SEIC - Earnings call transcript Q3 2024

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

Operator

Hello, and welcome to SEI Q3 2024 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Burke, Head of Investor Relations.

You may begin.

Unknown Executive

Thank you, and welcome, everyone. We appreciate you joining us today for our third quarter 2020 earnings call.

institutional have Financial SEI's leads Officer; management adviser we Sean Executive our call, of unit, Chief members Denham, Michael and the Ryan committee. Chief Hicke, Officer; investment our On executive and businesses Lane, who Phil James [indiscernible] and Mike Sanjay Cipriano, McCabe, Peterson, Sharma. Paul Klauder,

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

Please We Securities earnings and and your would remind questions, uncertainties press that during are Exchange that our differ actual certain that regarding notices to and to the statements release and have today's that today's make will presentation, may cause with like are to we forward-looking and responses risks results in in to our filings statements you refer to here Commission. our materially. in forward-looking subject

not do that, of over our it turn Ryan update undertake our any With CEO, now will Ryan? to I Hicke. forward-looking statements. to We

Ryan Hicke

Thank you, in record aspects had everyone. Brad, afternoon, a regards good SEI quarter. and many and

highest quarter management. excluding EPS of $X.XX highest growth prudent expense our a line and is the items, product company's history achieved, Our and it EPS in second onetime ever our represents of top

reaching new administration management, under and advisement prior grew highs. assets quarter, from Combined X.X% nearly the

cash net more for implemented of doubled had we program, sales $XX the which quarter end integrated the balances SEI. to in than also We the record totaling which our program. the modifications also at million, is events And a quarter,

availing last quarters. The These early integrated have SEI to capabilities over and the results. the and strategic results engagement, manifestation is detail in financial sales, market results to few energy we put our unpack are and attention meaningful of more changes marketing cash changes client showing our more increased program into will Sean shortly. an

should with half benefit did were the in quarter the the noted It the first closure QX. be of accelerating that third events in sales year, that we delayed in

X our on activity, last expand share years, as in enterprise client to continuously core the markets. Over of have increasing total been as positioning. markets significantly We engagement win our well addressable market we intend and laser-focused

invest to SEI talent platforms clients. we the As in and increase and awareness our can we market bring of value and

We relent expansion want and will we maximizing in new client the on and markets win. not growth client where segments to

a to to we market private footprint. market growth-oriented opportunity, for increase we client can execute having on managers, organizations For where and large and wealth share segments regional U.K. business like the blueprint example, surgical our their investment expenses private take to looking believe banking SEI rightsizing the banks focus relative continue power by community

and this market transformation other segments believe demand in seeing services. also are our as data, resonate We across value this I real integration SEI cloud for proposition well. will

events The enterprise business, reflect Investment truly we're broad-based. momentum sales also was quarter, our is record a Our in seeing the response which sales in the efforts. Managers

clients, existing global and looking having outsource. We're to clients clients, alternative managers, in-house traditional with larger both U.S. success providers

these market. including business, lead expect and operational to to robust, automation parts AI services We demand for invest of in the will will the all this we and continue remain

SEI's third segments. business quarter top of earnings across growth our margin all reflects line and both growth

Sean addition discuss will In from the benefit that shortly. to onetime items

$X.X in by grew space. the RIA adviser predominantly Net additional the by adoption billion, platform business strategic cash Some flow highlights. led in

opportunity segment has opportunity has market, solutions and as Consolidation providers asset SEI platform our well in where is and an expanding win significant across a as clients believe operational management. partner. created as who to more This SEI processing growth. market custody technology view the key investment for we a

with businesses companies a vertical of trend streamline in capabilities. clients true breadth a as their to continues to provider leverage strategic by an platform fewer enterprise turning It's existing market of the quarter, third gaining our just and repositioning the the single partner to to us and not partners is Beyond SEI grow, looking traction. scale evidenced

with selling approach, enterprise believe have By incredible against only opportunity an a focus. have growth gain that an to firms singular market we to share we

We new retail place focused choice types of are investments, we passive for offering growth our are as portfolios, of on classes, [indiscernible] increasing also our product asset and the to that continues repositioning be whether platforms clients. alternatives, in their growth and more reimagining asset management the for intermediary our market embrace

segments into for of in intermediary and to us solution it disruption, and opportunity equity beyond. position us to also consolidation of the tremendous private the The range advice. but the create addition space offering to Michael can creates future team influx invest space breadth our capital is SEI continued strategically for us of allow and a for broader a SEI the to in win Lane's this of

strength, confident sheet balance focus willingness that will of invest combination solutions are differentiation growth. competitive innovation we scalable trends, accelerated stability, industry and on to eyes SEI's our client and in drive and With culture,

on enterprise for seeing are the to our workforce and value have shareholders, focused rethink we we maximizing in market the across are momentum the We of opportunities for and enthusiasm the are proud SEI. we

performance our employees thank to want I for quarter. outstanding SEI this concluding, Before our

change. earnings make and we not are this be call Michael hitting change, satisfied full like of our of across until a brief what persistence, take realize And and congratulate everyone on is speaking moment all resilience on to have to to and to welcome still some their work to company. embrace to will willingness cylinders on to a do should possible. I'd We reflect celebrate remarks. potential, You I lot we Lane our

institutional last our businesses. unit, lead investment joined Michael for to management us and adviser month BlackRock

management Michael Michael? I'm As team positive opportunities early leadership us our an I experience, already help mentioned, made will leadership confident expertise extremely contribution and his to on its capitalize accelerate market growth. and has reimagine and in the days. asset

Unknown Executive

areas: I client the we first segments set serve. my speed up everyone. few afternoon, first, weeks in understanding getting good that do SEI, and not do Ryan, you, at Thank X and to

and needs across individual our existing investment products outsourcing services, of products, and aligning client technology SEI we what investment either custody meet looking capability clients. that new leverage solutions to to learning products base the or can Second, where these begin serve services exist

and areas improvement history, know Third, people and structure, person our learning what is strategy to and there while getting and each our adjusted about challenging to is for be opportunity think foundational bigger cannot expansion. both where

period fastest-growing what and with the of very serve clear represent is clients short of we small that But wealth advisers. well. percentage relationships have in a clients has our these Now time deep become a financial largest and them

highly and markets businesses move adviser be without can both leveraged institutional distribution. across cost to help We our our that skilled us increasing people of have into new

be team, the client that administrative outsourced us from and technologies our as will but willing Our products engine. LSV, in-house single focused or adviser serve CIO. our institutional and it technology management, must on businesses growing the skilled of a operational segments. engine to whole individual deliver and asset be have for has institutional product and investment beyond largest hearts we highly Parts our delivered business including room delivery, fastest custody of investment services the delivering Both growth also SEI, help

more reasonably has SEI pursue. that for we opportunities realize to come growth I than can

position across where will challenge both as prioritize, to market leadership and leader. the reallocate grow be a we secure invest team Our our collective and

results. share to turn to I more Sean quarter's it about detail as the Now financial

that weeks, excited it accepted say Sean. am this growth can the And to team. more I X than opportunity turn with prospects join honestly after that, when over our I about to I leadership I'll

Sean Denham

Michael. Thanks,

of was strongest quarter As the Ryan history. XX-year one the third mentioned, SEI's nearly in

line, a out estate, into to the I onetime comparability. million. business, items Before $X and from of portion impact approximately items in our some quarter million from large million real our below of a get benefited a financial performance I call current Banking $X our fee benefit few gain on performance, The was which an $X.X which from recognized that was the want sale onetime LSV, Private

both the quarter our this second Our increased quarter. to Each benefit and realized by XX% of by the compared versus second operating increased to year, XX%, above. including of Financial segments results the XX% prior and I revenue prior favorable broadly revenue compared year. the $X.XX by items a also EPS and X growth margin EPS expansion were business noted from income increased year

business realized implementation converting as the backlog and business continues profit realized banking XX.X% growth Revenue through notably margin in private first in by the noted as the XX% Turning half earlier to clients supported operating in the existing performance. was to The our on healthy year. growth was new SWP of or clients. unit momentum items strong. our quarter third Revenue growth I well the excluding

in driven and strength the continues business increasing by Our well profit cross-selling as our sales existing space to clients strong and significant in to investment by performance post with managers alternative CIT. as operating XX%

with revenue declined first versus from realized when last growth an by single digits. half business institutional Our low improvement year, modest year of revenue the the

Operating grew offsetting managed disciplined from from a operating and and and ETFs mutual positive at products. by, growth last The last things, XX% the management stronger pace, integrated cash year with from our year, double-digit performance cost revenue fund in up other business driven outflows a adviser profit accounts among realized strong separately profit efforts. program versus contribution traditional

program, XX, traditional resulting to strategies On in into will mutual we expand of last $X.X have quarter. our revenue programs the billion and inflows We continue the in our products. impact total offset integrated reaching on the increase modified of new day actively September cash the to to outflows balance fund

since seen continue to quarter have end, they fluctuate. anticipate balances we fluctuate will We significantly and

give a in program base from fourth we That income. double will $XX operating on for the million it Given cuts, balance is and in outlook affect this rate the balances difficult outlook these contribution on said, a case the increased how that see nearly quarter fluctuations, could realized to based QX. would precise a current

And this after up contributed be in to contributed fourth normalized I performance report which when large few taxes quarter. a will program driven we onetime the the We estimate million to of from $X.X over earlier, income, year. quarter results. XX% fee by equity $X.XX or noted in rate able $XX LSV run last the million months from better EPS

for that around increased do $XX which expect not naturally put that which in a million quarter in most totaling context. Notice sales outstanding should Note as events of quarter disclosure performance trends these has segment by are fourth the similar release, sales our help net these press recurring. fee the SEI have we events into had is also an we episodic.

offerings. business, business Private business were both were in cloud investment of excellent events entirely for addition both banking mix recurring -- events services nonrecurring managers events in our and private has professional a business our in the business. and to an new primarily growth of Banking the our to and Events quarter QX by private driven attributable which recurring continued data

business, new managers investment Events traditional addition to existing markets. to multiple were our significant in supported closing In cross-sell alternative by clients in the client and

couple space, events essentially endowment Our the in wins quarter. defined in benefit defined With institutional offsetting terminations. business a of flat were and notable benefit the

Turning to AUM and X.X% combined and prior of to our increased our $X.X by CI's X%, balances. asset new quarter, from AuA the trillion. increased total nearly bringing nearly AUM AuA a record

the attributable both largely was Growth private appreciation. our reflects inflows. in businesses quarter Growth and banking in appreciation positive to net market market and institutional

Our advisory spaces, fund strategists notably in platform-only benefited business outflows net healthy in net our offsetting from inflows, mutual and our products.

in on April X pricing for catalyst third was strong SMA quarter. revised growth structure introduced a Our the

the strong business, equity saw assets X% passive outflows by market into offsetting products. changes Our market investment quarter, is less from during LSV which and sensitive increase performance managers benefited to net

Touching million for shares repurchased quarter. $XX approximately million in capital allocation. the on X.X We

X maintain capitalization. or either million of market repurchases and nearly SEI shareholders as of Over with to X% a dividends, our balance to we cash no a $XXX have quarter capital end. million $XXX last quarters, fortress sheet balance the through of continues returned of debt

We message our third employees. that, proud we the is Ryan's would our this investor single Before of very proud are quarter. all just that also be quarter. should I'd strong reiterate to And record-setting remind community while of the a concluding, like results to quarter I our quarter,

for growth in work of of term, our continue a remain over lot and the focused long to have We business sustained driving on we us. front

leading our Before addition concluding, experience corporate investor like deep former functions finance Investor I in of sell-side Brad new being would and to a relations Relations, to Head Brad welcome analysts. Burke. has

line worked to in please join of for excited all many that, you the the and with that have we our past, Brad With are have team. operator, him know questions. open I

Operator

first from of [Operator Lau Instructions] question Owen Our with Oppenheimer. comes line the

Kwun Sum Lau

in double-digit it's when revenue this want growth segments quarter, all my quarter? it sales a question felt level I start is segments very So -- press record one-off to in level release, the things with happened also high-level printer margin expansion. that the have, energy question I But I Many because all and different. And a have quarter net I is think, you saw event. of this

accumulation Or comes this the sustainable? years have into done is it and of past fruition, they over X and an be what will it

Ryan Hicke

doing This you're Ryan. is hope well. I

I think that's a great question.

answer think the of little above. of I is So the bit all a

cyclical. because short-term production our the very medium don't and have to are term and across when I we So ensuring you the continue prioritize all strategic of the say in about focused, long made get skis we delivery stay of far that the in over we we and but see know, what as terms to we changes too things with think would that satisfied you are we things these organization, some

bit a around in But that normal. Sean about across more a and and talked what that talked now, banking Sanjay's some focused that we units, or business in of was think all little I When in as little you timing, bit in especially about than right it's last at QX a lower quarter, talking definitely sales. benefited execution look we we're the combined of about terms QX

know, think focused we a time, look like, look do How When expanding forward, markets, what rate about on pipelines only earnings does long-term with of broader this And activity moving you margins, for growing like? the leading as the think focused, of run we the but company how addressable the breadth same so to then enterprise focused really run indicators are we positioning for we're the we SEI expanding Owen, we we are total are our capabilities. that, our EPS on what about when at side lens. medium on

our thinking in So expand that make about position investments the accelerate can for market. we growth or we're quarter. constantly to Great

underlying one is but we it though, quarter, like said, SEI. things Sean are As around that the structural happening

Kwun Sum Lau

at back That's cash but was the to billion. average at And helpful. billion I it balance, going end the to program. of the then super increased the quarter it. $X.X look Got only your I third think When balance $X.X FDIC

do double so the like expect to quarter to question growth I or be end? will XQ $XX Sean think on, you closer touched talk my fees driver about will like is, -- but that please you could million of

average program the spread capturing And are in what is this now? you right

Paul Klauder

Paul. it's Owen, Sure.

there. give a Let me little bit commentary of

indicated, we XX, in As that program made September the actual the effectuated on day. modifications

no on So entirely the substantially that's integrated average XX, the balance. program. such why is the different cash allocated than ending We modified cash is September in the to that nonpositional cash program

model. is trades portfolio we sweep this X% with into for cash discretionary fund cash the that be X% investors operational the the automatic positional a none the basis may of invested above but model held prior market made of as outside had by money unless from all modifications a adviser away Our the on and cash suite

we be made. in have double modifications we And was or quarter. average but we're in nearly third about think interest the yield to should seen fluctuations, the the -- directionally, are the we Again, see after close contribution So we cut. fourth the rate X% rate is the quarter those where probably going to the

a rate that the So investors. we credit slight we made adjustment to give

points basis we the from went down, of the though interest modifying investor to even XX rate So points. basis took the rates position XXX

gives that color. hopefully, you So more some

Operator

the line Crispin of Sandler. Our next question comes from Piper with Love

Crispin Love

can very saw additional the new end give a First, there pickup wins it at are the little the helpful. were Was I release, bit of just strength of as that on the how But sizable? quarter, color the event and sales concentrated investment in managers press out? see you really banks But which the as nice well more any were advisers. there. a spread tables Private investment

that spanned bit that we discussed? And a then segments, you've little might expect were there just to any wins enterprise individual approach see which sales more across given

Ryan Hicke

I'm give going then question, This is answer leads of well. doing and a color. go are some some with you more the we'll your let first to hope Crispin, Ryan. Yes. quick to unit

is of this one sales that you not or think the the unpack that. there thing is one events deal proud with quarter sales those name events, are we that I when drove

was breadth that win. to our value price proposition where it a want want priced we resonating deals really was them where of It were where deals in we is segments

a installed we revenue, as and So leadership about events I that. we really team, are the when especially strong ability feel think look into revenue convinced when sales you that translate their to profitable at

did we we a not nor would do we deteriorate that client side liked anything anything chasing deals So would lowering do really did with the pricing, on have experience. expense that

when we to really, going can we're continue on focused to think I install the replenish, win, refresh. So we event, sales really where at look be segments

what it's we But happier But I'll seeing it's Paul actually Crispin. market now. let in we're the a an line right number, with were you Michael, And the question, it, area to happy color on when Phil, give some unpack Sanjay, think only top want not they're we I great win.

Sanjay Sharma

is earlier. call [indiscernible] you This Sanjay. what

Our well here we market, our now are well resonating X having well segments, managers And [indiscernible] have different in with is U.K. that our the U.S. the community as as go-to-market that are respect strategy. clients. quarter wins months, of this terms saying we banks we strategy the to with [indiscernible] in in very resonating investment

And Our that just to revenue. in pipeline is and quality I is of terms realize ability saw pipeline our of deliver it, the pretty it solid. and backlog

Philip McCabe

jump is in this real Phil I'll Crispin, McCabe. And quick.

and products jurisdictions. were As sales of the IMS, across had had names far record number overall with quarter. we a had new We all record in sales as sales concerned we

assets, the spots. and We bright They strong particularly were are products semi-liquid CITs. in private

I is team And is the than well. that, other pipeline think and doing very strong gaining the We're really EMEA. very, traction significant in

concentration new it as cross-sold concerned, and far the was cross throughout sales, XX% and different XX we As clients is business over XX% quarter.

concentration. there no So major was

a business, -- is and healthy the pipeline very we very, So strong. are just it's very

Paul Klauder

is And Chris, this Paul.

quick, advisers. $X.X the quarter. all in positive across of billion XXX That's record real one adoption mix. us new our cash X qualified in adviser for the nice Just net last years for over market, flow product a

So great. that's

some super about. to things of upmarket is he investors talked strong. helping that that in And us going reimagine RIAs do really of to larger larger about is optimistic going Michael and we're Pipeline kind the

to Thanks, is So we going This the increase has Paul. some marketplace. Jay. the TAM in is VC think our of by

Jay Cipriano

pipeline mentioned calls excited market in in we prior saw deals very the care in manifests not a benefit health for in OCIO -- space the opportunities and we I've quarter are with Yes, robust endowments and beyond the the foundations, when that itself we're at across institutional defined in -- about pipeline. look market we those that it's the municipality unions, this profits,

We be there. opportunities to further continue growth about optimistic

Ryan Hicke

with And the your then, I'll answer of part Chris, second close to and question. just

got Jay adviser the and had X [indiscernible] we Michael we've So Lane in in then out event conferences XXX institutional in large about Austin had October had with -- a Sanjay client clients event in an Arizona, client

the conferences visioning, broader just to is to I capabilities. now capabilities your SEI the is think question enterprise a instead of What still unit are On client around early though see in these refreshing we're for innings. really much content still the exposure

in the So think started SEI have full of would we've positioning again, to I caveat the this market. on but gotten don't execute, we enterprise even

Crispin Love

question me. one from that's other And X just very helpful. then all last Great. And

it flows bit types release, that mentioned there a positive flows the little the quarter. calling advisers as give the and managers. Just investment products investment you there? just specific in relates out of or you detail to drove net more clients Can in

Unknown Executive

you start? to do Paul, want

Paul Klauder

Sure.

about $X.X So SMAs. We and billion. once strategies our our in again, talked saw adoption we

that. the see certainly funds. Some to the mutual a the April had see We a of headwind on around funds. industry we helped done X, headwind Frankly, in mutual we the active marketplace in around repricing contribute SEI

that not So that's getting is but lower. uncommon, denominator

AuA the and in strong, opportunity are platform mix. amongst fixed major in an third had our that are strong side redistributing on had talk is in indexing AuA, we then a strong, product ETFs income, which finally, which about large one launched we staying RIA our differentiation When a And side. our are around other marketplace. the predominantly quarter. direct on flow cash assets direct on relationships signed. we larger is those is indexing Those We

as the that they redistributed does breadth capabilities. Some see asset of assets of get in the under management

detail. you that So gives hopefully, some more

Philip McCabe

side is The would thing on the I add of X from we IMS the that we're benefiting the didn't globalization or business. X One only cover, tailwinds. major

the Another markets. and convergence public one is of private

is retailization is of private private and general. Third fourth in alts. assets the the just credit And

bottom those us industry for have matriculating are are themes to of us of very all quickly. cross-sells and to and they're So falling the and those cross-sell tailwinds sort very, significant causing line

Operator

next Jeff the with Schmitt [Operator question Blair. Our William of Instructions] comes from line

Jeffrey Schmitt

existing but may maybe was up you the the professional of of how I just in too? growth And then new how I have revenue much speeding ramping it, banks, the versus which now. backlog, kind private drivers from driving missed like much clients some versus is that could piece, discuss know clients services is

Sanjay Sharma

Sanjay it's Jeff, here.

sort the [indiscernible] our things X you backlog solid. out, company of is called So all

clients. You have of in of quarters, over terms that our new terms terms if the seen expense last delivery, at trend in backlog X in look management signing of operating line you

see You we could are improving. consistently,

the the Those delivery, offerings it cloud as are helping as management well new the backlog not sales with revenue offering. which client the but cycle. helping new of is as helping with professional the sales also And an is us growth services the with on only the change side, X FDA

base on changes of years. once XX other in XX, I make the from side clients it's platform, on significant to a any of these when think they're the these projects undertaking for kind generally platform clients. client kind a The moving about

the is faster at and new we winning expertise a want and pace, we services, but really capabilities also are projects not business. year Ryan, LCI, in best helping do only is XX-plus realize what add? us you data And are of to our that's bringing terms with of such cloud. running In the revenue enterprise as that it, professional

Ryan Hicke

is perfect. it No,

Jeffrey Schmitt

in down been you've managing segment well. year. really Okay. then Obviously, And expenses last that we're

they're year-to-date, growth you know maybe versus X%. about that And you've efficiency on how coming $XX more million. that less think from before, how then like kind touched for and cuts think And but this can is than should I initiatives? much of I of R&D up we talk --

Samuel Hoffman

great So question. that's a

If you focus at talked our data delivery, professional look with backlog helping the FSC focus on on I that overall about, as cloud, our improvement. us is and services

think when end I perspective our are clients platform consuming on the the of from we the us platform, are our us from day, way about to with bases the they they're also and are on differentiating relying relying perspective, outsourcing competition. respect that technology

us. judicious in management, superior our the margin clients of new R&D and we to absolute of change and provide that's invest the services management to have critical us to very in solution because pace solutions that's to segment the Regarding industry. in, and with very been need for expenses, expansion we priority continue expansion keep very, for The something expense products terms

okay, Our motto as part their improvements. is through to our our is business, have are going that grow realized expense expenses What and R&D clients are compromising we margin management. of to expansion we really on efficiency not we help our

We in investing are AI.

in are investing We automation.

investing delivery. better manage we our are We can how in backlog

with excellent which those are So our management. factors differentiating are helping the

Ryan Hicke

about operational our footprint as and that more as from across leverage think think lens and drive efficiency and talked about you and optimizing putting add when the just with the all lens the and company actually I'd technology bit vertical this footprint, horizontal a though, we're little there. we we with not you Sean energy continue in [indiscernible] with about benefit focus to York I our that New Jeff, also were a

to delivery of more collaborate We're And they're starting to able we're differently. actually prioritize accelerate things. to able more,

an the team team, as But really infrastructure. drives that we continue Sanjay's done to the vertical. expenses be managing has horizontally a So amazing think can of foundationally doing scale leadership job what and about true we in

this the absorb but sales things those required investing one the all future, infrastructure done experience. the to horizontally that certainly the talk Because stop in not deliver about, events we client we happy things and company. quarter, are we great and greater across But to with and the things we're of a expect the are things going are in in other

Jeffrey Schmitt

sense, Okay. very helpful. Yes, that makes

Operator

showing back and no questions Thank now to like I'm to you. I Ladies remarks. decent, closing would Ryan further turn Hicke the call in queue. the for

Ryan Hicke

you Thank earlier, like would We're the today. focused you. on it but we SEI's attending quarter. from for Sean's one term. maximize great to for and We call leave remarks capability we it long a I focusing need just now. We're with potential. you everybody do to was what was really the right Thank see where quarter, ourselves

really that a starting of person to I to look We'll same them. QX. continue secular hopefully, everybody's we can the more in see appreciate we're trends few and and on emerge energy to into everybody, in time do we're create how where lean momentum and capabilities win seeing all in we but focused success across forward in units of our

Operator

participation. for Ladies call. Thank your conference and today's gentlemen, you this concludes

You may now disconnect.

SEI Investments (SEIC) 23 Oct 242024 Q3 Earnings call transcript