Hello, and welcome to SEI Investments Company's First Quarter 2025 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask questions during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. I would now like to turn the conference over to Brad Burke. You may begin.

Thank you, and welcome, everyone. We appreciate you joining us today for our First Quarter 2025 earnings call. On the call, we have Ryan Hicke, SEI's Chief Executive Officer; Sean Denham, Chief Financial Officer and Chief Operating Officer; and members of our executive management team: Jay Cipriano, Sandy Ewing, Paul Klauder, Michael Lane, Phil McCabe, Mike Peterson, Sneha Shah, and Sanjay Sharma. Before we begin, I would like to point out that our earnings press release and presentation accompanying today's call can be found under the Investor Relations section of our website at seic.com. This call is being webcast live, and a replay will be available on the Events and Webcast page of our website. We would like to remind you that during today's presentation and in our responses to your questions, we have and will make certain forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. Please refer to our notices regarding forward-looking statements that appear in today's presentation slides and in our filings with the Securities and Exchange Commission. We do not undertake to update any of our forward-looking statements. With that, please turn to slide three. I turn the call to our CEO, Ryan Hicke. Ryan?

Thank you, Brad, and good afternoon, everyone. Last quarter, I shared our expectation that SEI Investments Company would build upon the strong momentum we achieved in the second half of 2024. Not only did that momentum continue, but it accelerated. As I have said before, we are running SEI differently. We are showing up in the market differently. We are fundamentally reshaping our operating model, deepening client engagement and relationships, strengthening our talent, and sharpening our strategic vision. The results of these efforts are evident in our performance over the last several quarters. As part of our enterprise mindset, we held our first-ever global client symposium in March, where we brought together clients from across all of our business lines. It was unbelievable, energizing, and humbling. It gave us a forum and a platform to not only connect industry leaders but also help our clients learn about the breadth of SEI's capabilities through each other. We could see people's perceptions of SEI change in real time as they became increasingly aware of the size of our client network and the intersection of solutions and industries. In the first quarter of 2025, SEI delivered earnings per share of $1.17, an 18% increase year over year. All business segments contributed to this growth, each posting higher operating profits and expanded margins. Despite tumultuous capital markets, we saw modest growth in client assets under management and administration, demonstrating the breadth of SEI's diversification across product types and geography. Most notably, SEI achieved a record-breaking $47 million in net sales events in Q1, $37 million of those are recurring, a new high, surpassing our previous record from Q3 2024. This success spanned multiple clients and business lines, both domestically and internationally, and reflects the strength of our enterprise mindset and evolving go-to-market strategy. By…

Thank you, Ryan. Please turn to Slide four. Our EPS of $1.17 represents an 18% increase from Q1 2024. Additionally, share repurchases over the last twelve months were a notable contributor to earnings growth, driving three cents of EPS improvement against Q1 2024. Last quarter, we had a handful of items to call out that affected the comparability of our EPS. This quarter, the impact of those types of items was negligible. Earnings per share declined modestly on a sequential basis, which was our expectation. The primary factor driving the one percentage point decline is the seasonality of our tax rate. It increased to 22.8% from 18.5% and is typical due to the timing of releasing tax contingencies. Turning to business unit financial performance on Slide five. Each of our business units realized operating profit growth against Q1 2024. Growth in our investment managers business reflects strong sales momentum, particularly among alternative and global managers. Private banking's growth reflects the continued momentum from 2024, in addition to recent professional services wins, which convert into revenue more quickly than longer-term contracts. Investment advisors' revenue growth of 11% was largely attributed to the year-over-year contribution from the integrated cash program, which generated $21 million of revenue versus $10 million in the prior year. Sequentially, investment advisers and institutional investors saw modest declines, most attributable to the full quarter impact of lower asset balances, which occurred towards the end of the fourth quarter. Turning to Slide six, we achieved healthy improvement in the operating profit margins in all business units. As a result, SEI's consolidated operating profit margin increased to 28.5% for Q1, marking the highest level achieved in the last three years. Margin improvements stemmed from positive operating leverage, the lack of unusual or one-time items, the contribution from our integrated cash…

Please press star one one on your telephone. Then wait for your name to be announced. To withdraw your question, please press star one one again. Our first question comes from the line of Owen Lau with Oppenheimer. Your line is open.

Hello. Good afternoon, and thank you for taking my question. So could you please talk about the sales environment over the last few weeks? I saw that your first quarter net sales were pretty strong. But I'm wondering how does the recent macro uncertainty and tariff situation impact your conversation with clients and the sales cycle? Thanks.

Hey, Owen. How are you? Hope you're doing well. Thank you for the question. Yeah. Very, very strong Q1 in sales. As I mentioned in the script, we are not seeing a slowdown in activity, but I thought it might be more helpful. Michael's in the room, Phil's in the room, Sanjay's in the room, all the unit leads in the room. Maybe if they provide a little bit of color commentary in terms of what they're seeing, especially around those late-stage pipeline and early-stage pipeline. Sanjay, you wanna kick off first?

Sure. Hi, Owen. For private banking, I can look at this as an opportunity to segments. One, opportunity it is presenting for our existing clients. As existing clients are going through this kind of uncertain environment, we can see more traction in terms of outsourcing. And they are engaging with us. So I see that as an opportunity for SEI. In terms of the next stage pipeline, which we are expecting to close this year, we are very confident about that. And we are seeing good traction. So I don't see any slowdown in our near-state pipeline activity. In terms of long-term, that's something we had to watch. We I think we had to wait for a couple of quarters before we can make any comment about that. So

Hi, Owen. It's Phil McCabe. Couple things real quick. We don't see any slowdown at all in activity, especially on the alternative side of the business. If there was a little bit of slowdown on the institutional side, it's more than being made up for on the retail side of the business. We're seeing a lot of demand for semi-liquid products out there on the retail side. And this is a really great environment for alternative managers to deploy capital, and they're very opportunistic right now. So we're seeing a lot of great activity out there. It hasn't slowed at all.

Owen, this is Michael Lane. Interestingly, you heard from Sean that we are seeing results improving in the RA side of our business quicker than we expected. That's not only a result of our outbound activity continuing to improve and increase in that space, but our inbound activity, as advisers are spreading word-of-mouth of what we do and the and as they're learning more about the capabilities of the entire ecosystem of SEI. So the last few weeks of volatility have not impacted in any way the amount of activity that we're participating in with prospective clients.

So yeah. Oh, and I'll just summarize. I think that it's good to get their color. So we're confident about what we see. If there's anything we're watching more closely, it's just the timing of when we would expect things to sign. And then we saw some of that last year. But we aren't seeing anything coming out of the pipeline. We aren't seeing a slowdown of activity. But some of the market impact could maybe have some effect on the timing but that that would just be a quarter here or quarter there.

Got it. That that's super helpful. And then going back to slide eight, I think you make the comment that ending AUM and AUA were up sequentially. But the broader US market was down. The growth was broad-based, and it did not just come from one pocket. So could you please unpack the driver of that inflows and then how much of your AUM is actually tied to US versus non-US? Thanks.

So on the US versus non-US, when you think about the asset management, allocation, the equity allocation is brought somewhere in the ballpark of about forty about forty-eight percent, of which eighty percent of that is US versus twenty percent is non-US.

On the IMS side, we're seeing fewer losses these days and we're seeing a lot of funding from new launches and new clients converting. And most of the about eighty-five percent of that revenue were those that asset growth is coming from North America.

And then can you repeat please add some more color about the the to either of the inflows because it it kind of overcome the the the market decline in the first quarter.

I think oh, and that that's just a kind of a matriculation of the backlog of some previous signing. I think that's in a manifestation as well of what Michael was talking about with kind of ongoing activity from last year with advisers. So it was no one thing. I'd say it was such a variety of strategies that we have had in place for acquiring new advisors, engaging onboarding advisors, intermediaries. We also saw some flows outside the US from some new distribution partners. So it was definitely not materially driven by one firm, one event, one client. No. And in fact, we had positive net flow both on the adviser side and the institutional side. So that would offset some of the market losses. As well.

Got it. Thanks a lot.

Thank you. Please stand by for our next question. Our next question comes from the line of Ryan Kenny with Morgan Stanley. Your line is open.

Good afternoon. This is Conal Schmidt on behalf of Ryan Kenny. Can you guys speak to your ability to maintain the twenty-eight percent margin? That was a record this quarter. In you know, the uncertain backdrop from here given the volatility in the market and you know, how you see sales coming in.

Sure. This this is Sean. I mean, I I think now for a few quarters in a row, we've been seeing modest but increasing margin and operating profit increase. I think a lot of that contribution just is coming from net sales. I think the onboarding as as those net sales are coming online and translating into revenue. So we're seeing some improvement in margins there. In saying that, I think we've done a really nice job of cost control. And so I don't wanna say doing more with less, but thinking about where our return on invested capital specifically around investments, how those investments are coming on board, I think we've just been a lot more thoughtful about managing managing those investments. So I think the contribution, you know, combining the the the revenue growth along with the the cost control has really been the main drivers.

Got it. That's very clear. I had a follow-up on expenses, but that took care of it. So just one more on the repurchase authorization. Is there any sort of cadence that you expect to deploy or use that authorization from here?

Well, we were coming up against it. So we had, we had done an authorization in Q2 or Q3 of 2024 we used that up pretty quickly. We saw an opportunity in the market as well as our large cash position. We also believe that the stock is at a really good price. And as a result of that, we wanted to buyback and accelerated portion of stock than we had historically had. On a on a go forward basis, not sure if that question was in there, but I'm sure that question will come, We are we're looking at forward cash buybacks or stock buybacks really at a quarter at a time. We've you know, we do a really nice job, I think, of forecasting what the capital needs of the organization will be over the next quarter to a year. And based off of that, we really make it a and on what we think the buyback should be. So it's gonna be a combination of where we think the stock price is, We think the stock is low as I'm sure a lot of companies think their stock is low with market pullback over the last you know, couple of months here. And so that's really there's really not much more to it than just understanding what our cash needs will be on a go forward basis over the next quarter or two. And how how we're thinking about the stock price.

Got it. Thank you.

Thank you. Please stand by for our next question. Our next question comes from the line of Crispin Love with Piper Sandler. Your line is open.

Thank you. Good afternoon. Appreciate taking my question. Just when I look back over the last three quarters, just definitely gonna notice noticeable shift in sales events levels compared to prior years. And slide seven shows that well. But what do you think the the secret sauce is that that has driven the significant uptick? And and what's resonating most with with these new clients?

Hey, Crispin. I think there's a few answers to that, and others are welcome to chime in. Right? I mean, so this is three years into the role for me. You know, and change takes time, and some of these things don't happen overnight. But if you look at the sales results as you said over the last few quarters, I think there's probably been three primary drivers in terms of why we believe they have continued and why we continue to be, I think, positive moving forward. I think first and foremost is we have an extremely solid foundation. And what I mean by that is I I look at our client base and you look at the engagement we have with our client base, the growth we're getting from existing clients, from new launches or cross sells or organic growth, extremely strong, and that's a testament to the SEI teams that are out on the street every day in front of clients, engaging with clients. And I don't think you can underscore that. And I'll I'll own the fact that Crispin maybe we weren't doing that at the level we should have been doing that a few years ago, but that is definitely not the case. I think the second thing is a different positioning of the company less as a vertical and more as a horizontal. The market is starting to truly appreciate the breadth of what we can offer. Firms want to do more with fewer partners, not add to their stable strategic vendors. And they see SEI as a really, really strong choice in many situations not just to continue to drive existing capabilities, but to look for us to innovate and partner with them for new opportunities. And that positioning is really, really resonating.…

Great. Thank you, Ryan. And all all very helpful there. And then end of the mark remarks, you also called out growth in the investment manager segment among alts and global managers. Can you can you share and just give a little bit more detail on parts of the alternative space where you have been having the most success recently?

Yeah. I'll kick the bill on this, Crispin, but I think it really is a dovetail of your first question. You know, one of the decisions we made with the leadership team a couple of years ago was to put some more the ground talent outside of the US. Beyond bolstering our operational footprint in Dublin and Luxembourg, but adding more go-to-market town outside the US or what's winning in the US?

Sure. Thanks, Ryan. The only thing I would add, we are the leader in private credit around the world, so globally. So we're seeing good traction in private credit, private equity, real estate, infra. And as Ryan said, we sent a couple of people over there to live in the UK a couple few years ago, and it's really starting to pay dividends. So we are attracting some very, very large private credit managers and multi-strat managers over in that part of the world. So it's just great activity is driving results.

Great. I appreciate the color, and congrats on a great quarter.

Thank you, Crispin.

Thank you. As a reminder, ladies and gentlemen, that star one one to ask a question. Our next question comes from the line of Jeff Schmitt with William Blair. Your line is open.

Hi, everyone. In private banks, how much of the revenue growth is coming from your shift into regional and community banks? And is the competitive landscape much different there, or is it kind of the same players you typically compete against?

Hey, Jeff. I'll let Sanjay take that one. Okay. Hey. Hey, Jeff. This is Patrick here. So, Jeff, remember we talked about a couple of few quarters ago. That the way we segmented our go-to-market strategy, very heavy focus on the mutual community bank segment. That is paying dividends. If I look at last eight four quarters or so, almost sixty, seventy percent of that growth is coming through that segment. And that segment is also presenting two additional opportunities for us. One, we are very actively working on, and another one, Michael Lane, is going to drop out in maybe a few quarters. But the professional services opportunity belongs. If you're these are community segment. MSC data cloud, those those services are resonating really well. And we can see a possible that this segment we have, we are very strong with respect to our competition. And our solution, our services, our existing client base relationships, they're pretty strong. So existing clients, they are working as our reference points. And with that, that is also helping us to win new business.

And I think, Jeff, if you think about the competitive landscape, it is pretty consistent and similar. So I don't think we see any massive kinda new entrants you know, definitely formidable competitors. We have a tremendous amount of respect for in that space. One area where I think we continue to potentially separate ourselves is a little bit of what Sean mentioned earlier about our ability to continue to invest capital and continue to innovate. When you look at the SEI wealth platform, if you think about how we built that really from the back to the front, the majority of the investment now is going into front office, differentiating capabilities, client experience, adviser experience, portfolio management tools. So I would say, Sanjay, you and the team, it feels like you just have a a bigger arsenal of capabilities to talk about, and we're getting more credit, I think, for the value of the platform.

At the digital equity segment, they are also engaging us with the implementation services. Which they were not earlier. So now we are the ones providing those services. And I talked about professional services data cloud, and the sec the the other part that regional community segment they would would result really well. Is asset management services. So that's something we so we they will be able to utilize the enterprise cap release of SEI. Not just the technology platform, outsource operations, but professional services, data cloud, asset management, that will pay much bigger role.

Okay. Thank you. And then if this admin administration were to pivot and loosen up banking regulations, you know, would you expect that to have much of an impact on the private bank segment? I guess if if banks like change capital deployment strategies.

I think the only thing that really gets moved one way or the other is the speed at which some of these firms wanna get to their future operating model. Jeff. I think what's really resonated across all segments of banks, since Sanjay is living this every day, we just had two different firms in this week. It's really a shift to wealth. So I I think, you know, depending on what happens with the administration, the environment, I'm not sure that has a massive impact but these organizations have really realized that they need to have a much more robust and scalable competitive offering in the wealth space. And we are primed to really accelerate the delivery of that through our capability set and that resonates.

Great. Thank you.

Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. Would now like to turn the call back over to Ryan Hicke for closing remarks.

Thank you. As we, I think, echo the last couple of quarters, this was a terrific quarter, but it was one quarter. It doesn't change how we run the company. It doesn't change how we think of what we need to do moving forward. We remain very diligent, very focused, and very thoughtful about how we can continue to deliver these types of results for our shareholders and stakeholders globally. And I always like to close the call by thanking the clients and especially the SEI workforce for all they do every day.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.