Financial services company Voya Financial (NYSE: VOYA) met Wall Street’s revenue expectations in Q2 CY2026, but sales were flat year on year at $1.88 billion. Its non-GAAP profit of $1.51 per share was 23.3% below analysts’ consensus estimates.

Is now the time to buy VOYA? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Voya Financial’s second quarter results reflected mixed performance, with revenue matching Wall Street’s expectations but non-GAAP earnings per share coming in well below consensus. Management attributed the earnings shortfall to weaker-than-expected alternative investment returns, particularly from private equity, and the impact of severance costs tied to expense reduction initiatives. CEO Heather Hamilton Lavallee noted, “Strong underlying results were affected by lower alternative investment performance, and by severance costs we incurred to reduce our expense base.” Despite these headwinds, underlying business momentum in Retirement and Investment Management segments remained positive, and commercial execution was highlighted as a relative strength.

Looking forward, Voya’s outlook is anchored in improving efficiency and disciplined expense management, with the company expecting the benefits of recent cost actions to materialize in the second half of the year. CFO Michael Robert Katz emphasized that the expense reductions taken this quarter are expected to be fully offset by year-end, supporting higher earnings and cash generation. Management highlighted ongoing investments in wealth management capabilities and margin recovery in Employee Benefits as additional drivers of future growth. Lavallee stated, “The expense actions we took in the second quarter alongside a more constructive macro environment provide a tailwind for increased earnings in the second half.”

Key Insights from Management’s Remarks

Management attributed the second quarter’s profit miss to underperformance in alternative investments and upfront severance costs, while underlying business trends in Retirement and Investment Management remained solid.

• Alternative investment drag: Below-expected performance in private equity and alternative investments, which are reported on a one-quarter lag, weighed significantly on profitability this quarter. Management explained this was due to both industry-wide lower realizations and volatility in broader equity markets.

• Expense reduction actions: The company incurred severance costs as part of a broader effort to reduce ongoing expenses and improve efficiency. These actions are expected to result in immediate payback and support improved margins by year end.

• Retirement segment stability: Despite the earnings miss, Retirement delivered robust net inflows, high client retention, and large plan implementations, reinforcing Voya’s leadership in the defined contribution market. Over $8 billion of net inflows and the completion of the OneAmerica integration were highlighted as key achievements.

• Wealth management expansion: Voya reported 12% year-over-year revenue growth in its wealth management business, with assets under management in this segment up 60%. Management sees this as a significant opportunity to deepen participant relationships and drive long-term fee-based revenue.

• Employee benefits margin improvement: In the Employee Benefits segment, actions taken to improve underwriting, pricing, and risk selection are stabilizing loss ratios and supporting the restoration of margins to historical levels, especially in stop loss and voluntary lines.

Drivers of Future Performance

Management’s outlook for the rest of the year centers on disciplined cost control, margin recovery in Employee Benefits, and expanded wealth management offerings, with a focus on sustainable growth.

• Expense discipline and operating leverage: Management expects recent expense actions—including severance and operational efficiencies—to deliver a six-month payback and support higher earnings and cash generation for the remainder of the year and into 2027. These measures are positioned as resetting the baseline for improved operating leverage.

• Margin recovery in Employee Benefits: The company anticipates continued margin improvement in Employee Benefits, particularly within the stop loss business, citing disciplined pricing and underwriting. Management believes these actions will return margins to target levels by 2027, despite industry-wide headwinds.

• Wealth management and retirement pipeline: Voya is focused on growing its wealth management platform and capitalizing on a robust pipeline of retirement plan implementations. The company highlighted strong adviser growth, increased client demand for workplace-based financial guidance, and the potential for further fee-based revenue growth as key long-term drivers.

Catalysts in Upcoming Quarters

In the coming quarters, our team will be focused on (1) evidence that expense reductions are translating into improved margins and cash generation, (2) continued stabilization and growth in Employee Benefits, particularly stop loss and voluntary lines, and (3) sustained momentum in wealth management and retirement plan inflows, especially as the OneAmerica integration matures. Developments in alternative investment returns and the impact of cost actions on profitability will also be key areas to watch.

Voya Financial currently trades at $99.18, down from $100.68 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).

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