Patrick O'Shaughnessy • Raymond James

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CEO Tim Gokey stated that equities are likely to be impacted later by tokenization compared to other asset classes due to the efficiency of the current infrastructure. He emphasized that regulators, like the SEC's Hester Peirce, view tokenized securities as securities, meaning all related obligations, including disclosure, would still apply. CFO Ashima Ghei commented on the debt profile, stating the company is comfortable with its current 2.0x leverage and expects to roll forward the debt that is coming due.

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CEO Timothy Gokey described the wealth platform sale's core as a 'wealth operating system' or data layer, with additional components built on top. He highlighted broader momentum, with 34 components live and 40 more being onboarded across various clients. CFO Ashima Ghei reiterated the Q4 outlook for low-double-digit equity revenue position growth and mid-single-digit fund position growth. She noted they have high confidence in the full-year numbers and have not seen any negative impact from recent market volatility on trends for fiscal '26.

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CEO Tim Gokey and Interim CFO Ashima Ghei clarified that the SIS acquisition is expected to contribute just under $60 million in revenue this fiscal year, adding about one point to growth. They noted that while organic trends are strong, they would likely not have raised the guidance range without the acquisition. Regarding sales, Gokey stated the strong Q1 was not a pull-forward but rather timing of deals, and reaffirmed the full-year sales guidance of $290 million to $330 million.

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CFO Michael Rispoli explained that the adjusted free cash flow conversion is about 65% of post-tax adjusted earnings on a trailing twelve-month basis and could range from 65-85% depending on investments in talent. CEO Barry Gosin stated that while hiring is never easy, Newmark's model continues to resonate with high-producing professionals. He described their M&A criteria as focusing on smaller, synergistic bolt-on acquisitions, particularly in management services, to enhance recurring revenue without causing major disruption.

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Executive Jason McGruder stated that Newmark is careful with M&A and has found acquiring talent directly is often more cost-effective, though they will pursue acquisitions for white space opportunities. CEO Barry Gosin commented on multifamily, noting the FHFA seems supportive of creating more housing. He believes any potential privatization of Fannie and Freddie is a long-term process and won't have an impact in the foreseeable future. CFO Michael Rispoli added that multifamily debt origination volumes were strong in Q1 and continue to build.

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CFO Michael Rispoli explained that full-year loan spend was robust at over $200 million and expects similar investment levels in 2025 through loans or M&A. CEO Barry Gosin downplayed the potential impact of FHFA changes, anticipating minimal disruption. Mr. Rispoli added that Howard Lutnick is not expected to sell shares on the open market, with more details to follow his confirmation.

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Executive Michael Rispoli explained the adjusted EBITDA guidance was impacted by the comparison to a prior-year period that included a $12.8 million favorable legal settlement. CEO Barry Gosin reiterated that incremental margins are expected to be 40-45% as capital markets normalize in 2025-2026. He also described a shift in debt financing, with debt funds and private equity-owned insurance companies increasing activity as banks pull back, ensuring strong market liquidity.

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Rahul Kanwar (Executive) attributed the Battea revenue trend to the inherent lumpiness of the class-action settlement business and a conservative accounting approach during the integration. He expressed optimism about the underlying business and cross-sell opportunities. Brian Schell (Executive) addressed the FX question, stating that approximately 21% of revenues are non-U.S. dollar, so currency fluctuations have a corresponding impact on the overall growth rate, and the guidance conservatively assumes current rates.

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CFO Emma Giamartino identified the wind-down business as Telford. She confirmed the Industrious acquisition closed in mid-January 2025 and is performing as expected, though she did not provide specific financial contribution details.

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CFO Bryan Hipsher stated that roughly 25% of revenue is from delivery and usage contracts, and migrations to modern APIs are steadily increasing the share of ratable revenue, with a goal of reaching an 85-90% ratable mix over time. He explained that North American margins are impacted by bearing corporate innovation costs, but with major migrations complete, he expects improved scale and overall company margin expansion in 2025.

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CEO Ryan Hicke asserted that the improvement was not luck but the result of hard work and a more aggressive and strategic client engagement model. Executive Sanjay Sharma added that the adoption of an 'enterprise mindset,' offering a broader set of SEI services and professional services, has been a game-changer, repositioning SEI from a vendor to a strategic partner in the eyes of its banking clients.

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Global CEO Christian Ulbrich explained that short-term rates affect development and high-yield products while long-term rates impact core assets, but the overall interest rate trend remains favorable for a capital markets recovery. CFO Karen Brennan stated the rationale for issuing commercial paper was to reduce the overall interest rate on borrowings, yielding a benefit of approximately 60 basis points.

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