SEI(US:SEIC)2026-01-28 23:00Financial Data and Key Metrics Changes - SEI reported earnings per share (EPS) of $1.38 for Q4 2025, marking the highest quarterly earnings performance in the company's history, with a 16% year-over-year increase and a 6% sequential increase [4][11] - The company experienced double-digit earnings growth for the year and over a full percentage point of operating margin expansion [12][21] - Consolidated operating margins were impacted by severance and M&A costs but showed significant improvement when excluding these costs [14][21] Business Line Data and Key Metrics Changes - Private banking revenue increased significantly, driven by professional services wins, contributing to margin growth due to cost leverage [12][14] - Investment Management Services (IMS) benefited from a $3 million revenue accrual true-up, with overall revenue and margins increasing meaningfully [12][13] - Asset management segments saw sequential growth due to market appreciation and healthy flows, despite some client losses in the institutional segment [13][17] Market Data and Key Metrics Changes - Assets Under Administration (AUA) grew by 3%, supported by strong win momentum, while Assets Under Management (AUM) increased by 2% due to market appreciation [16][17] - The integrated cash program contributed $21 billion to revenue, matching levels from the prior quarter and year [13] Company Strategy and Development Direction - SEI is focusing on expanding its investment management product launches, particularly in ETFs, SMAs, and select alternative products, aiming to leverage its strengths in these areas [8][21] - The company is committed to a long-term strategic partnership with Stratos, enhancing its capabilities in the advisor channel and integrating technology and investment management strengths [6][8] - SEI is transitioning its IMS business model to platform-level services, utilizing automation and AI to lower costs and expand access to solutions [9][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sales momentum generated in Q4 2025, expecting it to carry into 2026, particularly in private banking and asset management [5][21] - The company is focused on executing its roadmap for 2026, emphasizing disciplined investment and operational efficiency [10][21] - Management acknowledged the challenges of seasonality and the impact of performance fees, indicating a cautious but optimistic outlook for the upcoming quarters [19][21] Other Important Information - SEI repurchased $101 million of shares in Q4, totaling $616 million for the year, representing nearly 6% of total shares outstanding [18] - The company completed the Stratos acquisition primarily with cash, ending the year with $400 million in cash and no debt [18] Q&A Session Summary Question: Sales events from alternative managers - Management indicated that over two-thirds of sales events came from alternative managers, with a mix of new wins and expanding relationships with current clients, expecting more updates in April [24][25][26] Question: Private banking segment margins - Management noted that private banking margins have been increasing steadily, with expectations to remain in the high teens range, influenced by professional services [36][37] Question: Impact of workforce reductions on expenses - Management clarified that the reduction in compensation from workforce reductions would largely offset annual compensation increases, resulting in a flattish impact on expenses [45][46] Question: Stratos acquisition run rate impact - Management provided insights on the Stratos acquisition, indicating a revenue contribution of about $5 million in Q4, with expectations for more detailed updates in Q1 [52][53] Question: Revenue recognition from non-recurring sales events - Management confirmed that the two significant sales events in private banking are recurring, with revenue recognition expected to occur over the coming quarters [56][57]