SEIC - Earnings call 4 2023 | SEI Investments Company

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the SEI Fourth Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Alex Whitelam. Please go ahead.

Alex Whitelam

Thank you, and welcome, everyone. us our joining earnings quarter you call. appreciate today fourth for XXXX We

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

a at point that webcast Before under in section Relations actual to may forward-looking to undertake our the response to earnings in notices our in questions, will any with uncertainties today's seic.com. statements. that press call during press being out replay to and results website regarding is not This are appear begin, and presentation and on update subject Commission. We you remind our we and refer your like release and available earnings forward-looking forward-looking live, Investor have page of we to our that and cause that Webcast like risks today's I'd of website. the can do found release to materially. will be the Exchange our differ be Please make would We that our Securities Events and to of filings statements statements our certain

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

Ryan Hicke

good everyone. and afternoon, Alex, Thanks,

for future. engaging navigating market driving While the did team growth up conditions vary throughout our clients, uncertainty, well setting our excellent job the an year, and SEI

leverage, company. space, across infusing in alternatives targeted further expansion strategic growth future managers, key investments talent bank and had we included RIA momentum new the continued and expansion driving for into sales XXXX, that global the in penetration operating growth private In profit margin and segments, continued objectives in investment

the are both and businesses. performance, the private We of banking and IMS with trajectory pleased momentum

positioned management. We attention to well to SEI's and to top we continue and of know our in bottom to are asset line. expand contribute businesses need these Both increase

message of the the our will maximize choice the proposition in a to we I business, at an this provide. as new with adviser we have we around With market. more adoption forefront our tech-centered what opportunity opportunity see us broaden huge client solutions intermediary and exploit the investment curated help expect offering value and

XXXX is with but leverage for driving segments and continuing a the growth, be focus new and transformation asset profit some increased targeting of accelerating to operational expansion going same management margin discipline. growth through sales surgical the and of our revenue businesses, sales, and on

into Revenues sales asset from our quarter $X.X quarter million, the Net by the in me up sales XXXX. Let This was and technology negative results. X% events of operational the outsourcing fourth in of in quarter a recurring. were financial of net of fourth businesses. dive million, $XXX the activity million combination which million, management $XX.X offset were $XX.X totaled

successful a revenue the had launch product business. late adviser will new we QX to Additionally, in that separate add additional

and purchases. EPS onetime of the a $X.XX that XX% quarter, the year will was prior events the up Dennis The into included $XX income an for X% over stock shares share. of That same stock million average million Net we In of approximately price $XX.XX number quarter $X.XX the fourth expand over million. translates for SEI also outlined fourth of reported X.X $XXX quarter, period. the the period to the at on repurchased per in increased release. quarter in are

beyond. remain positioned XXXX for We well and

and we seizing opportunities matters to market accelerate enable what and where we and capabilities Our connect of our the win I future. constant We're repeatedly to focused scale for drive clients can believe most, on breadth change can growth. to the unmatched adapt growth share. firmly

our me turn to business let With lines. that,

and delivering successfully in clients new implementing onto thrive, to business. earnings continues business managers our one growth. platform team investment strong Our revenue The

had we dozens quarter, During the cross-sale re-contracts. of and events

each pay traditional within In resulting key while business and continues alternatives, new focus to in global to unit. profit alternative, on the continuing clients for dividends, our We segments also the significant grow of won opportunities. cross-sell

During new asset expanding Globally, asset and alternative top the asset the to a and we spaces. another through competitive private private we takeaway. traditional XX into signed manager strong in clients classes quarter, asset signed manager see flows credit a X continue and private

As see we've development. excited this expanded to segment, pipeline our sales we're leadership in increased

to new In product the expansion all particular, our beginning trust traditional segment, seen are solution in And business collective we've we've traditional in clients discussed, as to the alternative our funds. In continues we lines. be investment strong. turnkey larger added launch

continued job margins reorienting strong with ago. done growth for expenses the appropriately. year a The quarter to revenue team managing expanded has growth business Private another compared Banking outstanding and had an while

X deals we new clients. re-contracted the quarter, and existing X signed During

the successful during We implementations year also QX. exited with

While we our still absorb previously some coming events growth in we announced to confident strategy. have quarters, in PB are

Asset in our in businesses. our quarter in offset Global Investment Advisors were positive with solutions, active flows fund Management partner Strategist accounts managed by products. Moving separately flows to and the fourth mutual essentially net outflows our cash flat

channel. the During the quarter, X advisers, new we brought on RIA including XX in

our also and a of that rollout towards of service advisers larger offering. for custody working onboarded new of are We X investments outside alternative

we Additionally, the great mobile portal. app, pushed is our feedback and is which investor as SEI investor out receiving Connect

of earnings the believe protection standard late and significant our bank end SEI mentioned December. insured generate cash models. launched program as to for in the insured the utilizing XXXX. Integrated investors Finally, could provides This earlier, custom program we program component We

changes clients and industry-wide in the our quarter, year. Institutional X new experienced the utilizing our we fourth services. result OCIO X we we the momentum results seeing In data said, the challenges quarter and technology signed That In reflected the segment, are XXXX. clients unbundled OCIO of sales Investors made a positive throughout structural as

the the alternative addition a cloud-based acquisition SEI technology our investments. Altigo, at in for across also platform We acquisition institutional best-in-breed of completed we our of and e-subscription delivery Pensions global investments inventory, of to the business. believe SEI's segment, services completed scale Trust that Trust in our business provides National of NPT Within reporting Master capabilities strengthens new the U.K. continued We

capabilities As I forward have alternatives. many services are more with and providing we discussed times, driving into

simplify and With expect investment widen transform distribution alternative intermediaries their investment our clients and helping we products. to to products Altigo, of investing, for more fund facilitate access and management easily while private also help create

LSV with and remains a performance partnership they had will Our strong, Dennis very good discuss. which quarter

our industry. remarks. Finally, who their my to vision. continued SEI future the commitment all nurture that like steps across ensure the thank our culture we've taken our colleagues and for my prepared of is to for prepared to best I'd concludes This workforce

to our Dennis? it discuss I over financial the quarter. turn will Dennis to now results for

Dennis McGonigle

Thanks, Ryan.

quarter approximately approximately the these our acquisition $X.X The associated severance quarter impact $X.XX XXXX expenses million and in $X.X million write-down professional is technology the $X.XX. This to million. our to third $X.XX Total and Revenue quarter. onetime the $X.XX for in in have items, were third million XXXX. to the last expense items, for the expenses $XX million approximately As $XXX quarter related to quarter of the during compares for million Without million, $XXX for fourth Included which $XXX was fees million EPS asset a and compared million was in Ryan $XXX mentioned, quarter of $X.XX. XXXX quarter $XXX segment, the quarter. $XXX expenses million $XXX.X of third of were year compares and of with $X fourth in would EPS for been activity. IMS quarter to million

In our the revenue. mutual to net private management-related business. businesses, approximately million $XX.X were million due On other recurring products client from programs, investment net our banking acquisitions our institutional processing net in our in our $XX.X as losses sales primarily front million, and $XX.X and expected businesses asset sales managers, investment fund movement events negative well and technology generate some as in into investment totaled to of sales are asset

was SEI We in also has Sphere of traditional our sold company. to market business beyond The supports Sphere mainly This segment, million hypothesis recurring a segments. that new nonfinancial $X.X resonance our Sphere. our sale revenue

sales program. were business the sweep This our in key net of One into like portfolios, million highlight model paying allocation account. an purposes recurring. takes operational launch an the FDIC-insured those fees which balances FDIC cash Total used is $X.X of million the for for deposit insured generally deposit for $XX.X adviser is our company and

platform-only additional revenue event, a our level the XXXX. under million the release million This and program in estimates, There assets the launch. at fourth in in of was technically XX. element clients program. current of our timing the our will from due $XX new of effort sales enroll was overall are deposit to on in assets assets December approximately the under reflected $XXX launch, educate And earnings significant. minimal to benefit not the captioned financial While the in quarter had The approximately scheduled generate offering assets

to client which partially SWP of million, one two $X.X to institution nonbanking a sales, recurring. were other financial due losses, which one were of a is generation the million focus sales banking two growing in by The building $X.X change Private and re-contracted to and was paying their new off operating recurring Banking acquisition segment's $X.X new quarter in is The and quality in represent clients million during the The three revenue. model. pipeline. Private both business annual a offset

revenue of client be backlog we to quarter, million implementations next backlog it revenue in our through million quarter sales XX We from the of active $XX.X installed increasing recurring the with months. and added were During the conversions. to and $X.X third installed to expected

down were Banking from quarter. quarter. to mainly assets asset slightly lower the the during This Private due average quarter, in third revenues management in levels resulting Asset was entering

true We their asset that asset fact As coupled based in a side run note, this making markets is quarter, revenues our entered the earn in lower all management with assets. resulted the of quarter lower until the later for on average The levels. not we average at businesses. positive levels, also

of of Entering reflecting Banking first and asset down to XXXX Expenses beginning higher Private were bring the are third at back to quarter profitability. a quarter higher in private XXXX, efforts banking levels of base. from we

$XX.X On for $XX.X recurring. million, the Managers of net front, sales is the which million were quarter Investment

annual reflecting the Revenue Expenses quarter were totaling compared the $XX.X installs. quarter, re-contracted for the of quarter, impact XX to During up. was up we client recurring revenue. million also in clients third

$X.X item However, million mentioned asset they included for earlier an write-down. a

Our sold next to million. the XX but $XX revenue expected install recurring of backlog months is

with sales were quarter reflecting third negative reasons repricing for the marketing-related up costs previously losses the to segment, for lower client activities. expense positive In from general management. compensation sales the were true-ups. quarter and for net offset down reflecting the down also Institutional distribution along slightly in due slightly Expenses mentioned. retention were and Investors the slightly Revenues increases due In quarter Expenses to the $X.X segment, client were down signings by revenues were and adviser assets. for million average

$XXX.X the during business third revenues profit flat third $XX.X in Fourth slightly. million compared down produced Revenues performance. the million to recorded quarter. quarter. included segment, were $X of fees the performance $XXX.X compares new investments to performance during positive reflection were continued This LSV million quarter during expenses the $XX.X million quarter. were to revenues In million Performance third and are of third quarter fees for quarter. LSV million of fees, the a in LSV relative of $XX.X

acquired coupled will with XX-K I SEI's in release line At will soon-to-be the information. transaction, the the going more for quarter, the new included strategic expect of filed material our and our forward. while we acquired existing press a the you alternative assets in business to point This business space. investments capital be to we segment when Altigo, capabilities in add opportunity end not talent and

quarter the Our for tax XX.X%. rate was

expect the first XX%. for to We quarter approximately rate be tax the

year, was That XX.XX%. the concludes my For remarks. our rate tax full

All take the call, you. on and Thank questions. will now of unit heads our are we

Operator

go for the first, [Operator line Sandler. we'll to Love Crispin Instructions] And Piper

Crispin Love

margins, XX% quarter. bank the accelerated they First private in on

move as And is -- could kind speak expect is on good of as a well. there then while if to you that longer-term margin to banks sustainable going in forward? you XXXX? Or want be think we're just Just private there? level of the kind topic, Do for onetime could anything a you that through outlook

Dennis McGonigle

Sure.

pretty and let kind quarter Thanks for anything I'll and of the of the I'll Sanjay first So was 'XX wasn't Dennis. part. financial a the I'll Really and margins quarter, clean unusual this kind in Chris, address answer outlook banking for is fourth beyond question. -- that.

Sanjay Sharma

Thank Dennis. you,

QX, And strategy have our as line in our of expense with not towards consistent managing well. top very So reflection our as well. expenses, forward our margin efforts a only but we going growth our been that's

on quarters shifting expense grow focus, will While to that's how you is continue our management focus be our what line. And can as see well. we our in would top coming

Crispin Love

facilities quarter, million all Am then, That's that anything in on helpful. and professional million onetime fees? I the in expenses of just there? the then missing $X And is in Dennis, $XX $XX of million

Dennis McGonigle

million. Chris, One down elements to technology X asset. $XX there that a -- was I'm wrote were we sorry,

that an will piece a better that had forward. market we we was So in of think found and we the in alternative software us development going serve

So made. to X-K market. with like fees of element asset that acquisition to associated did. unique, we of capitalized off fourth we We then $X that $X.X we to the quarter in a most bring which kind in million we're of severance was million professional that And more filing expense, out I'd not of had recent of we which call acquisitions the -- because it wrote is a the little going covered -- had two about

Crispin Love

there? in in the just at Or elevated facilities, item that that looking Is in line supplies Okay. costs going I'm forward? a item anything million run at good line is there other was quarter. and And I based $XX rate quarter. the why I'm curious then the guess, just

Dennis McGonigle

where be come would write-off down that Yes, because that that's would sitting.

Crispin Love

Right.

Okay.

Dennis McGonigle

will I'd the number more kind that come of average back, say, last quarter-to-quarter. So year of

Operator

And next, Morgan Kenny, line to we're going Stanley. for Ryan the

Ryan Kenny

to segments of businesses business. the institutional investment management-related the wanted and in in investor dig the AMD into net Just sales asset the events advisers

it's negative in a quarters few a for been So row.

sales? there's to understand that run So just going some time? forward net of wanted left? Or transitions negative down of I we Is more that expect rate? more should new come how like know the I good a over client this much should

Dennis McGonigle

programs separate what turn happened fund as of past phenomenon product the this of the shift wrapper products we'll of it because couple more mutual of quarters over kind we've Yes. address ETF had to I really advance program to Paul guess going type some kind and amount from accounts, over third-party a into off market, consolidation curated -- decent a the we've consolidation there on kind the advisory had have. lot process. you of in And is of aware, then of that we're some a we as or of picked advisers in get all

So when reflects really talk we're our in of context products offer. that in -- from the there shift But of pricing Paul cash let about we take terms flow I'll what the kind and seeing it -- quantify from we expectations the of revenue, that in perspective. we things and

Paul Klauder

little basically who A phenomenon seen So look are by you not we did positive in immune flat marketplace to at bit fourth have flow, negative the if roll-up cash but a we getting the we've that. had in a third advisers consolidators purchased quarter. firms, a quarter, were are that and and we to

the with last that In of under quarters, assets in the platform. billion were moved that off XXXX, we of assets extensively that were specifically firms couple X hit $X management represent

capabilities and with the energy a especially looking working have we're deal that at overall to friendly industry, including lot we this of Now strategic our on trend in with investments. them the on operations answers aggregators, and of aggregators the technology, selling

XXXX. that certainly was in we headwind that saw a So

RIA in the we very is bolstered. and have larger We've we the that, We're to XXXX RIAs part think had momentum positive on historically goal are of in larger continuing our efforts of said, our -- market optimistic doubled capabilities. between is most because be $XXX the we effort down RIAs That to have million but have the And the who capabilities and $XX leading $XXX and we're Gabe million, resources and think million there. Collin to greater and all Garcia, Eric than that sell capabilities, market we segment. to on all

that strategic positive focus don't is as want stemming into RIA we acquisitions the we with as ties then to what like. on channel goals, with going XXXX. and with give move the think our deconverting I through predictions were to So to advisers are look any But our XXXX

Operator

go Oppenheimer. for And the on to next, we'll Owen Lau, line

Kwun Sum Lau

about but help more Ryan, growth drive in remarks, strategic detail? you bit bit your a please could I priorities on talked little revenue a add you XXXX in year? does it think bit the how priorities in more your little this prepared little And color a

Ryan Hicke

doing you're well. hope I Yes.

of So of asset that of if he question part attention had, you businesses. management our Ryan's I around but jump is, I year our in really kind said, about mentioned, really the the some as we've I of of turned as it XXXX, middle think same, you off just when is think last

about, kind IMS think and you individually, years If go some with clients, of the start last drive us now and and is it's mode. we've to mode, also I but play, couple continue what a Sanjay, with rightsizing you the think as in business a great talked growth in businesses expenses groundwork through the of on terrific about for executing filled lay job, to new both client and team existing to growth he larger solidifying globally. a around that that is really growth base, on

management We structure growth. set about look segments. we the getting have really at But of pretty set those made around businesses. of across strongly tough you those we to we're when And in capabilities the a is than of of compete kind we rightsizing to feel have some decisions across the that about around businesses, back of broader businesses intermediaries past broader asset couple XXXX go suite a of and a enthusiastic and institutional maybe all the

a positive right other those asset really into into businesses ideas some getting we going is launched, another tremendous to of to different Around then kind incubate amount us about track and where back on to things provide new area organic doing you're management stand around of new areas momentum. see now And to getting of because lean lean business. we feel some some really

Kwun Sum Lau

of the expansion. comment this And it. about a direction and terms for also you year, investment in then margin Got margin talked

upside? some invest -- you should the potentially should stay could investment capture bit, should expect we there in we Would year? that Or expect we reinvest flat you like up potential upside AI of that business? kind a expect maybe something little any XXXX? expansion Just you or go the if in -- margin if is that of this AUM then the this Is

Ryan Hicke

I think X think that So ways. we different about in

If your you Owen. of question, take kind

our stack going and with things in technology on in Asset and operational automation our have our We stack. and AI Management stack

couple So expansion, we them. we to predict doing more know if there point leverage I around the of I of expectations things your all can drive this margin definitely operational company outcomes through believe of don't a are areas. we would around across But

at SEI. our we looking the about as at is that the company sales I spoken talent you ways going where spend invest in we One sure basis. of to and in we that a company in discipline we I'll position margins across ongoing of around we way an we those look and different how manifests And before, business and enterprise areas think future, across we've itself the expand that actually run things spend that to leverage believe about but can workforce microcosm level thinking as honest, horizontally, about be do on money, that we going there's we our more across can continued a to a other if can money, we're functions make continue where that be believe

like with the I and ability myself executive team see that like the our continue we see We what we with about And we excited that clients. sales is reason what install to the to activity. think are

courage SEI to discipline to momentum, the continue operating and actual the to we fall right model come we the drive for further on if we the have line. maximize think revenue, that So sales as and sales feel to those like bottom will we

Operator

for to Brown, Instructions] we're going the Next KBW. line [Operator Mike

Michael Brown

for quarter-over-quarter some on healthy it's the that like think to you touch activity growth looking were think a this the to that here, result great good but in business about wanted got a it XXXX hear I there. is investment some looks guess just as touch just more client business managers quarter, Net bit some of about Can tailwinds, growth. that love maybe as XXXX. about to I on we potential good installs well. how sales helped It little there like seems business. just

Ryan Hicke

room, so Phil a question. Phil that in that's i'll Mike, answer is Yes, the let directly. great

Phil McCabe

as quickly, That sounds $XX.X quarter, you great. net. Mike, sales great were million this said, so

XX%. More about they importantly, were year-over-year, up

operational So to there. we're looking as We're -- in Ryan said, seeing there good investing but closer our without technology. were business I write-down, traction at if scale. XX.X%, XX%. we're the Margins But also the look at and automation think you heavily and

trying trying we're what we're to and just out the our that build balance for clients. spending, we're platform So to

think as far don't overall a place As stronger. we're the I think We're in clients. great our cross-sales ever great have with a been place with solutions. our pipeline, I I in mean,

would from a is we think EMEA the market. in and getting in perspective, as the I globally U.K. strong. the pipeline resonating new stronger I is is in say The everything pipeline business -- speak.

day, huge brand single the we're and every in that. we towards push, a making have our really We're big, So a good activity push more market. building

we So good to I Ryan, anything we're I look more good forward think a place add into going mean, to in and come. to XXXX, there? things

Ryan Hicke

IMS, the Phil, week kind banking, with clients. And thing [indiscernible] tried units client other it pays to level understanding on and it advisers and I XXX and drive model our all has same the has our in service dividends and you've have across I here next think would Paul [indiscernible] at and of only exceptional, certainly based I add, Sanjay look the positioning you Jay, is is think the engagement clients. think No, engagement of actually the I the when

the we and think last to pay So engagement and around couple really let feel dividends, increase optimistic activity continues that will our going I of and we something not in to the put market the have forward gas. that foot it's off years we're significant client continue

Michael Brown

driven so kind that therefore, XX% natural that the of And by ceiling would business revenue rate that I focusing are maybe operating is growth the and guess Okay. What Certainly, generally business? it the the be of sounds on longer-term just guess, if Great. kind the for margins growth? income ongoing to of side? business? for like close the Yes. level, clarification the quick I is there. right growth a just growth

Phil McCabe

pointing his say to exactly Yes. Mike, he's I not Dennis that answer what what in past, around is Phil. XX% with I'm the X in said or in up and the as is wants We'll that, the would -- we've sure higher been this range. thumb air. to X. bump But XX% point we Actually, means.

also invest continue business. to to in have we that think I

XX% be might high. bit little a So

think it's there of us to that's I out important front for the capture kind market of us. in opportunity

we the just So want and our and sort drive to invest XXXX. in definitely invest continue to platform growth throughout people sales of in

Ryan Hicke

I agree. Mike, we're there's going business. to continue to in invest for growth in business, that that and opportunities invest for but scale significant

Michael Brown

And maybe side to the then change of of capital to kind Great. Okay. the just allocation gears business.

kind something a would more bolt-on transformational? little bit that like? I of into look on maybe transactions, that's guys on quarter. closed Those the into opportunities. maybe could consider back what M&A looking you were be case, other And size at Can might the You just X some guess and when if the you inorganic view transactions in you market any strategically touch growth

Ryan Hicke

So mean market back we're I now. in the right

activity. there. didn't could M&A our corporate the our continue the we're we our teams think the how capabilities that But months continue XX will or That's really accelerate acquire transformational. assets so I we invest space, to to example, one stop you look inorganically, I what didn't to we Paul we at to both growth to areas an find segment. would you is would for alternative put opportunities. We stop together we know tell and invest about but when where RIA that The area So and continue Altigo look talked ago. or never organically going development team is

And or that's AI business whether automation, some of Sneha doing new things area, the the data. that around in is

that consistent close focused, pretty the on but we in things past after talked X areas are investor the about specific with acquisitions. or we really we're in the have door Michael, the themes hopefully So presentation, didn't

Operator

no are questions queue. there in more And

You continue. may

Ryan Hicke

Well, for Thank proud delivering but in have as laser-focused our the call. joining new for you. business I'm We've our of future, got investing stay in ahead. accomplish for innovating and our on and XXXX, today's we growing talent we've Thank mentioned, much markets to capabilities. more to clients, achievements you our

Operator

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

now disconnect. You may

SEI Investments (SEIC) 31 Jan 242023 Q4 Earnings call transcript