SEI INVESTMENTS CO

Previous wording

Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 were:

Current wording

Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023 were:

Previous wording

The following items had a significant impact on our financial results for the three months ended March 31, 2024 and 2023:

Current wording

The following items had a significant impact on our financial results for the three and six months ended June 30, 2024 and 2023:

Previous wording

•Revenue from Assets under management, administration, and distribution fees increased in the first three months of 2024 primarily from higher assets under administration due to sales to new and existing alternative investment clients of the Investment Managers segment. Average assets under administration increased $121.0 billion, or 14%, to $961.7 billion during the first quarter 2024, as compared to $840.7 billion during the first quarter 2023.

Current wording

•Revenue from Assets under management, administration, and distribution fees increased in the first six months of 2024 primarily from higher assets under administration due to cross sales to existing alternative investment clients of the Investment Managers segment as well as new sales within the segment. Average assets under administration increased $131.4 billion, or 15%, to $983.6 billion during the first six months of 2024, as compared to $852.2 billion during the first six months of 2023.

Previous wording

•Revenue from Asset management, administration and distribution fees also increased during the first quarter from market appreciation and positive cash flows into separately managed account programs and Strategist programs of the Investment Advisors segment. Negative cash flows from SEI fund programs in the Investment Advisors segment and client losses in the Institutional Investors segment partially offset the increase in revenues. Average assets under management in equity and fixed income programs, excluding LSV, increased $8.1 billion, or 5%, to $175.9 billion in the first quarter of 2024 as compared to $167.8 billion during the first quarter of 2023.

Current wording

•Revenue from Asset management, administration and distribution fees also increased from market appreciation and positive cash flows into separately managed account programs and Strategist programs of the Investment Advisors segment. This was partially offset by negative cash flows from SEI fund programs and fee reductions in separately managed account programs. Revenue growth was also partially offset by client losses in the Institutional Investors segment. Average assets under management in equity and fixed income programs, excluding LSV, increased $7.6 billion, or 4%, to $176.0 billion in the first six months of 2024 as compared to $168.4 billion during the first six months of 2023.

Previous wording

•Fees from the SEI Integrated Cash Program of the Investment Advisors segment launched in December 2023 were $9.6 million during the first quarter of 2024.

Current wording

•Fees from the SEI Integrated Cash Program of the Investment Advisors segment launched in December 2023 were $10.1 million during the second quarter of 2024 and $19.7 million during the first six months of 2024.

Previous wording

•Revenue from Information processing and software servicing fees increased in the first quarter of 2024 primarily from higher assets from new and existing clients processed on the SEI Wealth Platform SM (SWP).

Current wording

•Revenue from Information processing and software servicing fees increased in the first six months of 2024 primarily from higher assets from new and existing clients processed on the SEI Wealth Platform SM (SWP). A one-time early contractual buyout fee of $10.5 million recorded during the second quarter of 2023 from an investment processing client of the Private Banks segment acquired by an existing client partially offset the increase in revenues.

Previous wording

•Earnings from LSV increased to $31.6 million in the first quarter of 2024 as compared to $28.9 million in the first quarter of 2023 due to higher performance fees and market appreciation. Negative cash flows from existing clients and client losses partially offset the increase in earnings from LSV.

Current wording

•Earnings from LSV increased to $65.9 million in the first six months of 2024 as compared to $61.6 million in the first six months of 2023 due to higher performance fees and market appreciation. Negative cash flows from existing clients and client losses partially offset the increase in earnings from LSV.

Previous wording

•Operating expenses increased from higher personnel costs due to business growth, primarily in the Investment Managers segment, severance costs of $6.2 million, and the impact of inflation on wages and services. Cost containment measures related to consulting and other outsourced vendor costs partially offset the increase in operating expenses in the first quarter of 2024.

Current wording

•Operating expenses increased from higher personnel costs due to business growth, primarily in the Investment Managers segment, and the impact of inflation on wages and services. Cost containment measures related to consulting and other vendor costs partially offset the increase in operating expenses in the first six months of 2024.

Previous wording

•Capitalized software development costs were $6.3 million in the first quarter of 2024, of which $3.8 million was for continued enhancements to SWP. Capitalized software development costs also include $2.5 million of software development costs in the first quarter of 2024 for a new platform for the Investment Managers segment.

Current wording

•Capitalized software development costs were $12.7 million in the first six months of 2024, of which $7.7 million was for continued enhancements to SWP. Capitalized software development costs also include $5.0 million of software development costs in the first six months of 2024 for a new platform for the Investment Managers segment.

Previous wording

•Amortization expense related to SWP was $6.8 million in the first quarter of 2024 as compared to $6.2 million in the first quarter of 2023.

Current wording

•Amortization expense related to SWP was $13.6 million in the first six months of 2024 as compared to $12.5 million in the first six months of 2023.

Previous wording

•SEI repurchased 808 thousand shares of its common stock for $56.0 million in the first quarter of 2024.

Current wording

•SEI repurchased 2,456 thousand shares of its common stock for $167.2 million in the first six months of 2024.

Previous wording

(B) Equity and fixed-income programs include $2.0 billion of assets managed by LSV in which fees are based solely on performance and are not calculated as an asset-based fee (as of March 31, 2024).

Current wording

(B) Equity and fixed-income programs include $1.8 billion of assets managed by LSV in which fees are based solely on performance and are not calculated as an asset-based fee (as of June 30, 2024).

Previous wording

(C) Equity and fixed-income programs include $6.4 billion of assets invested in various asset allocation funds at March 31, 2024.

Current wording

(C) Equity and fixed-income programs include $6.2 billion of assets invested in various asset allocation funds at June 30, 2024.

Previous wording

(D) In addition to the assets presented, SEI also administers an additional $11.0 billion in Funds of Funds assets on which SEI does not earn an administration fee (as of March 31, 2024).

Current wording

(D) In addition to the assets presented, SEI also administers an additional $8.5 billion in Funds of Funds assets on which SEI does not earn an administration fee (as of June 30, 2024).

Previous wording

(D) In addition to the assets presented, SEI also administers an additional $11.1 billion of average assets in Funds of Funds assets for the three months ended March 31, 2024 on which SEI does not earn an administration fee.

Current wording

(D) In addition to the assets presented, SEI also administers an additional $8.6 billion of average assets in Funds of Funds assets for the three months ended June 30, 2024 on which SEI does not earn an administration fee.

Previous wording

Revenues, Expenses and Operating Profit (Loss) for our business segments for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 were as follows:

Current wording

Revenues, Expenses and Operating Profit (Loss) for our business segments for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023 were as follows:

Previous wording

Operating margins increased to 13% compared to 7% in the three month period. Operating income increased by $8.7 million, or 103%, in the three month period and was primarily affected by:

Current wording

Operating margins increased to 15% compared to 14% in the three month period and increased to 14% compared to 11% in the six month period. Operating income increased by $2.3 million, or 12%, in the three month period and increased by $11.0 million, or 41%, in the six month period and was primarily affected by:

Previous wording

•Decreased costs, mainly consulting and other outsourced vendor costs from cost containment measures.

Current wording

•Decreased costs, mainly non-capitalized consulting and other vendor costs from cost containment measures; partially offset by

Previous wording

•New fee revenue of $9.6 million from the SEI Integrated Cash Program launched in December 2023; partially offset by

Current wording

•New fee revenue of $10.1 million during the second quarter 2024 and $19.7 million during the first six months of 2024 from the SEI Integrated Cash Program launched in December 2023; partially offset by

Previous wording

•Decreased investment management fees from SEI fund programs resulting from the continued shift out of SEI fund programs into separately managed accounts and other investment products.

Current wording

•Decreased investment management fees from SEI fund programs resulting from the continued shift out of SEI fund programs into separately managed accounts and other investment products; and

Previous wording

•Decreased non-capitalized consulting costs; and

Current wording

•Decreased non-capitalized consulting costs; partially offset by

Previous wording

Operating margin decreased to 44% compared to 45% in the three month period. Operating income decreased $1.8 million, or 5%, in the three month period and was primarily affected by:

Current wording

Revenues decreased $3.6 million, or 5%, in the three month period and decreased $6.2 million, or 4%, in the six month period ended June 30, 2024 and were primarily affected by:

Previous wording

•Increased investment management fees from existing clients due to higher assets under management due to market appreciation.

Current wording

•Increased investment management fees from existing clients due to higher assets under management due to market appreciation; and

Previous wording

Operating margin increased to 45% compared to 40% in the three month period. Operating income increased $12.8 million, or 30%, in the three month period and was primarily affected by:

Current wording

Operating margin increased to 46% compared to 39% in the three month period and increased to 45% compared to 42% in the six month period. Operating income increased $3.5 million, or 12%, in the three month period and increased $1.7 million, or 3%, in the six month period and was primarily affected by:

Previous wording

•Decreased direct expenses associated with investment management fees; and

Current wording

•Decreased direct expenses associated with investment management fees;

Previous wording

•A decrease in revenues; partially offset by

Current wording

•A decrease in revenues as mentioned above; and

Previous wording

Operating margin increased to 37% compared to 34% in the three month period. Operating income increased $10.3 million, or 19%, in the three month period and was primarily affected by:

Current wording

Operating margin increased to 38% compared to 35% in the three month period and increased to 37% compared to 35% in the six month period. Operating income increased $12.6 million, or 22%, in the three month period and increased $22.9 million, or 21%, in the six month period and was primarily affected by:

Previous wording

Revenues increased $16.2 million, or 15%, in the three month period ended March 31, 2024 and were primarily affected by:

Current wording

Revenues increased $1.9 million, or 15%, in the three month period and increased $3.3 million, or 13%, in the six month period ended June 30, 2024 and were primarily affected by:

Previous wording

•Increased revenues from hosted technology offerings through SEI Family Office Services due to higher assets under administration and increased non-recurring implementation fees.

Current wording

•Increased revenues from hosted technology offerings through SEI Family Office Services due to increased non-recurring implementation fees and new business; and

Previous wording

Corporate overhead expenses primarily consist of general and administrative expenses and other costs not directly attributable to a reportable business segment. Corporate overhead expenses were $37.8 million and $31.2 million in the three months ended March 31, 2024 and 2023, respectively. The increase in corporate overhead expenses is primarily due to severance costs of $6.2 million and investments in upgrading and enhancing various technologies utilized by corporate overhead units. Additionally, personnel costs increased from enhancements to further build our compliance infrastructure.

Current wording

Corporate overhead expenses primarily consist of general and administrative expenses and other costs not directly attributable to a reportable business segment. Corporate overhead expenses were $33.3 million and $32.4 million in the three months ended June 30, 2024 and 2023, respectively, and $71.1 million and $63.5 million in the six months ended June 30, 2024, respectively. The increase in corporate overhead expenses is primarily due to severance costs and investments in upgrading and enhancing various technologies utilized by corporate overhead units. Additionally, personnel costs increased from enhancements to further build our compliance infrastructure.

Previous wording

Net gain from investments in the three months ended March 31, 2024 were primarily due to unrealized mark-to-market gains recorded in current earnings associated with LSV-sponsored investment funds and Company-sponsored investment funds from market appreciation (See Note 5).

Current wording

Net gain from investments in the three and six months ended June 30, 2024 were primarily due to unrealized mark-to-market gains recorded in current earnings associated with LSV-sponsored investment funds and Company-sponsored investment funds from market appreciation (See Note 5).

Previous wording

Interest and dividend income is earned based upon the amount of cash that is invested daily. The increase in interest and dividend income in the three months ended March 31, 2024 was due to an overall increase in interest rates.

Current wording

Interest and dividend income is earned based upon the amount of cash that is invested daily. The increase in interest and dividend income in the three and six months ended June 30, 2024 was due to an overall increase in interest rates.

Previous wording

The increase in earnings from LSV in the three months ended March 31, 2024 was primarily due to higher performance fees and market appreciation. Negative cash flows from existing clients and client losses partially offset the increase in earnings from LSV. Average assets under management by LSV increased $3.7 billion to $90.7 billion during the three months ended March 31, 2024 as compared to $87.0 billion during the three months ended March 31, 2023, an increase of 4%.

Current wording

The increase in earnings from LSV in the three and six months ended June 30, 2024 was primarily due to higher assets under management from market appreciation. Negative cash flows from existing clients and client losses partially offset the increase in earnings from LSV. Average assets under management by LSV increased $5.0 billion to $90.8 billion during the six months ended June 30, 2024 as compared to $85.7 billion during the six months ended June 30, 2023, an increase of 6%.

Previous wording

The increase in amortization expense related to capitalized software development costs during the three months ended March 31, 2024 was primarily due significant enhancements to SWP (See Note 1 to the Consolidated Financial Statements).

Current wording

The increase in amortization expense related to capitalized software development costs during the three and six months ended June 30, 2024 was primarily due to significant enhancements to SWP (See Note 1 to the Consolidated Financial Statements).

Previous wording

The effective income tax rates for the three months ended March 31, 2024 and 2023 differ from the federal income tax statutory rate due to the following:

Current wording

The effective income tax rates for the three and six months ended June 30, 2024 and 2023 differ from the federal income tax statutory rate due to the following:

Previous wording

We recognized $11.1 million and $8.1 million in stock-based compensation expense during the three months ended March 31, 2024 and 2023, respectively. The increase in expense was primarily due to new equity awards granted during the fourth quarter 2023. The amount of stock-based compensation expense recognized is primarily based upon management's estimate of when the financial vesting targets of outstanding stock options may be achieved. Any change in the estimate could result in the amount of stock-based compensation expense to be accelerated, spread out over a longer period, or reversed. This may cause volatility in the recognition of stock-based compensation expense in future periods and could materially affect earnings (See Note 7 to the Consolidated Financial Statements).

Current wording

We recognized $23.5 million and $15.5 million in stock-based compensation expense during the six months ended June 30, 2024 and 2023, respectively. The increase in expense was primarily due to new equity awards granted during the fourth quarter 2023. The amount of stock-based compensation expense recognized is primarily based upon management's estimate of when the financial vesting targets of outstanding stock options may be achieved. Any change in the estimate could result in the amount of stock-based compensation expense to be accelerated, spread out over a longer period, or reversed. This may cause volatility in the recognition of stock-based compensation expense in future periods and could materially affect earnings (See Note 7 to the Consolidated Financial Statements).

Previous wording

We expect to recognize approximately $42.5 million in stock-based compensation expense during the remainder of 2024.

Current wording

During the first quarter 2024, we revised our estimate of when some vesting targets are expected to be achieved. This change in estimate resulted in an increase of $1.2 million in stock-based compensation expense during the six months ended June 30, 2024. We expect to recognize approximately $31.9 million in stock-based compensation expense during the remainder of 2024.

Previous wording

The majority of excess cash reserves are primarily placed in accounts located in the United States that invest entirely in SEI-sponsored money market mutual funds denominated in the U.S. dollar. We also utilize demand deposit accounts or money market accounts at several large, well-established financial institutions located in the United States. The institutions we utilize have not indicated any stability issues regarding the ability to honor current or future deposit obligations to their customers. Accounts used to manage these excess cash reserves do not impose any restrictions or limitations that would prevent us from being able to access such cash amounts immediately. As of April 11, 2024, the amount of cash and cash equivalents considered free and immediately accessible for other general corporate purposes was $497.5 million.

Current wording

The majority of excess cash reserves are primarily placed in accounts located in the United States that invest entirely in SEI-sponsored money market mutual funds denominated in the U.S. dollar. We also utilize demand deposit accounts or money market accounts at several large, well-established financial institutions located in the United States. The institutions we utilize have not indicated any stability issues regarding the ability to honor current or future deposit obligations to their customers. Accounts used to manage these excess cash reserves do not impose any restrictions or limitations that would prevent us from being able to access such cash amounts immediately. As of July 17, 2024, the amount of cash and cash equivalents considered free and immediately accessible for other general corporate purposes was $424.2 million.

Previous wording

Cash flows from operations decreased $2.1 million in the first three months of 2024 compared to the first three months of 2023 primarily from the negative impact from the change in working capital accounts. The increase in net income partially offset the decline in cash flows from operations.

Current wording

Cash flows from operations increased $44.6 million in the first six months of 2024 compared to the first six months of 2023 primarily from the increase in net income. The negative impact from the change in working capital accounts, primarily due to increased client receivables, partially offset the increase in cash flows from operations.

Previous wording

•Purchases, sales and maturities of marketable securities. Purchases, sales and maturities of marketable securities in the first three months of 2024 and 2023 were as follows:

Current wording

•Purchases, sales and maturities of marketable securities. Purchases, sales and maturities of marketable securities in the first six months of 2024 and 2023 were as follows: