AssetMark(US:AMK)2022-08-07 22:47Financial 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]