Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the SEI Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded.

turn over to Mr. our now like the to conference host, I'd Whitelam, Relations. of Alex Investor Director ahead. go Please

Alex Whitelam

Thank you, to everyone. today at all. and welcome, appreciate for SEI team join We XXXX and here our the second look earnings joining forward you working quarter you I'm with us excited call. to

Phil Financial Sharma. Withrow, we of our leaders have call, Chief Paul the and Jay Hicke, SEI's Sanjay Executive segments, Officer; Wayne McCabe Officer; On Ryan Dennis Klauder, Cipriano, McGonigle, and Chief business

Before like be our under This of of I'd available webcast we press the earnings the be at will being website on section page that our again, live, Events out website. point to replay Webcast and Relations release seic.com. found can is our a call Investor and

that our and differ Securities to presentation certain remind in of statements. that in and in the have materially. We with and responses questions, update Please refer undertake do our subject to make filings to may and actual release to to notices will would are regarding earnings not forward-looking risks press like during that today's your today's any statements we results Commission. and uncertainties cause statements you forward-looking We appear Exchange our that forward-looking to our

the With CEO, Ryan to turn over that, Hicke. I'll our call Ryan?

Ryan Hicke

Thanks, Alex. Hello, everyone. I having a hope summer. you're great all

results in second been for in last on foundation same drive year talent, was the period year. details a strategic second from X% million, will EPS XX% to $X.XX for $X.XX, quarter to are: financial Dennis last X% the up have the year's was increase reported more the $XXX compared from markets. results up approach growth. ago. leadership, laying our year, were provide Net market our the our a the shortly. million, headlines income increased to our quarter. our we $XXX presence invested enterprise-wide revenues for quarter evolved Over in the and quarter's past an The resources We've aligned

price quarter, per stock repurchased That of into shares average translates of $XX.XX X.X at an of the In share. million we million purchases. SEI stock $XX.X

$X.XX through We a we continued quarter. also declared share. the dividend year saw paid The momentum second in earlier the per semiannual sales and of

current resources proactively the with enterprise our pipeline against and into focus for execute Our clients, our opportunities identify sales and on expanding are engaging across teams. more connecting to cross-selling wins translating

totaled reported number increase Net million, XX% recurring $XX.X were of recurring. net first over sales $XX.X million in which we net This represents the this year. the events quarter a

we a profits, recently, and on prudently for delivering our our capital improved vigilant have remain growing markets deploying at While high level clients.

me funds and that, solid Managers business turn With while converted another quarter. Investment had successfully lines. several let We growing segment The new profits. our to clients

accounts number large during We implementing converted quarter. multiple on further our will just backlog, and recontracted a of provide also the moment. detail in Dennis this clients a

Our relationships strategic cultivating for driving and growth clients. teams are our

quarter, private expand in In new equity, largest real infrastructure and credit, the segments. global, alternative estate to private and traditional During continue clients won our the in we markets. alternatives, the accounts

One a process. onboarded competitive credit in-house competitive through using firm private we quarter, and equity private bid two is a the In firms. previously and another administration takeaway a

to solutions investment added traditional lines Access takeaway. also cross-sell XX across IMS our competitive signed in PE continue and strong particular, large business very business a product platform both in turnkey strong. managers. new collective quarter. We more also investment which ETF business a We expansion In than client, a be The trust had our was in all

this We're announce existing also recorded first an our we sale in unit. pleased SEI that to Platform to Wealth client

and highlights X,XXX agency manager successfully This reach global our the to renowned utilize on CIT adding more asset global transfer Finally, capabilities institutional we our and scale. than completed platform. our expanding a accounts partnered the breadth conversion, large of a with

private and deals recontracting had clients. four three another new signing Next, banking quarter active

Platform SEI successfully the clients during the on quarter. We three implemented also Wealth

strides front significant making on We’re the technology data cloud. including SEI the

Our new existing and cloud prospects. generating interest growing clients with solutions both are

continue clients to XXXX converting from to TRUST make headway also We in SWP.

quarter, our that and migrated in have successfully still line. more events During coming growth absorb and than manage banking expenses, we quarters, to larger of for approximately the one We assets confident billion our and clients. pipeline, to $XXX accounts drive but prudently both to are revenues grow XX,XXX previously and Sanjay to team continue in announced the our on bottom current some strategy we in profits. the capitalize

our We business. Advisors across Investment quarter. the intermediary growth positioned of accelerate our each of realignment. to believe based our intermediary with channels completed integration better American business the to North this its Turning We businesses during is

We’re quarter. growth the during seeing which already especially the in channel positive early in net of RIA that accelerated experience we cash flow signs

be is across processing, that solution In Our our provide investment they the we met spectrum full technology, with to allow to holistic the and meet capabilities unmatched Investors where our a asset want us our capabilities the outsourcing market. Institutional of and clients wins segment, management secured in offerings.

the continue Additionally, quarter’s benefit results. our Corporate factors expanded consume of suite curtailments products. and in for be UK annuitization the U.S. and to defined and to existing the driving headwinds financial were continue clients

as institutional improved mitigate in cross-sales private for other SEI and to our expansion headwinds as services markets. DB business management wealth through in continue lead well the We though generation other

following UK in a Trust we Additionally, master National of approval. Pension second in announced XX,XXX is our regulatory acquire the purchase our members. leading trust trust NPT NPT is more XXXX. recently than pending Atlas to serving agreement acquisition the master

developing, development well demonstrates we’ve priority to focus The growth. market. built a and accelerate year with last executing, our integrating NPT to our corporate the we on this to commitment acquisition a transactions as strategic strategic team UK our As commitment mentioned, as

the LSV strong. first And Investments in SEI adding very migrating Business to cloud. union Turning partnership had successfully Sphere positive client quarter with credit a our segment. and a to New new our client its remains

our leadership culture Sneha and of executive participant a earnings calls. front, business our team On ventures expanded be addition the will who with the on and Shah lead new will future We talent

join the excited at to initiatives wealth team and and career, new experience. growth intersection of leading she led are and businesses knowledge have Throughout We scaled brings her international she artificial created of a at technology. firms Sneha as has the Sneha where data, intelligence,

build goals. on platforms. and growth and including corporate resources businesses, Sneha’s foundation SEI’s be to that incubating believe the for to Sneha our will devote now new revenue with positioned time future attention SEI fact focused we it and that hire increase those and for existing will also highlights is growth upon for engines additional identifying our businesses us Sphere success, contribute to our

also company evidences into in It to ability our that talent. external infusing the commitment attract our to talent and

made we strategic message, drive employee engagement, SEI’s front, elevate in engagement investments cultural awareness will our values. the brand core community our building and initiatives. These and On amplify SEI’s also help investments

This concludes my remarks. it now results over discuss prepared the to turn quarter. I to Dennis? Dennis financial will for our

Dennis McGonigle

Ryan. Thanks,

mentioned, in was XXXX. the the the $X.XX XXXX per the Revenue This $X.XX $XXX Ryan compared for first million the and of $X.XX million was during quarter in to for share. XXXX to $XXX $XXX compares million for quarter second quarter. As quarter EPS first and quarter of

to million million, which Total year $XXX million compares the first $XXX and quarter last in were expenses $XXX for the quarter.

sales or generate are and sales $XX.X and management IMS, of were $X.X million technology net which $X.X This three front, processing sales In Sales sales million. million net revenue. totaled is which of $XX.X our is were our positive. private reflects businesses, from slightly net million, asset sales. million in our recurring sales to net were businesses expected new events in banking banking [indiscernible] investment $X related approximately of negative net newer Total million recurring. Private initiatives the recurring. million On $XX.X and recurring $XX.X were in

regional We re-contracted the and during segment’s revenue. the four segment, focus private $XX.X paying UK with annual along on quarter PCIM representing is community segment million the bank The banking clients in in off. recurring the

the with PCIM strengthen helps including UK active which Waverton to Management, the market. activities, During and we quarter, conversion Investment backlog implementing further delivery for solution our were

SEI Bank, the be helps in U.S. million. XX solidify is next completed acquired sold, $XX.X We but migrations the business revenue their our of onto to of The backlog to also SWP which conversion Union months platforms. Bank solution, SaaS business additional installed including expected for current

second were occur the that to clients. the were by quarter, year the two scheduled client installations in delayed During to later

ready technologically and clients operationally are when say We go. the

million Based one-time the on banking fee we consolidation. expect the $XX.X by to backlog year. benefited schedules, the convert to current approximately current related of the Union XX% a from revenues Bank Bank U.S. segment of The end

quarter primarily first items. banking the in slightly up management quarter one-time were up Expenses market in Asset XXXX, from were quarter appreciation. benefiting revenues from the from the slightly private of during

million, $XX.X were On front, recurring. the the is quarter net for sales million IMS $XX.X

from capabilities as the continue annual for but we up first to totaling expected to markets. $XX.X up and of During $XX.X quarter the install of is Expenses clients XX quarter capital the growth, invest million Revenue revenue support to quarter, months, recurring re-contracted in reflecting in client were the revenue. the and sold in talent to slightly impact we quarter our million. was installations four compared backlog our recurring first next

leverages our cash and fund asset adoption our technology, administration our flows increased mature only continues net our mutual and onto negative capabilities was and programs program, into from flow investment For platform platform flows AUA increased platforms The strategic to which advisors, experienced only flat. momentum. our We of newer management custody more essentially show products.

new more offerings a impact. were asset slightly billion. are Revenues out advisors Investors the us as associated are first the backlog offset of The quarter recruited clients business the the move capital and up appreciation. were of quarter up quarter helping $X.X In the quarter at for for providing the choice the movement of newer Expenses XX We gross us forward, funds assets improved slightly the helping Our which segment were RIA due end revenue client from in channel. markets. of net and mutual of sales XX our sales events was Institutional result quarter, unfunded newer to positive. during to

expenses to activity a this were recorded which facilities, related is first market expense and reimbursement. up expense, a client Revenues for quarter the costs Expenses Without flat item were net up the income roughly were other in million client capital $X.X This for quarter. our supplies and represents slightly of to million, quarter on fundings. charge from statement. $X.X due one-time

In first flat slightly the segment in were revenues and expenses compared down Investments New Business quarter. to

in segment in remain expenses this while shifting supporting new initiatives and expect to to this range. We

growth outsourcing not In quarter. repeat. addition segments, fees also consulting million was statement $X.X reflected line expense the the the for that will professional our strategic a This in a item income on completed company project to the a incurred in

LSV were profit $XX.X $XX.X million $XX.X million to produced the LSV quarter. quarter. compared in for to compares $XXX.X first million the this quarter during Revenues in during first million the

quarter performance included $XX.X of revenues Second million fees.

LSV reminder, by a $X.X assets client fees of continued As quarter. at and relative revenue net positive during a Core growth performance offset flows. capital recorded million the a performance of performance growth result is LSV. reflection first investment negative fees of in are Performance

item. final One

XX, Ryan I mentioned year agreement Trust. release end As press The National is before close July the a more for acquire regulatory approval. to to entered to subject Pensions information. on into XXXX, point we you expected recent an transaction applicable to

timing rate reduced for related higher This due option tax was the benefit. the exercises XX.X%. of to and tax level rate Our quarter is a difference

our be quarter. was XXXX the during a in step down in expect slight can rate tax this to fourth range You

remarks. my concludes That

the our call now of all we heads unit reminder, any on take are a and questions. As will

Operator

Kenny our Morgan [Operator question And Stanley. Ryan is of from Instructions] first

is Your open. now line

Ryan Kenny

Hi, question. my good Thanks for afternoon. taking

Ryan Hicke

Ryan. Hey,

Ryan Kenny

around fee banks $XX.X one-time the strip pretext X%. in but you Private we XX%, to margin of get million, at if out came

were want transition? of the Bank with segment? any understand timing pre-tax for Thanks. just expansion us going general expectations one-time just you the there can expenses I And So in to that on margin forward update Private associated

Dennis McGonigle

Sure. the kind and the part then Sanjay first of turnover the to of I’ll to business. to progression speak answer

some I And work first because converting the part, was in costs mentioned. also there’s there in that that were that segment million that On involved working $X.X consulting client. fee

progressing help. to would or against resources cost want certainly all here? of activity away that redeploy and those we’ll the we business But won’t have. implementations and – conversion – us the you you other because the we’ll how margins see behind future But is conversion kind address that the how from Sanjay So go do

Sanjay Sharma

base, so, our the Sure. Ryan how last our plus called go-to-market are where been the our and of has with up very existing out engagement, with, then segment can in margin delivery terms course you? backlog the very we areas work So three we okay, we focused that in of – focus of the improvement or clients, has Hey approach how these three, recontracting We in a came going Ryan, the four on as so terms are focus and client solidify quarters margin focus management. targeted of to are strategy then consistent. a course

this So we a been you as has are management how item would see staying here expense well. is that key and focused delivery

So this are targeting. is we how

I so will we that a say the focused be And would margin stay priority. management will and key

Ryan Kenny

at Thanks. at One the level And that the results all SEI rate? company still the or run is of then is initiative out impacting

Dennis McGonigle

I expense activities. we’ve there’s moved with the distinct as But we’ve some in really One SEI, worked is in P&L that would nothing umbrella couple well, particularly Ryan. One any P&Ls that to cost client that – related SEI. under longer kind we longer our distinct There probably and convergence any through say associated a technology no that would’ve there’s onboarding of client – not terminology off directly been and work

Ryan Kenny

you. Thank

Ryan Hicke

welcome. You’re

Operator

is next Blair. The of from Schmitt question William Jeff

Your open. now line is

Jeff Schmitt

Hi. Thank you.

And make in one type to business do typically the in segment Private in continue those inroads conversions? that, TRUST in, today? of Bank what the with You bump of versus SWP. revenue of good get XXXX SWP you What mix is

Sanjay Sharma

we So their to been go-to-market are more is with support our initiatives. new that strategy sales TRUST existing for SWP. XXXX clients and has leading

for terms We not is our segments. the and and Giant specific focused like concerned, going the market similar new TRUST a UK our SWP have far focusing management Regional operations we strategy And example, market, PCIMs very XXXX. with as we for with as are In as such in are U.S. a go-to-market with focus segment. been in technology, asset strategy Community on there is our IFC market, very to through segment sales and kind Jumbos and of of

Ryan Hicke

Jeff, Ryan. this is And

one team, question the and is other expect positioning going and lanes your bear a that certainly capabilities space perspective has we’re outside are we from of market, that when of we’re we perspective. we kind bank enterprise especially XX those revenue last is of to certainly Sanjay segments. I But XX also that think the in community a extension thing to can in to over terms thinking to and that regional other premium a the across certainly changed months those bring cost

Sphere, SEI the on be more So asset capabilities management focused whether that be that whether more alternative space.

basis, certainly like to would in our management somebody for their we moving there. team towards to premium. more agendas across What like more landscape seem a clear Sanjay gravitating really processing, that resonating is capabilities a on entire just growth definitely So us that the expect is if be really investment of and segment interesting is wealth and are the firms have

Sanjay Sharma

And Ryan, further to I if this. could add

implementation, to service we at multiple for We models, U.S. were well. the are matured and looking with SWP focused as traditionally software, bank models also business outsourcing operating for the in model we But SEI. significantly have

model. operating another now is strategy go-to-market SWP So

Jeff Schmitt

Okay.

And just have mid items internally? in margin historically. of think that’s of those to operating drive service high-XXs economy, just to are wage looking was then continued Okay, inflation of I It XX% come was versus some it what both I overall the appears at sort but curious running helpful. you those for weakness. that at Those and down the

Dennis McGonigle

as talent. And of to been we saw competitive this our that also in level in of We're say, our the of for we That make same I'd wage inflation XXXX, expenses, we're part year. onboarding hiring sure our markets talent. said, we XXXX in on focus practices kind our diligent not that want being and seeing of very, are

is of competitiveness. compensation maintaining that key element a So

element goes our beyond to the and that of orientation attractiveness still of is competitiveness it's of we of But working the think market type years. the growth so our culture. for there, off wage from cooled yes, definitely and – company past are but we still SEI competitiveness I are couple

out, was asset businesses as were of with position asset line today than continue in coming year, our better growth, as get So to top back what high-margin flowing margin in for a the a see management particularly long lot which management higher back will show we come net to starts as in move top deterioration with the go revenue way line that ability up. to really cash flow the activity, and and into to – expect our markets revenues that is a we they growth margins

Jeff Schmitt

That the makes for Okay. sense. Thank you answers.

Operator

next is Owen The Lau from of Oppenheimer. question

open. now is line Your

Owen Lau

questions. and my thank taking afternoon Good you for

you your mentioned hiring SEI Thanks. these venture just ventures So help this expect longer mentioned – Could about and please color just new Ryan, in can you more how business add you vision you term? you ventures.

Ryan Hicke

Owen, Yes, well. doing hear from I hope you're great you. to

SEI the more fostering more place, terms the a in the I But part we about businesses and a something really do how had growth. in focusing incubate have third if and of we hire three is of things in inside you think scale system entrepreneurs. we the second how that is Atlas. to strategy terms leadership of in that really put growth we say place about drive to of structure culture workforce we are is think And business new SEI. culture. really So in of to a SEI where wanted more thinking those And a X,XXX Ventures, of kind laid SEI Sneha about Today, I'd we SEI think Sphere, want promote how We ago couple on, facilitating creating and structured of was out months XX as of businesses today.

into able like one out the our to but starting because the market. a starting significant months, they opportunities ideas some client in have process But we're things legs, momentum. then have see and to cultivate our more in it things, partners. really XX role can that with don't engagement to with to be with looks our they those if if see scale see ideas, expand level putting ideas, Kill such grassroots a market from them, we're place things So in identify generating clients, thought also get and system we we're of last increase engagement partnership interesting those outside

an the really put alongside on SEI, track think we're focused how cultural in M&A. to we're feel engine to confident with of a for really where Sneha record some and to perspective executive we'll things be engine, these a development had core future going and the and a organic fifth sixth place, pivoting Owen, doing from identify right and when doing really So corporate I us we really engines think system wonderful because will that we what in we've additions new great current about terrific on can of just a that momentum sorts committee, now that we are say the position side businesses. we in business start our getting got addition

Owen Lau

helpful. quarter. $XX outsourcing you. and think Got it. Thank had And talk you That’s engagement you million Could learned was related – a expense? second I consulting then a for that runway please that then forward an from overhead engagement, it its – about you going end have the the what to good

Dennis McGonigle

broader did elements I’ll firm a Answer business. I want the… to and then you the focus kind comment outside consulting it’s target aspects second answer think Ryan, two that work of of was on we the That’s question banking good – it probably have – with our maybe is, to And the best had key of to kind it since the yes. Sanjay the on and

Ryan Hicke

turn first to I start and can Yes. Sanjay. then

this was of but size the very and things operational of stepped at we leadership leaders SEI across is we Owen, just sales we solutions one may not at summer, in think last mentioned product which call total market first back universe. did So summer, each technology the and addressable last our looked we have I the

repeatable distill pools So level of outsourcing, down granularity or would but was saying their firms channels. be really out community success growing, how and to our those another for that and really criteria which look we what weren’t banks, of there tried how regional appetite to RIAs many we in many those to were are in how

when an ideas it validate challenge we think firm an differently or to some external finished had. those then of we we thoughts to And thought also and and that bring help outcomes process, was opportunity that and in

So that. did want you in just UK, Sanjay, level to banking U.S. we about if talk in Owen, specifically the that, high and so

Sanjay Sharma

Absolutely. we part a four-pillar time, business where added it private strategy. my about wealth with Officer [Indiscernible] should strategy go-to-market. our thinking, our we we best XXX, own talked [ph], as XXX-day So initial that how we Chief came banking, last in that’s that with management, And Strategy And this we up best segment. came of

and U.S. the external existing market to strategy then understand as at as time, UK. and our are same the asked the then here as consulting was our validate thinking. well go-to-market reevaluate And clients, help well which clients strategy engaged we consulting an addressable company the in company line one, to provide our we the us Ideally we to engage us best in prospects, new in their the total with lost, as both

a it’s our as as new we validation not great So several strategy insights. well of

our what So that’s that’s further we the and redefined, now. – strategy executing and are and revalidate

Owen Lau

Got a lot. it. Thanks

Ryan Hicke

Owen. you, Thank

Dennis McGonigle

welcome. You’re

Operator

KBW. from [Operator Brown Instructions] Mike is The next of question

now Your line open. is

Mike Brown

of has kind concerted focus while revenue been prior initiatives while in but been follow-up It questions. on sounds Good here, the a that a you guys and Maybe just relatively have line a your for everyone. about guess one them of unchanged on there’s Great. the for talking certainly here. new evening, like I

that thoughts to us when you forward could initiatives. those start you If for inflect some look as hire could give here onto

Ryan Hicke

tell can to We be areas. new made years of that’s of we why seven a to five I goal corporate that. it’s know need mean, engines we’re And is don’t in of to revenue our going Mike, Ryan. terms that timelines. think in the thoughts with invest All of doubling I exact why part company have over the we hire, the you the that any we Hey I years. specific these next that’s

from expectations be. is part is – executive moving forward do as How I be? to on think new businesses, our What our really that for what you what generate greater ideas SEI. going doing around in focus us new really I helping those investment new committee a a should Sneha of What invest? to revenue start think So could should through will the areas think return engines, see that we

I think the to of some are more on how trying a because today of point engagement, right client the important kind these feel we’re of some because and well intellectual the units some that client financially new penetration, talent is, perspective, we across moving of go capacity existing now, both perspective, things. an get have focus like we of from

about when this quarter you the fills those in a in falling the quickly we excited SEI, sales IMS with revenue’s those are level to we’re to but excited also ability all is really across said we’re sales more that install very engagement where not and of revenue that line. manifesting that terrific room, results it hitting sell, quarter So themselves segments at we bottom of just sales really to so to and want but the and our focus look

Mike Brown

you are return? and that then capital just maybe balancing and on about – dovetail with on and your growth thinking in And forward? the M&A the kind that balance I with seeing about here, can thinking run road change your great. – you’re you to other here. capital maybe touch want Okay, transformational here of wanted based obviously But how allocation down allocation how capital going cash some levels Any sheet into – maybe I views recently. inorganic to

Dennis McGonigle

Sure.

extent to and where which quite reinvesting now, and the to it and start with allocation a the kind of that while or – The you then that that there’s So thrown gets second includes transformational for saw raise And that return – And us for for capital that been own we’re capital seen had a And our asset our and capital. that around I to today hesitant mean, to consistent sheet an makes enough I’ll to is it’s part continue is not and consistently. may shareholders. market extent of continue make fund, out to the transaction there lot hasn’t first to business sufficient a balance wasn’t business, of business we bigger a you’ve with SEI. M&A sense it’s a to word lot makeup current to foremost. go SEI

this – are get and approach, there’s better that’s position – we of case sometimes our the nature think a proven and that not sheet at this afraid our we’re with us words, but not perception in all. my capital to success these allergic markets we’re changing meant, I be And debt, the putting if of certainly in growth the or the balance it we’re large for in We’ll in.

Mike Brown

you. great. Thank Okay,

Operator

this And time, questions at Hicke. there are no Mr. further

Ryan Hicke

Thanks.

outstanding So we in closing, our stakeholders. have to an foundation and momentum drive continued growth for

and success parts been and and life. leadership it to and Dennis that to XX numerous enormous lasting XXXX executive SEI’s time other at the positions Dennis his of has reallocate McGonigle after decided over future, emotions me his He culture. away friend, remain to involved an Dennis for I countless, years, gratitude. the step smooth at has mixed will of is end with of the Looking with partner, to team contributions and with my coming to owe colleague of transition him an SEI. personally I and entire ongoing advisor, debt executive enduring work will on opportunities duties and we a months career, explore over invaluable the and to

I’m opportunities just to As confident XX we’ve joining deliver and ability for you I’m strategy confident in focus our Thank the on years. as done we today’s in our for ahead, call.

Operator

AT&T and That for your Teleconferencing for does using conclude Services. our conference today. Thank participation you for

You disconnect. may now

SEI Investments (SEIC) 26 Jul 232023 Q2 Earnings call transcript