Sign in

You're signed outSign in or to get full access.

SI

SEI INVESTMENTS CO (SEIC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered strong results: revenue $557.2M (+14.9% YoY, +3.7% QoQ), operating income $145.5M (+43.1% YoY), diluted EPS $1.19 (+31% YoY, flat QoQ), operating margin 26.1% (up ~510bps YoY; down ~60bps QoQ due to comp timing) .
  • Net sales events were $38.2M, the second-highest quarter in SEI history (after Q3), bringing full-year to $127.9M (+58% YoY); strength was broad-based across Private Banks and Investment Managers .
  • Segment performance was uniformly positive vs prior year: Advisors benefited from $21.1M integrated cash program revenue, Private Banks saw improved retention and backlog conversion, Investment Managers gained traction (notably private credit/global), Institutional improved sequentially despite DB plan headwinds .
  • Capital return accelerated: SEI repurchased 3.1M shares for $259.5M in Q4 (highest quarter ever) and lifted the semiannual dividend to $0.49 (+6.5%), supported by strong free cash flow and $840M cash, no long-term debt .
  • Stock reaction catalysts: sustained sales momentum, cross-sell and alternatives strength, margin discipline despite onboarding costs, and stepped-up buybacks/dividend increase; offset by Institutional DB plan terminations and anticipated moderation in integrated cash program contribution in 2025 .

What Went Well and What Went Wrong

What Went Well

  • Broad-based strength with all segments growing revenue, operating profit, and margins YoY; consolidated operating income up 43% YoY and margin to 26% .
  • Advisors’ integrated cash program contributed $21.1M in Q4 (+~$10.5M QoQ), supporting segment margins (45%) and operating profit (+47% YoY) .
  • Management emphasized momentum and execution: “Our record 2024 results reflect consistent execution… net sales events in 2024 increased 58%” (CEO) and reiterated enterprise-first mindset as a competitive differentiator .

What Went Wrong

  • Institutional Investors faced larger-than-normal DB plan terminations, driving ending AUM declines QoQ; management expects DB headwinds to persist through 2025 with elevated funding levels incentivizing annuitization .
  • LSV equity earnings declined to $33.4M (from $35.4M YoY) on lower incentive fees amid active-to-passive outflows and Q4 market pressure in global value indices .
  • Near-term margin pressure risk from strong sales events: onboarding costs precede revenue recognition (3–18 months depending on business), temporarily weighing margins in 2025 even as management still expects expansion .

Financial Results

Consolidated P&L Metrics (Quarterly)

MetricQ2 2024Q3 2024Q4 2024
Revenues ($USD Millions)$518.99 $537.40 $557.19
Income from Operations ($USD Millions)$136.51 $143.83 $145.54
Operating Margin (%)26.3% (calculated) 26.8% 26.1%
Net Income ($USD Millions)$139.12 $154.90 $155.77
Diluted EPS ($)$1.05 $1.19 $1.19

Note: Q2 operating margin is calculated as Income from Operations / Revenues from reported figures .

Q4 vs Prior Year and Prior Quarter

MetricYoY Change (vs Q4 2023)QoQ Change (vs Q3 2024)
Revenues+14.9% +3.7%
Operating Income+43.1% +1.2%
Net Income+29.0% +0.6%
Diluted EPS+30.8% 0.0%
Operating Margin+510bps -60bps

Segment Breakdown (Q4 2024 vs Q4 2023)

SegmentRevenue Q4’23 ($M)Revenue Q4’24 ($M)Op Profit Q4’23 ($M)Op Profit Q4’24 ($M)Op Margin Q4’23Op Margin Q4’24
Private Banks$123.34 $140.14 $12.68 $19.73 10% 14%
Investment Advisors$109.72 $139.27 $42.58 $62.43 39% 45%
Institutional Investors$69.79 $70.81 $30.68 $32.50 44% 46%
Investment Managers$168.57 $191.26 $57.86 $73.13 34% 38%
Investments in New Businesses$13.44 $15.71 $(4.39) $(3.59) ——

KPIs and Assets

KPI / AssetsQ2 2024Q3 2024Q4 2024
Net Sales Events ($M, Total)$21.97 $46.41 $38.22
Ending AUM ($USD Billions)$470.53 $493.34 $476.71
Ending Client Assets Under Administration ($USD Billions)$1,020.98 $1,045.97 $1,055.94
Platform-only Assets ($USD Billions)$22.80 $26.95 $27.64

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal financial guidance2025None providedNone provided; management reiterates margin expansion expectation despite onboarding costs Maintained (no formal guidance)
Integrated Cash Program revenue run-rate2025Not previously specifiedNormalized balances ~$2.0–$2.1B; net yield ~380bps; contribution expected to moderate in 2025 Clarified outlook (moderation)
Incentive compensationQ4 2024Not applicableOne-time increase (approx. $0.04 EPS impact) One-time
Tax rate / comp timing impactsQ4 2024Not applicableFX +$0.02, tax rate +$0.05; stock comp timing -$0.05 N/A
DividendJan 8, 2025$0.46 (prior semiannual)$0.49 semiannual (+6.5%) Raised
Share repurchasesQ4 2024N/ARepurchased $259.5M (3.1M shares at $83.43 avg) Increased activity

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
AI/Technology initiativesInvesting in innovation; platform adoption; AI initiatives mentioned in forward-looking statements Launched SEIGPT generative AI framework to improve productivity and client service Continued operational excellence focus; exploring offering SEIGPT to clients Improving adoption
Sales momentumNet sales events $26.9M (PB+IM) with strong pipelines Record net sales events $46.4M, broad-based $38.2M net sales events; second-highest quarter ever; broad-based US and global Sustained strength
MarginsMargin progress; cost discipline noted Consolidated margin 26.8%; YoY and QoQ expansion Consolidated margin 26.1%; underlying expansion excluding comp timing; onboarding costs may pressure near-term Structurally improving; near-term onboarding headwind
Alternatives/private marketsGrowth in IM segment; SMA/strategist strength Alternatives/global strong; record AUA/AUM Alternatives ~70% of IMS revenue; expanded Luxembourg footprint; best year internationally Strong tailwinds
Institutional DB headwindsClient losses; DB pressures Ongoing; though margins improved Larger-than-normal plan terminations in Q4; headwinds expected to persist in 2025 Persistent headwind
Regulatory/legal (UK)——UK subsidiary engaged with regulator to implement measures for firm of size/complexity Active engagement
Integrated cash program$10.1M fees in Q2 $10.7M revenue contribution in Q3 $21.1M contribution in Q4; expected moderation in 2025 Elevated, normalizing

Management Commentary

  • “Our record 2024 results reflect consistent execution against our growth strategy… net sales events in 2024 increased 58% from 2023” — CEO Ryan Hicke .
  • “Absent these items [incentive comp, stock comp timing], SEI would have achieved EPS growth on both an annual and sequential basis” — CFO Sean Denham .
  • “We are running this company and showing up in the market differently… driving the next level of momentum” — CFO Sean Denham on margin outlook and capital allocation .
  • “We’re not changing our pricing… delivery on time, on budget is a hallmark” — CEO Ryan Hicke on sales drivers .
  • “Alternatives… about 70% of our [IMS] revenue… growing based upon industry tailwinds” — Phil McCabe, IMS .

Q&A Highlights

  • Sales outlook: Broad-based mix of new logos and existing clients, domestically and globally; pricing unchanged; market engagement remains high with strong pipelines .
  • Margin trajectory: Onboarding costs precede revenue (3–18 months depending on unit), potentially pressuring near-term margins, but management remains confident in 2025 margin expansion .
  • Asset management initiatives: Consolidation of overlaps to repurpose savings into new distribution opportunities; leveraging SWP scale for larger firms; cross-business collaboration .
  • Private Banks retention and bank M&A: Elevated retention via deeper engagement and enterprise mindset; bank consolidation seen as opportunity to onboard acquired clients onto SWP .
  • Capital returns: Record Q4 buybacks driven by strong free cash flow; decisions made quarter-by-quarter based on cash needs and ROIC; no long-term policy shift signaled .
  • Incentive comp: One-off nature confirmed; intended to reward workforce for record sales and earnings .
  • Integrated Cash Program: Average balances ~$2.18B in Q4 (exit just under $2.4B); modeling ~$2.0–$2.1B going forward; net yield ~380bps; contribution expected to moderate in 2025 .
  • Institutional DB headwinds: High funding levels and elevated rates incentivize annuitization; timing unpredictable, headwinds expected through 2025 .

Estimates Context

  • Wall Street consensus estimates (S&P Global) for Q2–Q4 2024 could not be retrieved at time of analysis due to S&P Global daily request limit. As a result, explicit “vs consensus” comparisons are unavailable and not included.
  • Where management provided context: Q4 EPS matched prior quarter’s record level despite $0.02 headwind from comparability items; underlying margins would have expanded YoY and QoQ absent those items .

Key Takeaways for Investors

  • Sales momentum remains a core driver with two consecutive quarters of near-record net sales events; broad-based wins should continue to support revenue growth across segments .
  • Margin framework is improving structurally; expect temporary onboarding expense timing to modestly pressure near-term margins, with management still targeting expansion in 2025 .
  • Alternatives and global expansion (Luxembourg footprint) provide durable tailwinds for Investment Managers; ~70% of IMS revenue is from alternatives .
  • Integrated cash program’s outsized Q4 contribution should normalize as rates decline and clients diversify cash options; model ~$2.0–$2.1B balances and moderate revenue in 2025 .
  • Institutional DB plan terminations are a known structural headwind likely to persist; monitor the cadence of terminations and offsetting new wins .
  • Capital return stepped up materially with record Q4 buybacks and dividend increase; balance sheet remains conservative with ~$840M cash and no long-term debt—supportive of continued repurchases/M&A optionality .
  • Narrative catalyst: enterprise-first execution, delivery reliability, and integrated solutions are resonating with clients; combined with alternatives/global traction, this supports a constructive medium-term thesis despite near-term onboarding cost timing .