AssetMark(AMK) - 2024 Q2 - Quarterly Report

Financial Position - Total assets as of June 30, 2024, were $1,617,413,000, a slight decrease from $1,620,563,000 as of December 31, 2023[12] - Current assets decreased from $291,111,000 as of December 31, 2023, to $274,815,000 as of June 30, 2024, primarily due to a reduction in cash and cash equivalents[12] - Total liabilities decreased from $353,181,000 as of December 31, 2023, to $271,750,000 as of June 30, 2024, reflecting a reduction in long-term debt[12] - Stockholders' equity increased from $1,267,382,000 as of December 31, 2023, to $1,345,663,000 as of June 30, 2024, driven by retained earnings growth[12] Revenue and Income - The company reported a net income of $70,278,000 for the six months ended June 30, 2024, compared to $50,000,000 for the same period in 2023, representing a 40.56% increase[13] - Total revenue for Q2 2024 reached $198,491 thousand, a 13% increase from $175,521 thousand in Q2 2023[14] - Asset-based revenue increased to $158,878 thousand, up 15.7% from $137,336 thousand year-over-year[14] - Subscription-based revenue rose to $4,306 thousand, reflecting a 16.6% increase compared to $3,693 thousand in the same period last year[14] - Net income for Q2 2024 was $32,314 thousand, slightly down from $32,877 thousand in Q2 2023, representing a decrease of 1.7%[14] - Basic net income per share for Q2 2024 was $0.43, unchanged from Q2 2023[14] Expenses - Total operating expenses increased to $151,439 thousand, a 17.3% rise from $129,145 thousand in Q2 2023[14] - Employee compensation expenses rose to $51,902 thousand, up 8.5% from $48,099 thousand year-over-year[14] - Total asset-based expenses for the six months ended June 30, 2024, were $93,200, up from $76,778 for the same period in 2023, representing an increase of approximately 21.4%[63] Cash Flow - Net cash provided by operating activities for the six months ended June 30, 2024, was $99,436, slightly down from $105,479 in 2023, a decrease of 5.4%[21] - The company reported a net cash used in investing activities of $32,684 for the six months ended June 30, 2024, compared to $29,935 in 2023, an increase of 9.2%[21] - The company experienced a net change in cash of $(26,998) for the six months ended June 30, 2024, compared to an increase of $50,544 for the same period in 2023[21] Merger and Acquisition - The company entered into a merger agreement valued at approximately $2,622,573 with GTCR Everest Borrower, LLC, with the transaction subject to customary closing conditions[28] - The company incurred transaction costs associated with the merger of approximately $10,952 for the six months ended June 30, 2024[31] - The Company entered into an Asset Purchase Agreement with Morningstar, Inc. to acquire client advisory agreements, pending regulatory approval[41] Risks and Regulatory Matters - The company is exposed to various risks, including market fluctuations and cybersecurity threats, which could adversely affect its business operations[7] - The company has significant exposure to risks related to the pending merger, which could adversely affect its financial condition and operations[7] - The company is subject to various regulatory inquiries and litigation risks that could adversely affect its business and financial condition[77] - The company continues to comply with certain undertakings under the SEC settlement reached in September 2023[78] Shareholder Information - The weighted average number of common shares outstanding increased to 74,743,985 in Q2 2024 from 74,172,080 in Q2 2023[14] - Total stockholders' equity as of June 30, 2024, was $1,345,663 thousand, an increase from $1,184,439 thousand as of June 30, 2023[17] - The balance of common shares increased to 74,743,985 as of June 30, 2024, from 74,172,080 as of June 30, 2023, marking an increase of 0.8%[18] Accounting and Compliance - The company is evaluating the impact of new accounting standards issued by FASB, which will affect financial disclosures starting in 2024 and 2025[36] - The company performed an annual test for intangible assets impairment and determined that intangible assets were not impaired as of June 30, 2024[47] Taxation - The effective income tax rate was 28.3% for Q2 2024, compared to 26.2% for Q2 2023, and 25.8% for the first half of 2024, down from 26.8% for the same period in 2023[80]