight quarter of net redemptions would show that critical materials ETFs cannot offset profit-taking and structural withdrawals from the older gold and silver trusts.
Cash-Settled Stock Plan Still Distorts Expenses
Two standing drags on reported earnings remained in place this quarter: Sprott's cash-settled employee stock plan and its shrinking Private Strategies lending division. In 2025, Sprott switched employee stock grants to cash-settled restricted stock units (RSUs), which means the firm pays employees in cash when the awards vest and must revalue the unpaid liability every quarter.
Although Sprott issued 71% fewer RSUs this year, stock-based compensation still cost $16.5 million in the third quarter—22.0% of total revenue, down 12.4 percentage points from a year ago but more than triple the second quarter's $5.0 million charge. Sprott excludes this $16.5 million from Adjusted EBITDA even though it is paid in cash and leaves a $71.6 million liability on the balance sheet. Meanwhile, Private Strategies net revenue fell 17.3% from a year ago to $4.0 million as average assets slipped to $2.0 billion, with George noting that demand is "expected to support higher capital deployment in 2027 and beyond".
What to watch: the stock-based compensation liability at year-end, now at $71.6 million. How much cash leaves the balance sheet when the next tranche vests in early 2027 will show the true cash cost of employee pay.
💲 Other KPIs
Net commissions—fees Sprott earns for buying and selling physical metals when its trusts issue new units—dropped 80.4% from $1.69 million a year ago and 55.2% from $0.74 million last quarter. The decline happened because the Physical Uranium Trust issued no new units during the third quarter, after raising $703 million in the first half.
Cash on the balance sheet rose 63.8% from $123.4 million at the end of 2025 and 6.1% from $190.5 million in June. Strong operating cash flow of $123.9 million over the first nine months—helped by collecting $38.1 million of performance fees receivable from earlier quarters—built the cash reserve and lifted interest income 20.2% to $1.9 million.
🔮 Guidance
Raised. Sprott increased its quarterly cash payout by 25%, or $0.10 per share, starting with the payment due December 1, 2026. This follows a 33% dividend increase in the third quarter of 2025 (from $0.30 to $0.40). By our math, the new rate requires about $51.4 million of cash per year across 25.7 million shares.
❓ Key Questions
Did October's $5.2 billion asset drop include heavy client withdrawals?
Assets under management fell 9% in October to $52.1 billion during a gold and silver selloff. Management did not split that drop between metal price declines and client redemptions, which determines whether the fee base is shrinking permanently.
What stops the $1 billion drain from the Gold and Silver Trust?
Clients pulled another $208 million from the Physical Gold and Silver Trust in Q3, bringing nine-month withdrawals to $1.01 billion. Management has not said whether it will restructure the fund or lower its 0.40% fee rate.
Will Private Strategies crystallize any performance fees over the next two quarters?
Sprott recorded $38.1 million of performance and carried interest fees in Q4 2025 and $52.0 million in Q1 2026, versus $0.1 million this quarter. Without new payouts, total revenue will show steep year-over-year drops over the next six months.
How much of the $71.6 million stock-pay liability vests in cash next quarter?
Sprott carries $71.6 million of cash-settled stock compensation liabilities on its balance sheet. Because the company excludes these charges from Adjusted EBITDA, investors need the actual cash payout schedule for early 2027 to judge free cash flow.