SEI INVESTMENTS CO
For the period ended Sep 30, 2024. Filed Oct 25, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 25, 2024
SEIC$105.30+0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-26.
0000350894-24-000102
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-25.
0000350894-24-000131
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 190 previous paragraphs and 196 current paragraphs.
136 unchanged; 48 reworded; 12 added; 6 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 15 previous and 15 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
•In July 2024, SEI sold a condominium located in New York, New York and recognized a net pre-tax gain of $8.2 million, or $0.05 diluted earnings per share, after associated costs and expenses. The gain from the sale is included in Other income on the accompanying Consolidated Statement of Operations.
Current report
Revenues increased $19.1 million, or 16%, in the three month period and increased $28.3 million, or 8%, in the nine month period ended September 30, 2024 and were primarily affected by:
Current report
•Increased personnel and stock-based compensation costs.
Current report
•Increased personnel and stock-based compensation costs.
Current report
Revenues increased $1.1 million, or 2%, in the three month period and decreased $5.0 million, or 2%, in the nine month period ended September 30, 2024 and were primarily affected by:
Current report
Operating margin increased to 47% compared to 43% in the three month period and increased to 46% compared to 43% in the nine month period. Operating income increased $3.2 million, or 11%, in the three month period and increased $4.9 million, or 5%, in the nine month period and was primarily affected by:
Current report
Revenues increased $21.6 million, or 13%, in the three month period and increased $60.4 million, or 13%, in the nine month period ended September 30, 2024 and were primarily affected by:
Current report
Revenues increased $2.4 million, or 18%, in the three month period and increased $5.7 million, or 15%, in the nine month period ended September 30, 2024 and were primarily affected by:
Current report
Net gain (loss) from investments
Current report
Other income
Current report
Other income is related to a net gain of $8.2 million recognized from the sale of property located in New York, New York during July 2024 (See Note 14 to the Consolidated Financial Statements).
Current report
•Proceeds from fixed asset dispositions. We received proceeds of $9.9 million after associated costs and expenses from the sale of property located in New York, New York in the third quarter 2024.
Removed paragraphs (6)
Previous report
Revenues were flat in the three month period and increased $9.2 million, or 4%, in the six month period ended June 30, 2024 and were primarily affected by:
Previous report
Revenues increased $11.0 million, or 10%, in the three month period and increased $27.2 million, or 13%, in the six month period ended June 30, 2024 and were primarily affected by:
Previous report
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 report
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 report
Revenues increased $20.7 million, or 13%, in the three month period and increased $38.8 million, or 12%, in the six month period ended June 30, 2024 and were primarily affected by:
Previous report
Net gain from investments
Reworded paragraphs (48)
Previous wording
SEI delivers technology and investment solutions that connect the financial services industry. With capabilities across investment processing, operations, and asset management, SEI works with corporations, financial institutions and professionals, and ultra-high-net-worth families to help drive growth, make confident decisions, and protect futures. Investment processing fees are earned as either monthly fees for contracted services or as a percentage of the market value of our clients' assets processed on our platforms. Investment operations and investment management fees are earned as a percentage of assets under management, administration or advised assets. As of June 30, 2024, through our subsidiaries and partnerships in which we have a significant interest, we manage, advise or administer $1.5 trillion in hedge, private equity, mutual fund and pooled or separately managed assets.
Current wording
SEI delivers technology and investment solutions that connect the financial services industry. With capabilities across investment processing, operations, and asset management, SEI works with corporations, financial institutions and professionals, and ultra-high-net-worth families to help drive growth, make confident decisions, and protect futures. Investment processing fees are earned as either monthly fees for contracted services or as a percentage of the market value of our clients' assets processed on our platforms. Investment operations and investment management fees are earned as a percentage of assets under management, administration or advised assets. As of September 30, 2024, through our subsidiaries and partnerships in which we have a significant interest, we manage, advise or administer $1.6 trillion in hedge, private equity, mutual fund and pooled or separately managed assets.
Previous wording
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023 were:
Current wording
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023 were:
Previous wording
The following items had a significant impact on our financial results for the three and six months ended June 30, 2024 and 2023:
Current wording
The following items had a significant impact on our financial results for the three and nine months ended September 30, 2024 and 2023:
Previous 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.
Current wording
•Revenue from Assets under management, administration, and distribution fees increased in the first nine 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 $132.4 billion, or 15%, to $998.4 billion during the first nine months of 2024, as compared to $866.0 billion during the first nine months of 2023.
Previous 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.
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 $8.8 billion, or 5%, to $177.9 billion in the first nine months of 2024 as compared to $169.1 billion during the first nine months of 2023.
Previous 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.
Current wording
•Fees from the SEI Integrated Cash Program of the Investment Advisors segment launched in December 2023 were $10.7 million during the third quarter of 2024 and $30.4 million during the first nine months of 2024.
Previous 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.
Current wording
•Revenue from Information processing and software servicing fees increased in the first nine months of 2024 primarily from new client conversions and growth from existing SEI Wealth Platform SM (SWP) clients. 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 $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.
Current wording
•Earnings from LSV increased to $102.4 million in the first nine months of 2024 as compared to $91.5 million in the first nine months of 2023 due to market appreciation and higher performance fees. 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, 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.
Current wording
•Operating expenses increased from higher personnel costs due to business growth, primarily in the Investment Managers segment, stock-based compensation, 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 nine months of 2024.
Previous 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.
Current wording
•Capitalized software development costs were $18.4 million in the first nine months of 2024, of which $10.5 million was for continued enhancements to SWP. Capitalized software development costs also include $5.0 million of software development costs in the first nine months of 2024 for a new platform for the Investment Managers segment.
Previous 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.
Current wording
•Amortization expense related to SWP was $20.5 million in the first nine months of 2024 as compared to $19.0 million in the first nine months of 2023.
Previous wording
•Interest and dividend income was $22.4 million in the first six months of 2024 as compared to $18.3 million in the first six months of 2023. The increase in interest and dividend income was due to an overall increase in interest rates.
Current wording
•Interest and dividend income was $36.0 million in the first nine months of 2024 as compared to $29.5 million in the first nine months of 2023. The increase in interest and dividend income was due to an overall increase in interest rates and higher invested cash balances.
Previous wording
•Effective tax rates were 23.9% during the second quarter 2024 and 23.4% during the second quarter 2023. During the first six months of 2024 and 2023, effective tax rates were 23.4% and 23.5%, respectively.
Current wording
•Effective tax rates were 23.5% during the third quarter 2024 and 22.5% during the third quarter 2023. During the first nine months of 2024 and 2023, effective tax rates were 23.4% and 23.2%, respectively.
Previous wording
•SEI repurchased 2,456 thousand shares of its common stock for $167.2 million in the first six months of 2024.
Current wording
•SEI repurchased 3.7 million shares of its common stock for $253.0 million in the first nine months of 2024.
Previous 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).
Current wording
(B) Equity and fixed-income programs include $1.6 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 September 30, 2024).
Previous wording
(C) Equity and fixed-income programs include $6.2 billion of assets invested in various asset allocation funds at June 30, 2024.
Current wording
(C) Equity and fixed-income programs include $6.4 billion of assets invested in various asset allocation funds at September 30, 2024.
Previous wording
(B) Equity and fixed-income programs include assets managed by LSV in which fees are based solely on performance and are not calculated as an asset-based fee. The average value of these assets for the three months ended June 30, 2024 was $1.9 billion.
Current wording
(B) Equity and fixed-income programs include assets managed by LSV in which fees are based solely on performance and are not calculated as an asset-based fee. The average value of these assets for the three months ended September 30, 2024 was $1.7 billion.
Previous 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.
Current wording
(D) In addition to the assets presented, SEI also administers an additional $8.5 billion of average assets in Funds of Funds assets for the three months ended September 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 and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023 were as follows:
Current wording
Revenues, Expenses and Operating Profit (Loss) for our business segments for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 were as follows:
Previous wording
•Increased investment processing fees from new SWP client conversions and growth from existing SWP clients due to market appreciation and increased transaction volumes; and
Current wording
•Increased investment processing fees from new SWP client conversions and growth from existing SWP clients due to market appreciation and increased transaction volumes;
Previous wording
•Increased investment management fees from existing international clients due to market appreciation; partially offset by
Current wording
•Increased investment management fees from existing international clients due to market appreciation; and
Previous wording
•Lower investment processing fees earned on our mutual fund trading solution.
Current wording
•Increased investment processing fees earned on our mutual fund trading solution; partially offset by
Previous wording
•One-time early termination fees of $10.5 million from an investment processing client during the second quarter 2023;
Current wording
•One-time early termination fees of $10.5 million from an investment processing client during the second quarter 2023; and
Previous wording
•Lower investment processing fees from the recontracting of existing clients and a client loss; and
Current wording
•Lower investment processing fees from the recontracting of existing clients and a client loss.
Previous 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:
Current wording
Operating margins increased to 17% compared to 7% in the three month period and increased to 15% compared to 9% in the nine month period. Operating income increased by $15.2 million, or 179%, in the three month period and increased by $26.2 million, or 74%, in the nine month period and was primarily affected by:
Previous wording
•Increased amortization expense related to SWP.
Current wording
•Increased amortization expense related to SWP; and
Previous 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:
Current wording
Revenues increased $16.4 million, or 15%, in the three month period and increased $43.6 million, or 13%, in the nine month period ended September 30, 2024 and were primarily affected by:
Previous 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
Current wording
•New fee revenue of $10.7 million during the third quarter 2024 and $30.4 million during the first nine months of 2024 from the SEI Integrated Cash Program launched in December 2023; partially offset by
Previous wording
Operating margin increased to 43% compared to 41% in the three month period and increased to 44% compared to 41% in the six month period. Operating income increased $6.2 million, or 14%, in the three month period and increased $19.0 million, or 21%, in the six month period and was primarily affected by:
Current wording
Operating margin increased to 45% compared to 42% in the three month period and increased to 44% compared to 41% in the nine month period. Operating income increased $10.5 million, or 23%, in the three month period and increased $29.5 million, or 22%, in the nine month period and was primarily affected by:
Previous wording
•Increased direct expenses associated with the increase in separately managed account fees.
Current wording
•Increased direct expenses associated with the increase in separately managed account fees; and
Previous 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:
Current wording
Operating margin increased to 38% compared to 36% in the three month period and increased to 38% compared to 35% in the nine month period. Operating income increased $11.1 million, or 19%, in the three month period and increased $34.0 million, or 20%, in the nine month period and was primarily affected by:
Previous wording
•Increased costs associated with new business, primarily personnel expenses and third-party vendor costs; and
Current wording
•Increased costs associated with new business, primarily personnel and stock-based compensation costs and third-party vendor costs; 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 $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.
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 $37.9 million and $31.0 million in the three months ended September 30, 2024 and 2023, respectively, and $109.0 million and $94.5 million in the nine months ended September 30, 2024, respectively. The increase in corporate overhead expenses is primarily due to severance costs, stock-based compensation 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 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).
Current wording
Net gain from investments in the three and nine months ended September 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 and six months ended June 30, 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 nine months ended September 30, 2024 was due to an overall increase in interest rates.
Previous 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%.
Current wording
The increase in earnings from LSV in the three and nine months ended September 30, 2024 was primarily due to higher assets under management from market appreciation and higher performance fees. Negative cash flows from existing clients and client losses partially offset the increase in earnings from LSV. Average assets under management by LSV increased $5.5 billion to $91.6 billion during the nine months ended September 30, 2024 as compared to $86.1 billion during the nine months ended September 30, 2023, an increase of 6%.
Previous 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).
Current wording
The increase in amortization expense related to capitalized software development costs during the three and nine months ended September 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 and six months ended June 30, 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 nine months ended September 30, 2024 and 2023 differ from the federal income tax statutory rate due to the following:
Previous 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).
Current wording
We recognized $37.2 million and $23.5 million in stock-based compensation expense during the nine months ended September 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
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.
Current wording
We revised our estimate of when some vesting targets are expected to be achieved. This change in estimate resulted in an increase of $3.1 million in stock-based compensation expense during the nine months ended September 30, 2024. We expect to recognize approximately $31.9 million in stock-based compensation expense during the remainder of 2024.
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