OAKS, PA — SEI Investments Company (NASDAQ: SEIC) reported robust financial results for the second quarter of 2024, with diluted earnings per share rising to $1.05 from $0.89 in the same period last year.
“Our second-quarter results reflect 6% profit growth quarter over quarter,” said CEO Ryan Hicke. He attributed this success to a focus on capital allocation, operational leverage, and revenue growth. Hicke noted that the company is seeing increased adoption of its platforms in both technology and operational sectors.
SEI is investing in future growth opportunities, including talent, professional services, innovation, private assets, and emerging technology. “Our people and the breadth of our capabilities set us apart in the industry,” Hicke added, emphasizing the company’s commitment to delivering a world-class client experience and maximizing returns for stakeholders.
Key Second-Quarter Highlights
- Revenue Growth: Revenues from assets under management, administration, and distribution fees increased. This growth was driven by higher assets under administration, cross sales to existing alternative investment clients, and new sales within the Investment Managers segment. Additionally, the SEI Integrated Cash Program, launched in December 2023, contributed $10.1 million in fees.
- Market Performance: Market appreciation and positive cash flows into separately managed account programs and Strategist programs boosted revenues. However, this was partially offset by negative cash flows from SEI fund programs and fee reductions in separately managed account programs.
- Assets Under Administration: Average assets under administration increased by $141.8 billion, or 16%, to $1.0 trillion, compared to $863.6 billion in the same quarter last year.
- Assets Under Management: Average assets under management in equity and fixed income programs, excluding LSV, rose by $7.1 billion, or 4%, to $176.1 billion.
- Information Processing Fees: Revenues from information processing and software servicing fees grew due to new client conversions and the expansion of SEI Wealth PlatformSM (SWP) clients. However, a one-time early contractual buyout fee of $10.5 million recorded in the second quarter of 2023 partially offset this increase.
- Net Sales Events: Net sales events in the Private Banks and Investment Managers segments amounted to $26.9 million and are expected to generate net annualized recurring revenues of approximately $21.5 million once contract values are fully realized. However, net sales events in asset management-related businesses were negative $5.6 million.
- Operating Expenses: Operational expenses increased due to higher personnel costs from business growth, mainly in the Investment Managers segment, and wage inflation. Cost containment measures related to consulting and other vendor costs partially offset this increase.
- Earnings from LSV: Earnings from LSV rose to $34.2 million from $32.7 million, driven by market appreciation, although net negative cash flows from existing clients and client losses partially offset this increase.
- Software Development Costs: Capitalized software development costs totaled $6.4 million, with $3.9 million allocated for enhancements to SWP and $2.5 million for a new platform for the Investment Managers segment.
- Share Repurchases: SEI repurchased 1.6 million shares of its common stock for $111.2 million at an average price of $67.44 per share.
- Cash Flow: Cash flow from operations was $114.7 million, and free cash flow was $100.6 million.
SEI’s effective tax rate for the second quarter was 23.9%, compared to 23.4% the previous year.
The company’s strategic investments and operational efficiencies are paying off, positioning SEI for continued growth in the evolving financial landscape.
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