AssetMark Financial Holdings, Inc. (NYSE:AMK) Q1 2023 Earnings Conference Call May 3, 2023 5:00 PM ET Company Participants Taylor Hamilton - Head, IR Natalie Wolfsen - CEO Gary Zyla - EVP, Principal Accounting Officer and CFO Conference Call Participants Michael Cho - JPMorgan Jeff Schmitt - William Blair Patrick O'Shaughnessy - Raymond James Operator Good afternoon, everyone, and welcome to AssetMark's First Quarter 2023 Earnings Conference Call. Currently, all participants are in a listen-only mode. Later ...

1Q23 Earnings Presentation May 3, 2023 For general public use. Forward looking statements and non-GAAP financial measures Forward-Looking Statements Forward-looking statements include all statements that are not historical facts and can be identified by terms such as "will," "may," "could," "should," "believe," "expect," "estimate," "potential" or "continue," the negative of these terms and other comparable terminology that conveys uncertainty of future events or outcomes. These forward-looking statements i ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38980 ASSETMARK FINANCIAL HOLDINGS, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisd ...

Financial Performance - Total revenue for the year ended December 31, 2022, was $618.3 million, a 16.6% increase from $530.3 million in 2021[19] - Net income for the year ended December 31, 2022, was $103.3 million, compared to $25.7 million in 2021, reflecting a significant growth in profitability[19] - The company generated $534.2 million in asset-based revenue and $63.4 million in spread-based revenue for the year ended December 31, 2022[18] - The net income margin increased from 4.8% in 2021 to 16.7% in 2022, driven by increased spread-based revenue[30] - In 2022, 96.7% of AssetMark's total revenue was recurring, with 86.4% derived from asset-based revenue and 10.3% from spread-based revenue[29] Market Trends - The U.S. wealth management industry managed $30.7 trillion in assets as of 2021 year-end, reflecting a 19% increase from $25.7 trillion in 2020[21] - The number of financial planning practices grew at a 5.3% CAGR from 2015 to 2020, with over 203,000 Certified Financial Planning professionals worldwide as of 2021[21] - The Bureau of Labor Statistics projects a 15% growth in employment of personal financial advisers from 2021 to 2031, driven by increasing demand for financial planning services[21] - 93% of advisers anticipate that at least half of their revenue will be fee-based by 2023, indicating a shift towards fee-based models in the industry[21] Company Growth and Strategy - Platform assets grew from $61.6 billion to $91.5 billion from December 31, 2019, to December 31, 2022, representing a compounded annual growth rate (CAGR) of 14.1%[14] - The market share expanded from 10% to 11% from December 31, 2018, to September 30, 2022, indicating a positive trend in competitive positioning[17] - AssetMark experienced platform asset growth from existing clients of approximately 9% from December 31, 2019, to December 31, 2022, and attracted $15.6 billion in assets from new advisers, representing 52% growth[29] - The company aims to enhance its offerings to independent advisers by introducing new products and expanding services in the RIA market, retirement services, and high-net-worth segments[32] - The company plans to continue pursuing strategic acquisitions to enhance its scale and operating leverage[32] Technology and Innovation - Annual technology spending by investment advisers rose nearly 15% from 2020 to an average of $135,000 per adviser in 2021, marking the highest level of spending since 2018[22] - The use of model portfolios among financial advisers grew at a CAGR of 15.0% from 2015 to 2020, significantly reducing the time spent on investment management from 18.5%-29.5% to less than 10%[22] - AssetMark invested over $191 million in technology development from January 1, 2020, to December 31, 2022, enhancing adviser offerings and operational efficiency[26] - The company’s technology platform and personalized service are expected to drive revenue expansion despite anticipated increased competition and fee pressure[33] Operational Risk and Management - The company has developed and continues to enhance specific policies and procedures to manage operational risk throughout the organization[328] - Business continuity plans exist for critical systems, and redundancies are built into the systems as deemed appropriate[328] - Operational risk includes the risk of loss from improper execution and processing of transactions and deficiencies in technology[328] - The company operates in diverse markets and relies on its employees and systems to process a large number of transactions[328] Employee Engagement and Diversity - The company had 980 employees as of December 31, 2022, and focuses on employee engagement and retention through various incentive programs[35] - The company's diversity statistics as of December 31, 2022, show 57% male and 43% female employees, with 19% from underrepresented minorities[38] ESG Initiatives - The company launched a values-driven investment program in 2022, including tailored ESG investment solutions and released its first ESG report[39] - The company incorporated ESG performance indicators into its 2022 Credit Agreement, aiming to increase diverse new hires and expand ESG investment strategies[40][41]

Financial Data and Key Metrics Changes - Full year net revenue for 2022 was a record $456 million, up more than 20% year-over-year and almost 50% from the IPO [8] - Adjusted EBITDA for 2022 was up 27% to nearly $200 million, with adjusted net income increasing more than 26% to $130 million [8] - Adjusted EBITDA margin expanded by 270 basis points in 2022, with a total increase of 600 basis points since the IPO [8] Business Line Data and Key Metrics Changes - The acquisition of Adhesion Wealth added over 560 advisers and close to 16,000 households, enhancing the company's service offerings [9] - Revenue from Voyant was up approximately 13% year-over-year, driven by increased enterprise and adviser consumer licenses [11] - The number of engaged advisers increased to 2,882, with 281 new engaged advisers added in the quarter [26] Market Data and Key Metrics Changes - Fourth quarter platform assets decreased 2.2% year-over-year to $91.5 billion, but were up 15% quarter-over-quarter due to the acquisition and market impact [24] - Net flows for the full year of 2022 were $5.6 billion, representing 6% of beginning period assets [24] - The number of households on the platform increased almost 15% year-over-year to 241,000 [27] Company Strategy and Development Direction - The company aims to evolve from a TAMP to a holistic full-service wealth management platform, focusing on adviser efficiency and client engagement [6] - Strategic focus for 2023 includes expanding offerings with Adhesion, enhancing fixed income and SMA offerings, and improving adviser benefits programs [21] - The company is actively pursuing M&A opportunities to enhance capabilities and expand its addressable market [20] Management's Comments on Operating Environment and Future Outlook - The management acknowledged the challenging macro environment in 2022, including high inflation and market volatility, but expressed optimism for 2023 [13][21] - The expectation for platform asset growth in 2023 is over 10%, with net revenue growth projected in the high teens to low 20s [39] - Management emphasized the importance of adviser-client relationships and the need for timely education and solutions during uncertain market conditions [59] Other Important Information - The company ended the fourth quarter with $136 million in cash and has $375 million available in its credit facility for future M&A [34] - Total adjusted expenses increased 6.2% year-over-year to $118 million, with a focus on maintaining disciplined expense growth [31] Q&A Session Summary Question: Discussion on alternatives in the platform - Management highlighted the importance of alternative investments for high net worth clients and discussed the implementation of alternative sleeves within market-based portfolios [43] Question: M&A possibilities and attractive capabilities - Management expressed excitement about capabilities and scale acquisitions, focusing on enhancing adviser service levels and efficiency [46] Question: Fixed rate term contracts and cash management - Management explained the cautious approach to fixed rate term contracts due to unpredictable cash balances and the need for liquidity [48] Question: Differentiation of Voyant in the marketplace - Management noted Voyant's flexibility and depth of technology as key differentiators, particularly in enterprise markets [51] Question: Organic growth and slowing growth rates - Management attributed the slowing growth rate to market conditions and emphasized the importance of adviser-client relationships during uncertain times [56][59]

Financial Performance - Total revenue for the quarter ended September 30, 2022, was $154.7 million, an increase of $15.0 million, or 10.7%, from $139.7 million for the same quarter in 2021[88] - Net income for the quarter ended September 30, 2022, was $30.1 million, or $0.41 per share, compared to $12.3 million, or $0.17 per share, for the same quarter in 2021[88] - Adjusted EBITDA for the quarter ended September 30, 2022, was $52.7 million, compared to $44.8 million for the same quarter in 2021[88] - Net income increased by $64.3 million, or 483.1%, from $13.3 million in the nine months ended September 30, 2021 to $77.7 million in the nine months ended September 30, 2022[179] - Total revenue increased by $67.5 million, or 17.4%, from $386.7 million in the nine months ended September 30, 2021 to $454.2 million in the nine months ended September 30, 2022[164] Revenue Breakdown - Asset-based revenue for the quarter ended September 30, 2022, was $128.2 million, down $6.0 million, or 4.5%, from $134.2 million for the same quarter in 2021[88] - Spread-based revenue for the quarter ended September 30, 2022, was $21.2 million, up $19.9 million, or 1,613.4%, from $1.2 million for the same quarter in 2021[88] - Subscription-based revenue decreased from $3.2 million in Q3 2021 to $3.1 million in Q3 2022, primarily due to currency weakness[150] - Asset-based revenue increased by $34.8 million, or 9.3%, from $374.7 million to $409.5 million[165] - Spread-based revenue surged by $23.8 million, or 364.7%, from $6.5 million to $30.3 million in the same period[166] Operating Expenses - Total operating expenses decreased by $1.1 million, or 0.9%, from $116.8 million in Q3 2021 to $115.7 million in Q3 2022[151] - Employee compensation decreased by $2.5 million, or 5.6%, from $44.1 million in Q3 2021 to $41.6 million in Q3 2022[155] - General and operating expenses increased by $2.9 million, or 15.3%, from $18.8 million in Q3 2021 to $21.7 million in Q3 2022[156] - Interest expense increased by $0.5 million, or 47.0%, from $1.1 million in Q3 2021 to $1.6 million in Q3 2022 due to higher interest rates[159] Assets and Advisers - Platform assets were $79.4 billion as of September 30, 2022, down 8.6% from $86.8 billion as of September 30, 2021[89] - The number of engaged advisers on the platform was 2,601 as of September 30, 2022, down 5.4% from 2,749 as of September 30, 2021[89] - The number of new producing advisers for the period was 20, contributing to the growth of platform assets[110] Cash Flow and Investments - Cash provided by operating activities increased by $1.7 million to $95.6 million for the nine months ended September 30, 2022, compared to $93.9 million in the same period of 2021[185] - Cash used in investing activities decreased by $115.3 million to $37.9 million for the nine months ended September 30, 2022, primarily due to a significant acquisition in the prior year[187] - Cash provided by financing activities decreased by $37.3 million to $2.8 million for the nine months ended September 30, 2022, mainly due to a net drawdown from the revolving credit facility in the previous year[188] Compliance and Risk - The company was in compliance with all applicable covenants as of September 30, 2022, maintaining a Total Leverage Ratio below 3.5 to 1.0 and an interest coverage ratio above 4.0 to 1.0[182] - A 1% decrease in the aggregate value of assets on the platform would have led to a 1% decline in total revenue and a 3.1% decline in pre-tax income, equating to a $3.0 million impact[194] - An increase of 100 basis points in interest rates under the 2022 Credit Agreement would result in a decrease in income before income taxes of approximately $1.2 million annually[195] Technology and Development - The company invested $55.9 million in technology development during the nine months ended September 30, 2022[93] - The company expects to continue making substantial investments to support growth and expand sales capacity[94] - The company plans to enhance technology, services, and investment solutions to continue growing platform assets, which are seen as a key indicator of business momentum[103]

AssetMark Financial Holdings, Inc. (NYSE:AMK) Q3 2022 Results Conference Call November 1, 2022 5:00 PM ET Company Participants Taylor Hamilton - Head, IR Natalie Wolfsen - CEO Gary Zyla - CFO Conference Call Participants Ryan Bailey - Goldman Sachs Gerald O’Hara - Jefferies Operator Good afternoon, everyone, and welcome to AssetMark’s Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions w ...

Financial Data and Key Metrics Changes - Record revenue of $151.2 million, up 18% year-over-year [5][6] - Adjusted EBITDA reached $49.6 million, with an adjusted EBITDA margin of 32.8%, the highest as a public company [6][22] - Reported net income for the quarter was $25.3 million, nearly equal to the full year 2021 [6][22] - Platform assets totaled $82.1 billion, impacted by $10.1 billion in market loss net of fees [16] - Net flows for the quarter were $1.4 billion, with annualized net flow as a percentage of beginning period assets at 7.5% [16] Business Line Data and Key Metrics Changes - Revenue diversification achieved through the acquisition of Voyant, with subscription-based revenue from Voyant at $3.3 million [6][19] - Spread-based revenue increased by 260% to $6.5 million, driven by rising interest rates [19][20] - Asset-based net revenue increased by 11% to $99 million [19] Market Data and Key Metrics Changes - The number of households increased by 12% year-over-year to 220,000 [18] - Engaged advisors totaled 2,663, with 193 new producing advisors added in the quarter [18][19] Company Strategy and Development Direction - The company is evolving beyond a TAMP by executing on five key components of its growth strategy, including acquisitions and enhancing advisor capabilities [5][7] - The acquisition of Adhesion Wealth is expected to expand the total addressable market by 3x and provide a modular unbundled outsourcing option for advisors [7][9] - Focus on delivering a holistic differentiated experience to advisors and their clients, with significant growth in Voyant's licenses [10][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges of a lower growth, higher inflation environment and emphasizes the importance of supporting advisors during market volatility [39] - The company reaffirms its earnings outlook and EBITDA margin expansion target for the year, despite market conditions [27][29] Other Important Information - The company added $17.8 million to its cash position, ending the quarter with $116.5 million in cash [23] - Capital expenditures for the quarter were $10 million, expected to be about 7% of total revenue for 2022 [24] Q&A Session Summary Question: How could AssetMark accelerate the revenue growth of Adhesion? - Management highlighted the combination of AssetMark and Adhesion provides a full menu of services for RIAs, allowing advisors to choose solutions that fit their needs [33][34] Question: Would the below 10% annualized pace of net flows persist? - Management noted the uncertainty in predicting market conditions but emphasized strong fundamentals and support for advisors [39] Question: What is the outlook for household growth despite a decline in total advisor count? - Management explained that household growth occurs as investors seek support during market volatility, leading to new households being added [42] Question: Is there interest in locking rates or extending duration? - Management acknowledged awareness of potential rate cuts in 2023 but has not yet pursued locking rates [46] Question: What is the expected revenue contribution from Voyant? - Management indicated that Voyant's revenue growth may be delayed due to pandemic impacts but expects to return to a $20 million run rate [49][50]