Jeff Schmitt

Jeff Schmitt asked about the strategic rationale behind the Curo Fund Services acquisition, its revenue generation, and why it would be integrated into the GIDS business. He also requested an update on the implementation of agentic AI within Blue Prism and other SS&C businesses.

Answer

Chairman and CEO Bill Stone explained that the Curo acquisition provides a local presence in the African market, deepens relationships with two large insurer clients, and is integrated into GIDS due to its focus on life and pensions. He noted its revenue is negligible, around $15 million. Regarding AI, Bill Stone stated SS&C acts as "customer zero," infusing AI agents across its entire business to enhance existing technologies, leveraging its 27,000 employees and functional expertise to build smart agents for regulated industries.

Jeff Schmitt asked about the Curo Fund Services acquisition, seeking details on what attracted SS&C to the business, its revenue generation, and why it is being integrated into the GIDS segment. He also requested an update on the implementation of agentic AI in Blue Prism and its development for other businesses.

Answer

Bill Stone, Chairman and Chief Executive Officer, explained that the African market for fund administration is less developed, and Curo's clients are large insurers who jointly owned the business, hence its placement in GIDS. He noted the revenue generated is negligible, around $15 million. Regarding AI, Bill Stone stated SS&C acts as 'customer zero,' infusing all technologies with AI agents, leveraging its 27,000 employees and experts to build smart agents and become a trusted AI source in regulated industries.

Jeff Schmitt inquired about the revenue synergy potential from the Callistone acquisition and the drivers behind the sustained increase in capital expenditures.

Answer

Chairman and CEO William Stone explained that while it's early, significant cross-sell opportunities exist between SS&C's 10,000 addressable clients and Callistone's 4,500 clients in areas like ETFs and digital assets. He added that increased CapEx is funding growth initiatives, including new product development and market-specific software, and is expected to remain at elevated levels to support technological advancement.

Jeff Schmitt from William Blair asked about SEI's integrated cash program, specifically if any cash is allocated to fixed rates given the Fed's easing, and how the company manages the spread between earnings and investor yield. Jeff also inquired about the recent higher expense growth in private banking, asking if it's primarily due to talent investments and how the new service center's offshoring initiatives might affect future growth.

Answer

Paul Klauder, EVP and Head of Independent Advisors Solutions Unit, SEI, explained that SEI currently earns about 370 basis points and yields 55 basis points to investors. He noted that typically, a 25 basis point rate drop would impact investors by 15 basis points and SEI by 10 basis points, with a floor eventually. Ryan Hicke, CEO, added that the impact would be muted by SEI's larger fixed income portfolios. Ryan Hicke, CEO, and Sanjay Sharma, EVP, CEO, and Global Head of Private Banking and Wealth Management, SEI, stated that the expense growth is primarily due to investments in onboarding backlog and ensuring successful client delivery, not an unusual trend.

Jeff Schmidt inquired about the AxiomSL to Calypso cross-selling opportunities, asking if Nasdaq is approaching this differently than Thoma Bravo and if these opportunities are picking up under Nasdaq's leadership.

Answer

Adena Friedman, Chair and CEO, explained that Thoma Bravo had already created a data connector between AxiomSL and Calypso to ease implementation. Nasdaq continues to build these connectors and leverages holistic conversations with high-level clients (e.g., COO, Chief Risk Officer) to address broader needs across risk management, trading, regulatory compliance, and financial crime. Friedman noted that Nasdaq's ability to engage clients holistically, often prompting questions like 'what are other banks taking that I'm not?', significantly enhances cross-selling opportunities across the bank's operations, including wealth management.

Jeff Schmitt inquired about the AxiomSL to Calypso cross-selling opportunities, asking if Nasdaq's approach differs from Thoma Bravo's and if these opportunities are increasing under Nasdaq's leadership.

Answer

Adena Friedman, Chair and CEO of Nasdaq, noted that Thoma Bravo had already created a data connector between AxiomSL and Calypso, easing implementation. Nasdaq continues to build such connectors and emphasizes holistic conversations with high-level bank executives (COO, Chief Risk Officer) to address broader risk management and trading needs. This 'One Nasdaq' approach, leveraging Nasdaq's trusted provider status, fosters a more comprehensive dialogue and drives cross-sell opportunities across the bank's operations.

Jeff Schmitt of William Blair & Company, L.L.C. asked about Verifin's international expansion, questioning whether the medium-term guide for mid-20s revenue growth assumes a significant contribution from it, or if there is potential upside.

Answer

Chair & CEO Adena Friedman clarified that European expansion is the third of three growth pillars for the business and is considered a 'longer leg' of the strategy. She stated that Europe is not expected to be a material revenue contributor in 2025 or 2026, but its future success is factored into achieving the medium-term outlook for 2027 and beyond.

Jeff Schmitt of William Blair & Company, L.L.C. inquired about client re-up rates in the current volatile environment and asked if the firm was experiencing any fee pressure in its private markets strategies.

Answer

CEO Michael Sacks described re-up rates as "fantastically strong" and a continuing positive feature of the business. President Jonathan Levin elaborated that while fundraising cycles elongated in 2023, clients continued to re-up, and those cycles are now normalizing. On fees, Sacks stated that conversations have been constructive and that pricing is not a significant point of pressure.

Jeff Schmitt of William Blair & Company, L.L.C. asked about sales force productivity, which is at the low end of its historical range, questioning if it could decline further and what would be needed for a turnaround. He also asked if the recent surge in recruits may have included less committed individuals.

Answer

CEO Glenn Williams explained that productivity is pressured by a growing sales force denominator and new agents entering a challenging sales environment. He expressed confidence that the issue is the environment, not the quality or commitment of the new recruits, who will adapt and improve their skills over time.

Jeff Schmitt of William Blair & Company, L.L.C. inquired about the specific drivers of weakness in the Commercial segment, requested an update on revenue synergies for the R.J. O'Brien acquisition, and asked about the long-term strategy for expanding the retail segment's product offerings.

Answer

Executive Vice Chairman Sean O'Connor and CFO William Dunaway attributed the Commercial segment's weakness to tariff uncertainty impacting the physicals business and lower volatility in agricultural markets reducing OTC revenue capture. Regarding R.J. O'Brien, Mr. O'Connor reiterated his belief that revenue synergies will be multiples of cost synergies, primarily from cross-selling StoneX's broader product suite to R.J. O'Brien's clients. Group President Charles Lyon detailed the retail segment's roadmap, explaining that an infrastructural rebuild is underway to support a multi-asset class offering, with new products expected to roll out in stages during fiscal year 2026.

Jeff Schmitt of William Blair & Company, L.L.C. inquired about the future trend of the benefit ratio in the Global Lifestyle segment and the drivers behind the negative investment income from 'other investments' in the first half.

Answer

President and CEO Keith Demings expressed satisfaction with Global Lifestyle's Q2 performance, highlighting the strength in Connected Living. CFO Keith Meyer elaborated that while mix shifts can affect the benefit ratio, the key positive trend is the improving loss experience in the vehicle service contract business, marking an inflection point. Regarding investment income, Meyer stated the overall portfolio is performing well with rising book yields, and that quarter-to-quarter lumpiness can result from items like real estate transactions, but he expects overall investment income to be up for the full year.

Jeff Schmitt of William Blair & Company, L.L.C. inquired about the drivers for the increased 2-10 Home Buyers Warranty cost synergy forecast, from $10 million to $15 million, and the status of the long-term $30 million run-rate synergy goal. He also asked if the strong guidance for the upgrade program is exclusively for HVAC or includes other categories like water heaters.

Answer

Chairman and CEO Bill Cobb attributed the increased 2-10 synergies to finding new efficiencies across all functions as the company gains familiarity with the business. He affirmed the long-term synergy target of over $30 million by 2028 remains intact. Cobb also clarified that the current upgrade program revenue is entirely from HVAC, although the company is running tests for other product groups.

Jeff Schmitt of William Blair & Company, L.L.C. inquired about the drivers for the increased 2025 cost synergy forecast for the 2-10 acquisition, from $10 million to $15 million, and the status of the long-term synergy target. He also asked if the strong guidance for the non-warranty upgrade program is exclusively for HVAC.

Answer

Chairman and CEO Bill Cobb attributed the higher near-term synergy forecast to finding new efficiencies across all functions as Frontdoor gains familiarity with the 2-10 business. He reaffirmed the long-term synergy goal of over $30 million by 2028. Cobb also confirmed the upgrade program's current guidance is entirely for HVAC, noting that while tests for other appliance categories are underway, there is nothing significant to report yet.

Jeff Schmitt of William Blair & Company, L.L.C. pointed out that Commonwealth's guided core G&A expense appears more efficient as a percentage of AUM compared to LPL's and asked for the reason behind this difference.

Answer

President & CFO Matt Audette advised against focusing too heavily on the initial, pre-integration expense figures for Commonwealth. He clarified that these numbers represent the business as it currently operates and that once the integration is complete in 2026 and synergies are realized, Commonwealth's margin profile is expected to be in the same zone as LPL's.

Jeff Schmitt questioned the potential timing for reaching adjusted EBITDA breakeven in 2026 and asked about specific features of the next-generation platform, like auto-matching, that are expected to drive transaction volumes.

Answer

CFO James Nevin reiterated confidence in achieving breakeven in 2026, driven by platform scalability, the Liquidity acquisition, and offshoring efficiencies, but did not provide more specific timing. CEO Kelly Rodriques added that the new platform's initial release includes a novel automated negotiation process. He described it as a rolling release that will progressively add features to support various transaction structures and reduce friction.

Jeff Schmitt from William Blair & Company, L.L.C. questioned whether slowing top-line growth in wealth management might lead to more aggressive recruiting or outsourcing deals, and if the share buyback payout ratio could exceed the 85% target.

Answer

James Cracchiolo, Chairman & CEO, confirmed a focus on competitive recruiting but emphasized maintaining a strong client experience over simply 'rolling up' advisor networks. On capital returns, Walter Berman, EVP & CFO, stated that while they have the capacity to exceed the 85% payout ratio target, 85% remains the firm's current plan for the second half of the year.

Jeff Schmitt questioned if Ameriprise might pursue more aggressive recruiting or outsourcing deals amid slowing top-line growth and asked if the share buyback payout ratio could exceed the new 85% target for the second half.

Answer

Chairman & CEO James Cracchiolo affirmed their focus on recruiting with competitive packages but emphasized they are not interested in simply 'rolling up' advisor networks. On capital returns, EVP & CFO Walter Berman confirmed the 85% payout ratio is the current target, but they retain the capacity to evaluate it and will act in the best interest of shareholders.