AlTi Global, Inc. Q2 FY2025 earnings call

• AlTi executed strategic actions to strengthen and simplify its business, focusing on the ultra-high net worth segment. - Exited the international real estate business to sharpen focus on core recurring revenue wealth management. - Implemented zero-based budgeting to drive efficiency, expecting approximately $20 million in recurring annual gross savings starting in the second half of 2025. - Completed the acquisition of Kontora, entering the German market and adding approximately $16 billion in billable assets. - Showed strong organic growth momentum in the U.S. and Middle East, with a robust pipeline of OCIO opportunities. - Launched the 2025 Family Office Operational Excellence report, generating new advisory and OCIO opportunities.

In the second quarter of 2025, AlTi generated consolidated revenues of $53 million, up 7% year-over-year. The core Wealth Management and Capital Solutions segment saw revenue rise 8% to $52 million year-over-year, driven by increased AUM, contributions from acquisitions, and improved ROA on raised assets. 99% of the revenue came from recurring management fees. Adjusted EBITDA was $4 million on a consolidated basis and $14 million in the core Wealth Management and Capital Solutions segment. The quarter included only 2 months of contribution from the Kontora acquisition, and reported numbers didn't fully reflect the business model's potential due to timing mismatches and ongoing transformation initiatives.

• Expect second half results to progressively reflect the strength of the recurring revenue business with operational leverage from a leaner cost structure. - The exit of the international real estate business and zero-based budgeting are expected to lead to improved EBITDA going forward. - Confident in converting organic growth opportunities, including those in the Middle East and U.S., into long-term relationships.

• Forward-looking statements involve known and unknown risks; actual results may differ materially from forward-looking statements. - Refer to AlTi's SEC filings for risks and uncertainties causing actual results to differ. - Current results include timing mismatches between costs incurred and benefits yet to be realized, understating the business model's full earnings power.

Q: Real estate has been about a $3 million per quarter quarterly drag. Should we expect that to go away once the real estate business is wound down and does that imply around $12 million of higher annual EBITDA?

A: Willma, it's Mike Harrington. Yes, the real estate-related expenses have been running about $2 million negative on an adjusted basis. Going forward, once accounting is complete, there will be no expenses related to that business, leading to much lower expenses and higher EBITDA.

Q: Could you talk a little bit about the net inflows. Are they margin accretive? What are the fee rates on the inflows versus the business...

A: It's Mike Tiedemann. Internationally, the ROA on incoming business has been higher than outflows. In the U.S., it's mixed depending on the size of families; Q2 has natural outflows for tax payments but not lost business.

Q: Could you help us think about on a more quarterly [indiscernible] regarding Kontora?

A: It's Mike Tiedemann. The Kontora business has a large AUA and is working on organic growth and converting existing client base to discretionary mandates. The deal structure is aligned for margin growth as they drive margins.

Q: Could you talk about the opportunity to recruit teams from banks? Just what does that look like going forward?

A: It's Mike Tiedemann. Depends regionally. Cultural fit and client base fit are important. AlTi is a desirable platform with a holistic service model and is actively engaged in recruiting teams from banks.