Dear Fellow Shareholders,
In 2018, Artisan Partners generated revenues of $828.6 million and record cash for our shareholders, as a result of maintaining an attractive operating margin and the benefits of lower corporate income tax rates. Revenues increased 4% compared to 2017, due to higher average assets under management (AUM). Our adjusted operating margin was 36.8%, down slightly from 37.6% in 2017. Adjusted net income per adjusted share was $2.94, up 22% from $2.41 in 2017. (GAAP earnings per share was $2.84 in 2018.) We paid cash dividends of $3.39 per share of Class A common stock with respect to 2018, the most dividends declared with respect to a calendar year in our history.
While our financial results were strong in 2018, our AUM ended the year at $96.2 billion, down 17% for the year, as a result of the sharp decline in global equity markets in the fourth quarter of 2018 and $7.4 billion of net client cash outflows during the year. Two-thirds of the net client cash outflows came in the fourth quarter, in part from tax loss selling and risk-off client redemptions. In addition, we continued to experience outflows in our domestic mid cap strategies and international growth strategy.
We made a number of strategic capital investments in 2018 which continue to differentiate our firm. Each year, we re-invest in our existing investment talent through equity grants. Approximately 90% of our total equity awards are granted to investment teams, a reflection of our investment-centric business model. Late in the year, Rezo Kanovich joined us to manage the Non-U.S. Small-Mid Growth strategy. And over the course of the year, several of our investment teams relocated to new office space dedicated to their autonomous investment cultures. We also executed on multiple technology projects to further support investment decision-making, distribution capabilities and operational efficiencies. These investments, along with investments we have made over the last several years, have created significant additional capacity for growth over time and have strengthened the long-term economic alignment of our investment teams.
Our financial model remains transparent, predictable and adaptable to global market volatility. We derive essentially all of our revenues from investment management fees, nearly all of which are based on a specified percentage of clients' average AUM. A majority of our expenses, primarily incentive compensation costs, vary directly with changes in our revenues. Our balance sheet is strong, and we maintain considerable liquidity.
Beginning with the quarterly dividend declared and paid in the first quarter of 2019, we transitioned from a fixed quarterly dividend to a variable quarterly dividend. We expect to distribute approximately 80% of the cash we generate on a quarterly basis, and to continue to consider a special annual dividend after the end of the year to distribute remaining cash. The variable dividend is more consistent with Who We Are as a firm, our commitment to transparency and our history of promptly returning cash generated to our owners.
As a high-value added investment manager, we expect that long-term investment performance will be the primary driver of our long-term financial results. Over shorter time periods, our results are subject to the volatility of global equity markets and client cash flows trends. For example, in the fourth quarter of 2018, when global equity markets dropped sharply, our AUM declined 17%, resulting in quarter-over-quarter declines in average AUM and revenues of 10%, and our operating margin contracted from 38.5% to 33.5%. Our financial model naturally adjusts certain expenses with changes in revenues, allowing us to manage our business with a long-term perspective.
Looking ahead, we will remain diligent in adhering to our business and financial model, investing for growth over the long term and ensuring the sustainability of our business.
Charles (C.J.) Daley, Jr.
Chief Financial Officer
For additional details and information about our 2018 financial and business results, including a reconciliation of our adjusted and GAAP metrics, please see our 2018 Form 10-K.