AssetMark(US:AMK)2021-11-08 16:00Financial Performance - Total revenue for Q3 2021 was $139.7 million, an increase of $32.5 million or 30.4% from $107.1 million in Q3 2020[102] - Net income for Q3 2021 was $12.3 million, or $0.17 per share, compared to $8.6 million, or $0.13 per share, in Q3 2020[102] - Adjusted EBITDA for Q3 2021 was $44.8 million, compared to $29.3 million in Q3 2020[102] - Total revenue for the nine months ended September 30, 2021 was $387 million, up from $321 million in the same period of 2020[117] - Adjusted net income for the nine months ended September 30, 2021 was $78.6 million, compared to $51.0 million for the same period in 2020[117] - The total net income for the three months ended September 30, 2021, was $12,250, compared to $8,597 for the same period in 2020, showing an increase of 42.5%[152] - Net income for the nine months ended September 30, 2021, was $13.3 million, a significant increase from $2.1 million in the same period of 2020[153] Revenue Breakdown - Asset-based revenue for Q3 2021 was $134.2 million, up $30.3 million or 29.2% from $103.8 million in Q3 2020[102] - Subscription-based revenue rose by $3.2 million in Q3 2021, attributed to the acquisition of Voyant on July 1, 2021[170] - Spread-based revenue decreased by $1.4 million, or 53.0%, from $2.6 million in Q3 2020 to $1.2 million in Q3 2021, mainly due to lower interest rates[171] - Asset-based revenue increased by $70.5 million, or 23.2%, from $304.2 million in the nine months ended September 30, 2020 to $374.7 million in the nine months ended September 30, 2021[184] Asset Management - Platform assets reached $86.8 billion as of September 30, 2021, a 29.1% increase from $67.3 billion a year earlier[103] - Regulatory assets under management (AUM) totaled $55,361 million as of September 30, 2021, compared to $41,546 million in the prior year, indicating a growth of about 33%[119] - As of September 30, 2021, platform assets reached $86,826 million, up from $67,254 million as of September 30, 2020, reflecting a year-over-year growth of approximately 29%[119] - 96% of total revenue for the nine months ended September 30, 2021, was based on the market value of assets on the platform, indicating a strong reliance on asset performance[217] Adviser Engagement - Engaged advisers on the platform increased to 2,749, up 14.6% from 2,398 as of September 30, 2020[103] - New producing advisers numbered 201 in Q3 2021, compared to 171 in Q3 2020[117] - As of September 30, 2021, engaged advisers, defined as those with at least $5 million in platform assets, contributed significantly to the overall platform assets[124] Expenses and Costs - Total operating expenses increased by $11.9 million, or 11.3%, from $104.9 million in Q3 2020 to $116.8 million in Q3 2021[168] - Employee compensation increased by $1.3 million, or 2.9%, from $42.8 million in Q3 2020 to $44.1 million in Q3 2021, driven by higher salaries and integration costs[175] - General and operating expenses rose by $2.9 million, or 17.8%, from $15.9 million in Q3 2020 to $18.8 million in Q3 2021, due to increased costs in various operational areas[176] - Professional fees increased by $1.4 million, or 39.5%, from $3.6 million in Q3 2020 to $5.1 million in Q3 2021, driven by higher outsourcing and consulting expenses[177] - Depreciation and amortization expense increased by $2.0 million, or 22.8%, from $8.7 million in Q3 2020 to $10.6 million in Q3 2021, primarily due to new assets and the Voyant acquisition[178] Cash Flow and Liquidity - Cash flow from operating activities increased by $39.5 million to $93.9 million for the nine months ended September 30, 2021, compared to $54.4 million for the same period in 2020[209] - Cash used in investing activities rose by $111.7 million to $(153.2) million for the nine months ended September 30, 2021, primarily due to a $124.2 million net cash payment for the Voyant acquisition[210] - Cash flow from financing activities increased by $39.9 million to $40.1 million for the nine months ended September 30, 2021, primarily due to net drawdowns on the 2020 Revolving Credit Facility[211] - Liquidity as of September 30, 2021 included cash and cash equivalents of $50.4 million and restricted cash of $12.0 million[200] Tax and Compliance - Provision for income taxes increased by $14.3 million, or 503.7%, from a benefit of $(2.8) million in the nine months ended September 30, 2020 to a provision of $11.4 million in the nine months ended September 30, 2021[198] - As of September 30, 2021, the Total Leverage Ratio was compliant with the covenant limit of 3.5 to 1.0, and the interest coverage ratio was above the minimum requirement of 4.0 to 1.0[206] Market Sensitivity - A 1% decrease in the aggregate value of assets on the platform would have led to a 1% decline in total revenue and an 11% decline in pre-tax income, equating to a $2.6 million impact[217] - Client cash assets in the insured cash deposit program totaled $2.6 billion as of September 30, 2021, with a potential annual income impact of approximately $26 million from a 100 basis point change in short-term interest rates[218] - If LIBOR-based interest rates increased by 100 basis points, annual interest expense would rise by approximately $1.2 million based on amounts drawn under the 2020 Revolving Credit Facility[219]