AssetMark(US:AMK)2021-07-31 16:32Financial Data and Key Metrics Changes - AssetMark reported record platform assets of $84.6 billion, a 34% increase year-over-year, driven by net flows of $2.2 billion and $3.5 billion in market gains [20][21] - Net revenue for the second quarter reached $128 million, reflecting a 33% year-over-year increase, with asset-based net revenue up 37.5% to $88.9 million [24][30] - Adjusted EBITDA was a record $40 million, up 58% year-over-year, with an adjusted EBITDA margin of 31.3%, an increase of 570 basis points year-over-year [32] Business Line Data and Key Metrics Changes - Organic growth has accelerated for four consecutive quarters, with year-to-date net flows at 11.2% of beginning-period platform assets [7][21] - The company added 201 new producing advisers in Q2 2021, the highest total since Q1 2020, bringing total engaged advisers to 2,691, which now account for 91% of platform assets [22][23] - The acquisition of Voyant is expected to contribute $20 million in revenue and $8 million in adjusted EBITDA for 2021, enhancing AssetMark's financial wellness vision [12][41] Market Data and Key Metrics Changes - The company noted that high net worth households account for over 43% of U.S. investable assets, indicating a growing market opportunity [14] - The shift towards fee-based solutions is being driven by regulatory changes, with programs in place to assist advisers in transitioning from commission-based to fee-based models [44][50] Company Strategy and Development Direction - AssetMark's growth strategy is centered around five key components, including meeting advisers' unique needs, delivering a holistic experience, and expanding into high net worth offerings [10][15] - The company aims to pursue strategic transactions to enhance capabilities and scale, positioning itself well for future M&A opportunities [17][34] - The focus on adviser-centric strategies is expected to drive long-term growth and shareholder value [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of 2021, expecting continued strong organic growth and market impact, with revised net revenue growth outlook increased to 26% to 28% [34][35] - The potential for earlier-than-anticipated interest rate hikes could positively impact revenue diversification and earnings growth [26] Other Important Information - The company ended the quarter with $179.8 million in cash and a low debt position of $125 million, providing flexibility for future investments [33] - The effective tax rate for Q2 was 23.5%, lower than the previous year's rate, reflecting tax efficiencies created in 2020 [32] Q&A Session Summary Question: Insights on Voyant's future contributions - Management plans to invest in further integration of Voyant's capabilities and expects to cover costs within the regular capital budget, with a focus on expanding relationships in the U.S. and internationally [38][39] Question: Share of wallet capture from engaged advisers - Current share of wallet from engaged advisers is 50%, with plans to capture more through new product offerings and transitioning advisers to fee-based solutions [43][44] Question: Sources of organic growth acceleration - Organic growth is driven by share of wallet expansion, the move to fee-based solutions, and increased efficiency among advisers on the platform [46][48] Question: Future organic growth expectations - The company targets low to mid-double-digit organic growth as part of its ongoing objectives, with investments aimed at achieving these long-term goals [53] Question: Revenue run rate and infrastructure support - Management emphasized the need for continuous investment in infrastructure to support growth and expand the total addressable market through new services and technology [64]