AlTi Global, Inc. Q3 FY2025 earnings call

• Restructured the international real estate business, with charges related to it now being final and no longer a drag on margins. - Moved to a single reporting segment for cleaner transparency. - Core wealth management business focus, with long-standing client relationships (96% retention since 2021, average tenure 10 years, average AUM per client over $50M). - Revenue for the quarter was $57 million, up 10% year over year and 9% sequentially, led by management fees. - AUM up due to strong portfolio performance and acquisition of Contura. - Cost base structurally lower with zero-based budget program, expecting $20M in recurring annual gross savings by 2026. - Built operational centers of excellence in Lisbon and Delaware for cost-effectiveness and operating leverage. - Refining pricing models, especially in international wealth management, to drive margin expansion.

The main segment is wealth management. Third quarter revenues were $57 million, with 95% of revenues being recurring. Assets under management (AUM) reached $49 billion at quarter-end, up 6% year over year. The international real estate business was placed in administration and presented as discontinued operations, leading to restated prior periods to isolate continued operations.

• Expect results to reflect focus on core wealth management business, with revenue growth converting to margin expansion. - Confidence in organic growth from robust pipeline of mandates, especially in OCIO opportunities. - Pricing models being refined to drive stronger operating margins and align with service value.

• Noncash valuation adjustments and impairments, such as the $35 million impairment of the arbitrage fund due to refreshed growth assumptions. - Uncertainty around future realization of deferred tax asset leading to a $30 million noncash tax charge. - Continued support needed for orderly wind-down of international real estate business, though no further P&L impact expected.

Q: About normalized EBITDA and understanding normalized levels.

A: Michael William Harrington mentioned focusing on normalized EBITDA, noting confidence in cost management and margin expansion with pipeline activity and pricing initiatives.

Q: About impairment of arbitrage fund.

A: Michael William Harrington explained the impairment was due to refreshed assumptions on growth rates as AUM didn't grow last year, but the strategy is performing well.

Q: Restructuring completion.

A: Michael William Harrington stated the restructuring of the international real estate business is complete with no further charges related.

Q: Buyback plans.

A: Michael Tiedemann said buyback share repurchases are on the list of topics to be discussed with the board in the next meeting.

Q: Contura integration.

A: Michael Tiedemann said the integration of Contura is going well with early wins and evaluation of talent and portfolios.

Q: Support for international real estate wind-down.

A: Michael William Harrington explained providing cash support through payable reduction, with the administrator handling legal matters for the orderly wind-down.