SEIC

SEI Investments Company - 10-Q Summary (Q3 2025)

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended September 30, 2025. SEI Investments Company is a global provider of financial technology, operations, and asset management services. The company manages, advises, or administers approximately $1.8 trillion in assets through its subsidiaries and partnerships.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Total revenues increased 8% year-over-year for both the quarter and the nine-month period. Asset management fees grew due to higher assets under administration (up 13% YTD) and market appreciation. Information processing fees increased due to new client conversions on the SEI Wealth Platform (SWP).
• Divestiture Impact: The company completed the sale of its Family Office Services business on June 30, 2025, recognizing a gain of $94.4 million in the second quarter. This non-recurring gain significantly boosted YTD net income.
• Segment Performance:
  • Investment Managers: Revenue up 12% (Q3) and 11% (YTD) driven by alternative fund clients and collective trust funds.
  • Investment Advisors: Revenue up 16% (Q3) and 14% (YTD), aided by the expansion of the SEI Integrated Cash Program.
  • Investments in New Businesses: Revenue declined 48% (Q3) and 7% (YTD) primarily due to the divestiture of Family Office Services.
• LSV Earnings: Equity in earnings from LSV Asset Management decreased 8% YTD to $94.3 million due to negative cash flows and client losses, partially offset by market appreciation.

Guidance, Outlook, and Risks

• Acquisition Activity: On July 17, 2025, SEI entered an agreement to acquire 57.5% of Stratos Wealth Holdings for approximately $527 million. The transaction is expected to close in two stages subject to regulatory approval. Professional fees related to this acquisition are expected to continue into Q4 2025.
• Capital Allocation: The company repurchased 6.2 million shares for $515.2 million in the first nine months of 2025. As of September 30, 2025, approximately $154.4 million remained authorized for repurchases. On October 20, 2025, the Board approved an additional $650 million increase to the repurchase program.
• Regulatory Matters:
  • Rubicon Wealth Management: Litigation remains pending regarding fraudulent activity by a former client. SEI estimates potential losses are capped at approximately $15 million in transferred client assets.
  • UK FCA Review: SEI Investments (Europe) Limited (SIEL) is undergoing a "Skilled Person" review. A voluntary requirement (VREQ) is in place restricting new client agreements requiring material changes until the FCA is satisfied with remediation efforts.
• Tax Legislation: The "One Big Beautiful Bill Act" (OBBBA) signed in July 2025 made permanent certain tax provisions, impacting deferred tax liabilities but not significantly altering the effective tax rate.

Investor Verification Checklist

• Divestiture Proceeds: Verify the utilization of the $116 million gross proceeds from the Family Office Services sale.
• Stratos Acquisition: Monitor the closing timeline and regulatory approval status for the Stratos Wealth Holdings acquisition.
• LSV Performance: Track the trend of negative cash flows and client losses at LSV Asset Management, a key equity method investment.
• Regulatory Remediation: Assess the progress of SIEL's remediation plan with the UK FCA to ensure the VREQ is lifted without further operational restrictions.
• Stock Repurchase Authorization: Confirm the impact of the new $650 million authorization on future capital return strategies.