SEI INVESTMENTS CO Q4 FY2024 earnings call

• Sales events: Q4 sales events $38M, net recurring $28M; full-year net sales events nearly $130M, recurring nearly $100M, up nearly 60% from 2023 and almost double from 2022. - Employee incentive: Board unanimously approved one-time increase to 2024 incentive compensation; despite some headwinds, Q4 still saw impressive earnings growth while rewarding employees. - Business unit performance: Every business unit had revenue, operating profit, and margin growth vs Q4 last year, but institutional business had asset outflows from plan terminations and LSV had net outflows from structural pressures. - Asset situation: Healthy growth in 2024 for AUM and AUA; Q4 investment managers grew due to alternatives business, while others declined from market valuation and net outflows. - Capital allocation: Repurchased $259M in stock in Q4, increased semiannual dividend by $0.03; full-year capital returns to shareholders totaled $620M; acquired LifeYield in December; balance sheet pristine with no long-term debt, $840M cash and $325M undrawn revolver capacity.

In Q4 2024, sales events were $38 million with $28 million net recurring. For the full year, net sales events reached nearly $130 million with nearly $100 million recurring. EPS was $1.19 for the quarter, a 31% increase from the prior year, and $4.41 for the full year, growing 27% versus 2023. Every single business unit realized revenue growth, operating profit growth, and margin growth relative to Q4 of last year. However, the institutional business saw asset outflows due to expected plan terminations, and LSV experienced net outflows due to structural pressures. SEI's $1.6 trillion in assets under management and assets under administration were nearly flat with the prior quarter. In 2024, investment managers continued to realize growth in assets driven by the alternatives business, while other businesses declined due to market valuation and net outflows.

• 2025 strategy: Focus on driving continued change in operating model, aligning capabilities with client engagement; continue to invest in infrastructure, scale, client experience, people, and global regulatory compliance. - Sales outlook: Positive about market engagement, activity breadth, and sales pipelines, but no specific financial guidance; sales from event to revenue online takes 3 months to 18 months. - Margin pressure: Winning new business leads to upfront cost increases impacting margins in the near term, with investment costs ahead of revenue from sales events.

• Institutional business: Asset outflows due to expected plan terminations. - LSV business: Net outflows due to structural pressures facing active asset managers. - Regulatory: Regulated subsidiaries outside the US face high supervisory engagement, UK subsidiary continues to engage with regulator to meet expectations. - Performance fees: LSV's performance fees expected to moderate from 2024 levels.

Q: Talk about the sales environment, driver of growth and sales outlook in 2025 A: Sales events in Q4 had mix of new and existing clients, broad-based across units and domestically/globally. Not changing pricing, leaning into meeting client expectations and delivery reputation; positive about market engagement, activity breadth, and sales pipelines but no specific financial guidance Q: Near-term margin comment and margin profile in 2025 related to strong net sales events A: Need to make investments in costs prior to onboarding clients; sales typically take 3 months to 18 months to bring revenue online, with expense slightly ahead of revenue; investing for long-term, not short-term earnings targets Q: High-level thoughts about opportunities for asset management-based businesses A: Started process of consolidating areas of overlap, repurposing savings into new distribution opportunities; using scale of banking business to target large successful firms in technology custody and investment areas, with strong collaboration across business units Q: Private banks growth and client retention A: Growth through existing clients by improving engagement, high client retention; segment-specific growth initiatives like SEI Data Cloud, Professional Services, digital onboarding; delivery certainty and excellence key Q: Capital management, share buybacks and M&A outlook A: Buybacks based on cash balance, free cash flow; considering on quarter-by-quarter basis; M&A areas considered strategically to expand footprint; incentive comp one-off in terms of expense but hope to reward workforce for record results; alternative servicing in IMS segment about 70% of revenue, growing with industry tailwinds Q: Progress of integrated cash program and institutional investors' large impact A: Integrated cash program average balance during quarter about $2.18B, expected normalized run rate around 2 - 2.1B in 2025; institutional business headwinds in defined benefit space to persist in 2025 due to elevated rates and clients annuitizing when funding status high Q: Private banks client retention reason A: Not lucky, but due to aggressive ongoing engagement, enterprise mindset, exposing broader capabilities, professional services helping existing client base; repositioning from vendor to strategic partner role Q: Bank M&A impact on SEI A: Existing client acquiring or being acquired presents opportunities to help onboard business or convince acquiring parties to come on platform; attrition rate on those clients around 1%