SEI Investments Company (SEIC) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance with a 16% YoY EPS increase, significant share repurchases, and robust sales in the Private Banking segment. Despite some management ambiguity in the Q&A, the overall sentiment is positive due to strong revenue growth, margin expansion, and strategic partnerships. The company's initiatives in AI and tokenization, along with a disciplined capital allocation strategy, further bolster confidence. While potential risks exist, the positive financial metrics and strategic direction suggest a likely positive stock price movement over the next two weeks.
Key Financial Performance
Earnings per share (EPS) $1.38 for the quarter, representing a 16% year-over-year increase and a 6% sequential increase. The increase was driven by broad-based revenue growth and margin expansion across business segments, despite unusual items reducing EPS by $0.08.
Sales events $44 million in total for the quarter, with Private Banking contributing $28 million. This was one of the highest quarterly results ever, driven by disciplined execution and a strong private banking pipeline.
Private Banking revenue Increased due to recent professional services wins, which are margin accretive and convert into revenue more quickly. Margins also increased due to cost leverage on revenue growth.
Integrated cash program revenue $21 million for the quarter, matching levels from the prior quarter and prior year.
Consolidated operating margin Significantly increased year-over-year and sequentially, excluding severance and M&A costs. The increase reflects cost efficiency and revenue growth.
Assets under management (AUM) Increased by 2% sequentially due to market appreciation, offsetting modest outflows, primarily in the institutional business.
Assets under administration (AUA) Increased by 3% sequentially, supported by strong win momentum and market appreciation.
LSV performance fees $22 million in Q4, with $8 million attributable to SEI's share. This was driven by strong underlying fund performance and market appreciation.
Share repurchases $101 million in Q4, bringing the total for the year to $616 million, representing nearly 6% of total shares outstanding at the end of 2024.
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Operating Highlights
Private Banking Professional Services: Commercialized private banking professional services, data cloud, and SaaS offering, strengthening client retention and unlocking new growth opportunities.
Investment Management Product Launches: Accelerating launches in ETFs, SMAs, models, and select alternative products, with over $1 billion of net inflows into ETFs this year.
AI Investment: Made a strategic investment in Avantos, an AI-native operating system for client onboarding, to create a more connected, scalable, and intelligent experience.
Stratos Partnership: Expanded reach in the adviser channel through the Stratos partnership, positioning SEI to capture new flows and deliver greater client value.
IMS Business Evolution: Transitioning IMS business to platform-level services with shared tooling, workflow automation, and data services to onboard and expand with large investment managers more efficiently.
Global Capability Center: Laid the foundation for a global capability center to scale operations more efficiently.
Automation and AI: Leveraging automation and AI to lower unit costs, expand access to solutions, and maintain client experience at scale.
Focus on Outsourcing Demand: Focused on growing demand for outsourcing, especially from alternative managers, and the convergence of public and private markets.
Cost Efficiency Measures: Implemented a targeted reduction in force affecting approximately 3% of the global workforce to support future-focused investments and scalable operations.
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Risk or Challenges
Severance and M&A Costs: The company incurred $20 million in elevated corporate overhead expenses related to severance and M&A fees in Q4, which weighed down consolidated operating margins.
Client Losses in Institutional Segment: The institutional segment experienced client losses, particularly in the U.K., which negatively impacted sales events and financial performance.
Mutual Fund Outflows: Continued pressure from mutual fund outflows across the asset management industry affected the company's asset management segments.
Seasonality and Lumpy Items: The company faces seasonal and lumpy financial impacts, such as lower tax rates in Q4, fewer days in Q1, and variability in LSV performance fees and gains on investments.
Workforce Reduction: A targeted reduction in force affecting approximately 3% of the global workforce was implemented, reflecting efforts to balance costs with future-focused investments.
Cost of Accelerated Investments: The company is advancing accelerated investments, including hiring and increased depreciation and amortization, which could pressure short-term financials.
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Guidance & Outlook
Sales Momentum: The sales momentum generated in Q4 2025 is expected to carry into 2026, with significant contributions from private banking, asset management, and IMS.
Private Banking Pipeline: The company expects meaningful developments in private banking by the April 2026 earnings call, driven by structural demand for outsourcing and large alternative managers.
Stratos Partnership: Focus on integrating technology and investment management strengths with Stratos' platform to scale operations and capture new flows in the adviser channel.
Investment Management Product Launches: Plans to accelerate launches in ETFs, SMAs, models, and select alternative products in 2026, building on $1 billion of net inflows into ETFs in 2025.
IMS Business Model Evolution: Transitioning from fund-by-fund operations to platform-level services with shared tooling, workflow automation, and data services to onboard and expand with large investment managers more efficiently.
Automation and AI: Leveraging automation and AI to lower unit costs, expand access to solutions, and support entry into underserved segments while maintaining client experience at scale.
Avantos Investment: Strategic investment in Avantos, an AI-native operating system for client onboarding, to create a more connected, scalable, and intelligent experience across platforms.
Cost Efficiency and Workforce Reduction: Targeted reduction in force by 3% of the global workforce in December 2025 to support future-focused investments and ensure a scalable operating model.
Capital Allocation: Commitment to returning 90%-100% of free cash flow to shareholders through dividends and share repurchases.
2026 Financial Goals: Focus on long-term double-digit earnings growth and consistent margin expansion through disciplined investments and cost efficiency.
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Shareholder Return Plan
Dividends: SEI remains committed to returning 90% to 100% of free cash flow to shareholders in the form of dividends and share repurchases.
Share Repurchase: During the fourth quarter, SEI repurchased $101 million of shares, bringing full-year share repurchases to $616 million, representing nearly 6% of total shares outstanding from the end of 2024.
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Key Q&A
Q:What was the source of more than 2/3 of sales in the quarter?
A:The sales were a combination of new business and expanding relationships with current clients. The pipeline is strong, and larger wins will be covered more in Q1 results.
Q:What caused the wide gap between net recurring and nonrecurring sales events in the quarter?
A:The gap was driven by the growth of the professional services strategy, which includes engaging with clients early in an advisory capacity and influencing their overall strategy and transformation.
Q:Can the margin for the Private Bank segment stay in the high teens range due to stronger professional services?
A:Margins have been increasing steadily over the last 8 quarters and are expected to remain in that range, though they may fluctuate depending on the mix of professional services and platform services.
Q:What details were provided about the two large mandate wins in the Private Bank segment?
A:The wins involved engaging with prospects early, creating transformation blueprints, and combining SEI's core platform and professional services. One client is a regional/community bank, and the other is a large private wealth manager. One of the clients is SEI's second software-as-a-service client.
Q:What was the impact of workforce reductions on expenses?
A:The reduction in compensation from workforce reductions is expected to match the increases in compensation rates for the year, resulting in a relatively flat impact.
Q:What is the expected margin run rate for the IMS business?
A:The margin was around 40% in the quarter, but this included one-time items. Future margins may decrease slightly due to continued investments and hiring in anticipation of new opportunities.
Q:What is the run rate impact of the Stratos acquisition on the Investment Advisors segment?
A:In Q4, Stratos contributed about $5 million in revenue and under $1 million in operating income, including $2 million in amortization expense. More details will be available in Q1.
Q:Is Stratos continuing to pursue acquisitions during its integration phase?
A:Yes, Stratos is continuing to pursue acquisitions as part of its strategy, including acquiring additional interests in entities and planning further acquisitions.
Q:How will revenue from the $23 million professional services sales event in the Private Bank segment be recognized?
A:Revenue from professional services can start being realized immediately and may be spread over 12-18 months or longer, depending on the complexity of the projects.
Q:How strategically important is the U.K. market to the institutional investors business?
A:The U.K. market is a small but important part of the institutional investors business. Changes in leadership and strategy are being implemented to grow this segment.
Q:Review of Unclear Management Responses
A:Management avoided giving direct answers or lacked clarity on future margin guidance for the Private Bank segment, the exact run rate impact of the Stratos acquisition, and the timeline for revenue recognition from professional services sales events.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI system
AI unit
Asset traction
Avantos AI
Banking standout
CEO Directors
Day place
Directors afternoon
ETFs SEI
ETFs SMAs
IMS demand
IMS fund
Instructions Head
Officer Chief
RIA broker
SEI RIA
SEI commitment
SEI effort
SEI flow
SEI insight
SEI model
SEI quarter
SEI success
SEI year
SMAs model
SaaS offering
Sean result
access solution
accountability foundation
advice end
adviser channel
adviser client
adviser intermediary
automation
demand outsourcing
end client
focus
launch
outsourcing manager
priority
SEIC Transcript
SEI Investments Company (SEIC) Q4 2025 Earnings Call Transcript
Positive1-28
The earnings call highlights strong financial performance with a 16% YoY EPS increase, significant share repurchases, and robust sales in the Private Banking segment. Despite some management ambiguity in the Q&A, the overall sentiment is positive due to strong revenue growth, margin expansion, and strategic partnerships. The company's initiatives in AI and tokenization, along with a disciplined capital allocation strategy, further bolster confidence. While potential risks exist, the positive financial metrics and strategic direction suggest a likely positive stock price movement over the next two weeks.
SEI Investments Company (SEIC) Q3 2025 Earnings Call Transcript
Positive10-22
The earnings call summary and Q&A indicate strong financial performance, with growth in AUA and AUM, robust performance fees, and significant share repurchases. The company is investing in future growth, with a focus on alternatives and international markets. Despite some margin pressure from investments, the overall sentiment is positive, supported by optimistic guidance and a strategic focus on long-term growth. The Q&A revealed no major risks or concerns, and the management's responses were generally reassuring.
SEI Investments Company (SEIC) Q2 2025 Earnings Call Transcript
Positive7-23
The earnings call reveals strong financial performance with increased EPS, private banking, and investment manager revenue. Despite margin declines due to investments, year-over-year improvements are noted. Shareholder returns through buybacks and dividends are emphasized, and optimistic growth in AUM and AUA is reported. The Q&A session provides additional insights into strategic investments and strong sales pipelines, although some timelines remain uncertain. Overall, the combination of positive financial results, strategic investments, and shareholder return plans suggests a positive stock price movement over the next two weeks.
Earnings call transcript: SEI Investments Q4 2024 shows EPS growth
Positive2-1
The earnings call reveals strong financial performance, with a 31% YoY EPS growth and record share buybacks, signaling confidence in the company's prospects. Despite a slight decrease in Q4 sales events, net recurring sales increased significantly. The Q&A section highlights positive market engagement, strong client retention, and potential for M&A. The company's strategic investments and high cash reserves further support a positive outlook. However, some uncertainty remains regarding future terminations and alternative servicing revenue, slightly tempering the overall positive sentiment.
SEIC Slides
SEIC Report
Frequently Asked Questions
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