Business context and reporting period
AlTi Global, Inc. filed this unaudited Form 10-Q for the quarter ended September 30, 2023. The company provides wealth management and asset management services and reported approximately $68.2 billion of combined AUM/AUA. Its reported 2023 results include the businesses combined on January 3, 2023; the 2022 comparison includes only predecessor Tiedemann Wealth Management Holdings (TWMH). Accordingly, year-over-year comparisons are not like-for-like.
Financial performance and position
| Metric | Q3 2023 | 2023 period to date |
|---|---|---|
| Total revenue | $49.2 million | $159.2 million from January 3 |
| Operating loss | $23.6 million | $78.8 million |
| Net loss | $171.1 million | $231.9 million |
| Net loss attributable to AlTi | $88.7 million | $114.0 million |
| Adjusted EBITDA, non-GAAP | $(3.0) million | $18.9 million |
Management said 97% of Q3 revenue was recurring and revenue was essentially flat versus Q2 excluding AHRA, which AlTi exited effective June 30. Management/advisory fees were $45.1 million in Q3. The reported operating loss was approximately 48% of revenue, calculated from the filing figures; this is not a company-reported margin.
The Q3 net loss was driven chiefly by a $153.6 million non-cash goodwill impairment in Asset Management. The impairment reflected lower estimated reporting-unit value amid market conditions and business restructuring. For the period from January 3 through September 30, impairment of goodwill and intangible assets totaled $183.0 million, including a $29.4 million charge tied to the AHRA deconsolidation. Other significant non-cash items included a $46.2 million year-to-date gain on the business-combination earn-out liability and a $12.9 million warrant-liability loss. Adjusted EBITDA is non-GAAP and includes substantial adjustments; it should be read alongside GAAP results.
Cash and cash equivalents were $12.2 million on the balance sheet, plus $2.2 million classified within assets held for sale. The cash flow statement reports $14.4 million including held-for-sale cash; $3.4 million of cash was restricted for regulatory requirements. For the period from January 3 through September 30, operating cash flow was negative $81.0 million, investing cash flow negative $132.4 million, and financing cash flow positive $30.9 million. Total assets were $1.234 billion and total equity $845.8 million at quarter-end.
Debt outstanding was $174.5 million ($172.8 million net of financing costs), comprising $96.3 million of term loans and $78.3 million drawn on the revolver. The revolver’s weighted-average interest rate was 8.5%; reported undrawn commitments were $71.8 million before the subsequent amendment. Debt was secured by substantially all borrower and guarantor assets. Operating lease liabilities were $29.6 million.
Changes, outlook, risks, and unusual items
- Business and assets: AlTi completed acquisitions including AL Wealth Partners and acquired the remaining 70% of AIMS. AIMS acquisition consideration was $16.8 million. AHRA was deconsolidated June 30. Family Office Services (FOS) was classified as held for sale; on November 6, AlTi agreed to sell it for approximately $20.1 million, subject to regulatory approval.
- Debt amendment after quarter-end: On November 10, the company amended its credit agreement temporarily through effectively April 1, 2024. The revolver commitment was reduced from $150 million to $110 million; financial covenants were modified; and certain new debt or equity proceeds must be applied to repay the facility under specified conditions. Management said it was discussing possible further amendments and evaluating repayment and capital-structure options. Despite these uncertainties, management concluded funds were sufficient to support operations and going concern for at least 12 months from the November 14 issuance date.
- Management outlook: No formal numerical earnings or revenue guidance was provided. Management expects operating expenses to trend down in Q4 and 2024 and anticipates that cost savings and growth initiatives could improve operating leverage and consistency next year. Management said event-driven strategy performance was strong in Q3 but related incentive fees were not yet recognizable under GAAP; it expected fees in Q4 if conditions persisted through year-end.
- Market and operating risks: Management cited higher-for-longer interest rates, weaker public markets, real-estate valuation and financing pressures, inflation, currency movements, and geopolitical uncertainty. Certain Asset Management real-estate activities may face reduced returns. Fair values of external strategic-manager investments and contingent liabilities rely on significant unobservable assumptions and may create earnings volatility.
- Legal and controls: A pre-action letter received October 6 for potential claims connected with Home REIT allegations named, among others, AlTi subsidiaries AFM UK and ARE. The claim amount and potential exposure were not clear in the filing and could be material; the company said it would defend any claims. Management concluded disclosure controls were not effective at September 30 because of previously identified material weaknesses in risk assessment, process controls, and IT controls. Remediation is underway, but completion and cost are uncertain.
- Other commitments: A new New York office lease entered into October 9 has an approximately 17-year term and $63.5 million of fixed rent payments. The Tax Receivable Agreement liability was $18.0 million; payments generally provide certain former owners 85% of specified realized tax benefits.
Most important facts for investors to verify
- Review the credit-agreement amendment, covenant headroom, required cash sweeps, near-term liquidity, and any further amendments or capital actions.
- Assess the assumptions behind the $153.6 million Asset Management goodwill impairment and the possibility of additional impairments.
- Track recurring fee growth, AUM/AUA flows, Q4 incentive-fee recognition, expense reductions, and whether Adjusted EBITDA converts into operating cash flow.
- Monitor the FOS sale closing, proceeds and use, and the outcome or development of potential Home REIT-related claims.
- Follow remediation of material weaknesses and any restatements, reporting delays, or further control deficiencies.