SEI INVESTMENTS CO Q3 FY2024 earnings call

• Ryan Hicke mentioned Q3 was a strong quarter with EPS of $1.19, second highest in company history. Combined AUM, administration, and advisement grew nearly 3.5% from prior quarter. Net sales events were a record $46 million. - Implemented modifications to integrated cash program, doubling balances. - Private Banking business is rightsizing expenses and focusing on specific market segments. - Investment Managers business had record sales events, with demand for services expected to remain robust. - Adviser business net cash flow grew by $1.1 billion led by platform adoption in RIA space. - Michael Lane's addition to the team is seen as a win for growth in asset management platforms.

Private Banking business: Revenue growth was strong, with an operating margin of 17% in Q3 (15.5% excluding one-time items). Investment Managers business: Operating profit increased by 19% driven by sales and cross-selling. Institutional business: Modest revenue growth vs last year, operating profit up 11% driven by cost management. Adviser business: Double-digit revenue and operating profit growth, with integrated cash program balance reaching $2.4 billion on September 30. SEI's AUM increased by 5%, and combined AUM and AUA reached a new record of nearly $1.6 trillion. Net sales events totaled $46 million, a record quarter.

• Integrated cash program balances have fluctuated since quarter end, difficult to precisely predict impact on operating income, but based on current balances and rate cut outlook, could see nearly double the $11 million contribution in Q4. - LSV's $37 million contribution to equity income, but no similar performance fee expected in Q4 as they are episodic. - Expect to continue investing in all parts of businesses, including operational automation and AI.

• Fluctuations in integrated cash program balances make it hard to accurately predict its impact on operating income. - One-time items' effects are not sustainable. - Market competition and industry trends could pose challenges to maintaining growth and market share.

Q: Is the Q3 performance a one-off or sustainable?

A: Ryan Hicke said it's a combination of strategic changes, focused execution across business units, but they stay focused on medium to long term and leading indicators like pipelines and activity.

Q: Driver of integrated cash program growth closer to quarter end and average spread?

A: Paul Klauder explained modifications on September 30 swept cash into the program, directionally expecting nearly double contribution in Q4, and average rate/yield close to about 4% after rate cut.

Q: Concentration of sales events and enterprise positioning?

A: Ryan Hicke said sales events were broad with no single big driver, and enterprise positioning is in early innings with client conferences showing broader exposure to SEI capabilities.

Q: Detail on net flows in investment advisers and managers?

A: Paul Klauder mentioned $1.1 billion net positive cash flow in adviser market, adoption across product mix, 114 new qualified advisers, and IMS having record sales with various tailwinds.

Q: Revenue growth drivers and expense management in Private Banking?

A: Sanjay Sharma said it's a combination of backlog delivery, professional services, and data cloud offerings, with expense management driven by efficiency improvements like AI and automation while prioritizing R&D for new products.