SEI Investments Company Aktie

Greetings. Welcome to SEI Third Quarter 2026 Earnings Call. [Operator Instructions] A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Brad Burke, Head of Investor Relations and Treasurer. Thank you, sir. You may begin.

Thank you, and welcome, everyone, to SEI's Third Quarter 2026 Earnings Call. We appreciate you joining us today. On the call, we have Ryan Hicke, SEI's Chief Executive Officer; Sean Denham, our Chief Financial and Chief Operating Officer; and members of our executive management team, including Kristie Edling-Day, Michael Lane, Phil McCabe, Mike Peterson, Sneha Shah, Sanjay Sharma and Amy Sliwinski.

Before we begin, I'd like to point out that our earnings press release and the presentation accompanying today's call can be found under the Investor Relations section of our website at seic.com. This call is being webcast live, and a replay will be available on the Events and Webcast page of our website.

With that, I'll now turn the call over to Ryan. Ryan?

Thank you, Brad. Good afternoon, everyone. The results SEI delivered in the third quarter reinforced the conversations we have been having with this audience for the last couple of years, and they confirm why we had the conviction in the strategy we discussed at the Investor Day last year. The results provide repeatable evidence that the strategic changes we have made are showing up across the company. It also demonstrates that the nature of our client relationships have evolved. SEI is now engaging with clients at the top of the organization on more strategic issues and bringing a broader set of capabilities to the relationship.

In the third quarter, SEI reported revenue growth of 14%, adjusted operating profit growth of 25% and adjusted EPS growth of 24% compared to the prior year. And for some longer historical context, the adjusted EPS achieved in the third quarter is nearly 50% above where the company stood 2 years ago. Our growth continues to broaden across the company, with contributions from multiple businesses in both financial performance and sales activity.

And speaking of sales events, third quarter net events totaled $47 million, bringing our year-to-date total to $157 million. With a full quarter still remaining in the year, we have already exceeded the highest level of full year sales results in the history of the company. We're excited about the results and the trajectory of the business. Sean will walk through the results in more detail, but I want to spend a couple of minutes talking about what we're seeing in each of the businesses at a macro level.

In IMS, demand remains strong, especially among large alternative asset managers. We continue to be the partner of choice for those looking for global scale, asset class breadth and modern technology. What has become clear to us over the last 18 months, is that SEI's reputation is one of our strongest competitive advantages. When firms evaluate outsourcing partners, they speak with our existing clients. They ask who can execute? Who can handle complexity? Who can support future growth? But they also ask who has a client-centric culture and truly understands the nature of partnership? Those conversations are opening new doors with some of the largest first-time outsourcers in the industry.

We are also encouraged by the strong demand for solutions in retail offer. We had a successful launch with our retail transfer agency and our Alton CIT capability is showing momentum, with multiple clients launched in Q3 and more expected to fund shortly. Our Private Banking business delivered another strong quarter, and we expect sales activity to remain solid. Professional services is a key driver of this acceleration.

When I step back and look at why we have seen sales activity accelerate and why our pipelines are strong, professional services looks less like a separate offering in banking and more like the missing piece that is now complementing the SEI offering. And this is a solution set that we believe has resonance across all of our client bases in the enterprise.

What does that mean? Just a few years ago, our discussions with clients were driven entirely by the platform offering. Here's the platform. Do you want to buy it? And when you do that, you box yourself in as a vendor. Those client conversations have evolved into discussions around transformation, how to simplify technology environments, modernize operating models, increase client acquisition, improve the use of data, harness AI and positioned for future growth.

Clients are looking for a partner that can help them define the future state of their business. As a result, the largest opportunities in our pipeline are no longer just platform replacements. They are comprehensive enterprise transformation initiatives. And on AI, specifically, I understand there's been a lot of concern in the market about how AI might impact SEI. The only effect we are seeing is that AI has accelerated client interest in partnering with SEI. It is driving more demand, not less, and we can point to multiple specific examples in our pipeline where this is the case.

Turning to Asset Management business. The team has moved beyond reimagining and is building momentum in the execution phase. The progress we have seen reflects substantial effort around client segmentation, distribution, adviser engagement, pricing, product development and new client acquisition. We're seeing stronger engagement with RIAs, improving activity across the institutional pipeline and continued adoption of our ETF strategies, which now total more than $9 billion in AUM, up from only $4 billion just last year.

We continue to invest in distribution, products, partnerships and talent. That includes the recent addition of Kristie Edling-Day as our new Chief Information Officer, bringing deep financial services and technology experience, to help advance our technology and product strategy. We believe the business is moving in the right direction, and we expect that direction to continue improving.

Also, our conviction and independent financial advice and the Stratos partnership increases every day. We got to see that firsthand at our recent adviser conference in Nashville, where more than 500 advisers, including Stratos advisers and their leadership team came together with real enthusiasm about what we can all accomplish together. After a year of working closely with Jeff and the Stratos team, we're even more confident that we chose the right partner to build alongside in the United States. The combination is already creating new opportunities across both Stratos and SEI, and we believe there is substantially more we can accomplish together.

Before concluding, I want to touch on profitability. Adjusted operating margins in the third quarter remained near record levels. And this was not driven by some shortsighted cost-cutting initiative. It is the result of building a more scalable business and paring thoughtful investment with strong revenue growth. We believe that combination creates significant value for shareholders. As I often say on these calls, an enormous thank you goes to our global workforce for their passion and their delivery. But also to our clients, for their continued trust and partnership.

In conclusion, the results this quarter are great. But in the words of Jelly Roll, the windshield is bigger than the rearview mirror for a reason, because what's in front of you is so much more important than what's behind you. I have a lot of confidence in what underpins our results, strong pipelines, enthusiastic clients and a business that is becoming more capable and efficient with each passing day. Some people tell us, SEI is back. Well, to that, we say thank you. But we believe SEI hasn't even remotely defined who we will be yet.

With that, I will turn the call over to Sean.

Thank you, Ryan. Turning to Slide 4. SEI delivered another outstanding quarter. Ryan already covered the highlights, so I'll focus on just a few items that affected results. The third quarter included one notable item within operating expenses. Given the strength of our results year-to-date and our outlook for the remainder of the year, we increased our incentive compensation accrual during the quarter. This adjustment reduced operating profit by $6 million and adjusted operating margins by roughly 100 basis points. While it impacted reported profitability in the quarter, it is ultimately a reflection of the strong performance being delivered across the business.

Sustaining that performance requires the best people and a commitment to rewarding them. Adjusted EPS declined by $0.02 compared to the second quarter, driven by 2 items. First, net gains on investments in variable interest entities declined by $8 million from the second quarter. These investment gains can be volatile, and Q3 reflects what we believe is a more normalized level of contribution.

The second item is the incentive compensation adjustment I just discussed. Excluding that adjustment, adjusted operating profit would have increased approximately 4% and adjusted operating margins would have expanded by roughly 20 basis points compared to Q2. The quarter also benefited from a slightly lower effective tax rate than normal, driven by elevated employee stock option exercises after SEI shares reached a record high. In addition, GAAP net income was reduced by $32.5 million recorded in other expenses, related to our mutual agreement with Stratos to terminate the planned acquisition of NSC, its Mexican RIA.

Please turn to Slide 5 for the business segment results. SEI's strong financial performance was broad-based. Investment Managers led SEI's organic growth with revenue and operating profit, both increasing by 14% compared to the prior year. Absent the elevated compensation accrual, operating profit would have increased by 17%. Growth was driven by the conversion of prior sales success into revenue and our clients continuing to deploy capital at healthy levels.

Private Banking also posted another strong quarter, with revenue increasing 11% and operating profit increasing 38% compared to the prior year. That performance reflects strong operating leverage, with revenue growth driven by balanced contributions from professional services, platform expansion and international asset management.

Advisers benefited from the acquisition of Stratos, which contributed $23 million of revenue and $4 million of operating profit during the quarter, including $7 million of amortization. Stratos generated $11.5 million of EBITDA in Q3, an increase of 17% from the second quarter. Stratos also completed a tuck-in acquisition and onboarded several advisers during the quarter with additional opportunities in the pipeline. We continue to see interest from long tenured Stratos and SEI advisers seeking succession and continuity solutions, creating another avenue for growth across the combined platform.

Excluding Stratos, Advisors revenue increased 10% and operating profit increased 7% compared to the prior year. Results benefited from higher market values and onboarding clients won over the last year. Institutional revenue declined 2% compared to the prior year, but increased 1% sequentially from the second quarter. Pipelines in our Institutional business are improving, although the timing of when that progress translates into financial results remains difficult to predict.

Moving to Slide 6. Adjusted operating margins increased 260 basis points compared to last year. Sequentially, adjusted operating margins declined 80 basis points due to the higher compensation accrual. Excluding that impact, adjusted operating margins would have increased approximately 20 basis points. We achieved those margin levels while continuing to invest in the business. That includes adding senior talent across data, AI, professional services and asset management, along with continued investment in technology and product development.

We also opened our Singapore office in September, extending our global footprint in creating a platform to support clients with operations and growth ambitions across Asia Pacific. On a sequential basis, excluding incentive compensation, Private Banking and Institutional both generated modest margin improvement. IMS margins were essentially flat, and Advisers margins declined approximately 50 basis points, primarily reflecting investments in technology to support the Stratos adviser experience.

Turning to Slide 7. I Net sales events totaled $47 million, the second highest quarter in SEI's history, with recurring sales events also reaching their second highest level. IMS led the quarter with $32 million of net sales events, with approximately 1/3 driven by new clients and the remainder attributable to client expansions. Demand in the quarter remained strongest amongst alternative asset managers, which drove nearly 90% of sales events.

In July, we launched our retail transfer agency with our first client, with additional launches expected in the coming months. We expect the combined transfer agency and fund administration revenue from the initiative to exceed $10 million on a run rate basis by the end of next year.

Private Banking generated $13 million of sales events during the quarter. Results reflected continued demand for enterprise transformation initiatives, professional services, data cloud capabilities and broader strategic engagements with clients. Nearly $3 million of events came from asset management sales to U.K. intermediaries.

We're also starting to see momentum build in the U.S. The investments and talent we made early in the year to start -- early in the year to start driving asset management conversations are beginning to gain traction. New leadership, clear accountability and a renewed commercial focus are rebuilding pipelines that have been underdeveloped for years. Within Asset Management, positive sales events and advisers of $2 million offset $2 million of negative events in Institutional.

Please turn to Slide 8. Ending AUM was essentially flat for the second quarter, with limited impact from both market movements and net flows. Slightly positive net inflows in Advisers largely offset modest net outflows in Institutional. While flows remain mixed across our asset management businesses, we continue to see traction from newer products and initiatives, including ETFs, SMAs, strategic partnerships and our adviser engagement efforts.

Assets under administration increased 4% compared to Q2, with growth driven by expansion in the IMS business, including the funding of recently won mandates and clients continuing to deploy capital. Assets managed by LSV were down 1% as strong investment outperformance was offset by $5 billion in net outflows, a figure that we expect to improve next quarter. Performance fees in Q3 totaled $4.5 million at SEI share.

Turning to Slide 9. We ended the quarter with $400 million of cash, modestly higher than Q2 despite repurchasing $215 million of SEI shares at an average price of $105. Based on our current outlook, we would expect repurchase activity in the fourth quarter to be similar to the level achieved in the third quarter. Our commitment to share repurchases does not come at the expense of investing in the business. We continue to fund strategic growth initiatives across the enterprise while maintaining significant financial flexibility.

The recent authorization of an additional $800 million of repurchase capacity gives us the ability to remain active well into 2027. In closing, we delivered another strong quarter and remain confident in the outlook for the business. Healthy pipelines and continued client engagement support that confidence as we head into the fourth quarter.

With that, operator, please open the line for questions.

[Operator Instructions] Our first question is from Jeff Schmitt with William Blair.

So I know ETF assets have been growing at a high rate, and you recently announced the integration with ICE ETF Hub. I think, a few weeks ago. So as you begin distributing these ETFs kind of outside of the SEI ecosystem, how should we think about kind of the size and pace of that opportunity?

Yes, it's a great question. Thank you. Our ETF lineup is growing. So we both are growing the number of ETFs. We're out selling both on platform and off platform. And the size, the actual volume of the ETF business overall and the industry is growing as far, tripled just this year in terms of AUM from about $3 billion, $4 billion to about $9 billion, as I said earlier.

So we've also seen other model providers begin to use SEI in their models, and that is a first for the company. So we -- I can't give a number of what I expect the growth to be. But if you look at that business, the ETF business, we are growing our product line up across a range of fee schedules. It's not all very low-cost, cheap betas. There are active strategies, fund-to-funds strategies, across fixed income and equity. I would expect our hope is that, that business has the potential to double again next year. So we see it as a growth engine for us.

Okay. Great. And then just given the strength in IMS, are you running into capacity constraints that could limit how quickly you take on new business? And if so, I guess, could your automation initiatives support higher growth as those kind of progress?

Thanks, Jeff. This is Phil. I would definitely say the automation initiative is going to help us with IBM over the next several quarters or so. So we're definitely looking forward to that. We have never had a conversion queue. When a client wants to be converted, we rally the troops and convert them. We do have a lot of business right now, and we are hiring quickly as humanly possible. So it's a constant valet, a juggling act, and we're doing everything we can to bring revenue in as quickly as humanly possible.

Our next question is from Crispin Love with Piper Sandler.

Just first on sales wins and IMS specifically the alternatives segment. Can you just discuss the areas where you're seeing the most success today? You've discussed being a leader in private credit and private equity. Kind of out of those 2, where you're seeing the most success? And then beyond PE and private credit, where else are you seeing strength?

So Jeff -- I'm sorry, Cris, it's Phil. I look at the pipeline in 3 different ways. I look at first-time outsourcers. So right now, we're doing really, really well with first-time outsourcers. We have 2 of the top 25, and we're probably speaking to another 15 of the top 100 managers out there. So we're really starting to resonate in the market with that.

But that's everything. It's not just private equity or private credit. Most of these managers are multi-strat managers, and we do everything for them. But we are seeing a ton of traction with secondaries out there. In private credit, we're still seeing flows. It's a little lighter on the retail side, but they're still launching flagship products. But we're seeing more insurance money falling or flying into private credit.

Beyond that, on the retirement side of the business, we've closed 14 managers already that want to put alternative products into collective investment trust. So we're seeing a lot of traction there. It's a little bit slow on the funding side, but that only bodes well for the future. And then lastly, we look on the wealth side. and the new TA capabilities enable us to go after interval funds, which we had been losing prior to a couple a few months ago. So we got a couple of them locked down. And we have a bunch stacked up for converting in October, November, December and well into next year.

And Cris, the only other thing I'd add to what Phil said is something that we talked about at the Investor Day and to in the past, we track pretty closely our success rate of new fund launches from existing clients, and that's an area that we just continue to see, I think, outsized growth relative to peers.

All right. Great. Then a little bit about the expense outlook, just given the success of sales and how that can flow into compensation. You did call out the additional $6 million plus of incentive comp. Is that just based on sales that have already been announced? And then also, as I look at my model on a go-forward basis, is it better jumping off point for expenses, the operating expenses, less that $6 million accrual? Just kind of curious as I look at the fourth quarter and beyond.

Well, first off, the $6 million incentive comp accrual is a one-timer that goes away next quarter. We did increase that this quarter. So that's a true-up. There's another 25% that hits in Q4, so call it, $1.5 million. Looking back historically, our incentive comp accrual overall is closer to 100%. So it's fair to call out as being a bit of a choppier impact, certainly in terms of the impact of Q3 results. Good expense from the standpoint that it goes up when the business performs great and if the business performs not great, then it goes down.

The only thing I would add, Crispin, you but -- also, incentive comp is independent of sales comp at SEI. So the incentive comp incentive comp is a variable bonus element to the majority of our workforce that is completely independent of the sales compensation linked to our sales results.

Our next question is from Alex Kramm with UBS.

Just want to come back to your comments on the pipeline. I think you call it healthy and maybe some of this you just answered a couple of questions ago, but can you just give a little bit more detail where you're seeing most of the strength. You made the comment you already exceeded last year. So anything in particular on the 4Q, we should be mindful of? Any big chunky areas? Yes, how do you feel about year-end?

Alex, it's Ryan. I mean, I think we'll do what we normally do on the call. When we get this question is I'll give a high-level overview and then I'll let the unit leads maybe give some color commentary. I think what's really exciting is when you compare Q3 to Q2, they look eerily similar in terms of the spread and the breadth, which is a great thing because we constantly talk about both the qualitative importance of our sales and results are just as important to us as the quantitative, but we really care about repeatability.

When we look at pipelines for Q4 and into early 2027, we see a lot of the same. A lot of the same trends in terms of the segments where we believe we can differentiate a lot of trends in terms of the value proposition residents. But I think it's always great to let Michael or Phil or Sanjay give a little bit of color around kind of what segments or what they're seeing where we continue to win.

When you think about platform business and you think about custody and Welltec, one of the things that you have to count on, if you want to do something in a large degree, some sort of stimulus. And we're seeing those stimulus happen in the industry right now. There is a competitor to us that just recently announced that anybody where a certain asset level is going to have to lead within the next 9 months that produces and provides an opportunity for us. And so we are all over that opportunity. We think that opportunity industry-wide, just that one occurrence is probably somewhere in the $50 billion mark that will be coming out looking for a new home or platform.

So if you look at our pipelines that are in place right now across the institutional and wealth business, they are at all-time highs. Our institutional business, we have been focusing hard on top line growth. We've been retaining assets very well, but we need to focus more on top line growth. So we have that. Our advisory business has incredible momentum. But the stimulus that has happened in the industry where there's up to $50 billion seeking a new home, we feel will be new pipeline coming into '27. Phil?

Sure. Last quarter, I was practically giddy when I was talking about the pipeline. So I was constructed to dial a little bit. What I would say is the outlook is very, very strong for the next several -- several quarters or so. No matter what jurisdiction, no matter what product, I mean things are going really well. So we've talked about retirement. We talked about wealth. We've talked about insourcers to outsourcing. In general, we seem to be clicking on all cylinders. So not sure what else to say other than the team is working really hard, and we expect great things. Sanjay?

I would echo my colleagues here. Our pipeline is very strong, and we are very excited about it. Ryan, you talked about how we are going to market in PV segment now. We are not just leading with our platform. We are leading in PV segment with enterprise capabilities. And that is generating a lot of new opportunities, not just with new logos, but with existing clients as well.

I think about 100-plus existing clients in PV segment. We are very, very focused on how we can continue to grow our footprint with SEI enterprise capabilities, both here in U.S. as well as in international markets. So we are very excited about our pipeline.

And I'll just say Sanjay, on top of that, Sanjay and I are working closely on bringing investments into banks -- we now have a team of people hired that are going out and capitalizing on the fact that we have deep relationships with banks on the technology side and operation side, but we've never brought investments to them. And as we've grown our investment lineup, we're now bringing that into the banks as well.

Michael here. I was going to say the same thing and just add a little color of saying to Alex's question, like there are core kind of business areas, but to Sean's commentary around things that we have accelerated and activated in 2026. We are optimistic that things like asset management to the banking space, we're really excited about the momentum we see in Stratos. The Carlyle fund launches in Q4. So we have multiple different things actually that we know will start to get some momentum going into 2027 that we believe will be additive to the success that we've had.

Great. Lots of great color. And then maybe just very quickly, on the transfer agency launch, it sounds like one win live so far. Anything else you can talk about in that opportunity specifically? And you mentioned that $10 million by the end of next year. Maybe just -- how do you get there? And what needs to happen for that to actually be exceeded? So just a little bit more color how you're thinking about the ramping of that business.

Sure. This is Phil again. So the first one went live on August 3. We have other ones live now. And as I said, we have been stacked up for the next several months or so. I think the $10 million number will be a little bit light. The first deal was about $600,000. And from there, I think it's in a space that we've never been in before. So I think if we just keep doing what we're doing, we're going to be fine.

Our next question is from Ryan Kenny with Morgan Stanley.

So you called out that the pull forward of net new sales helped drive some of the revenue growth. Is there any effect of accelerated implementation time lines, either because of process improvement or because of AI?

I can take that. From a private banking wealth managing perspective, as Ryan talked about, the quality of deals we are focusing on is a repeatable business. So we have invested very heavily in our onboarding process. And I think about when our clients are changing the platform pay to our platform, it's a significant undertaking in terms of people, process, technology. And SEI to enterprise capabilities, we have mastered that. So if you look at last 2 plus years, that is how we have like regional community bank space or the PCIM and IFA market in the U.K. It's a repeatable process. We are investing in automation, in AI, and that is helping us to fast track the overall onboarding process.

I think the other thing, Ryan, which is a little bit more kind of independent is when Sanjay and Michael were talking about kind of how we're positioning the company, and we use phrases like an enterprise partner. And I know that sounds kind of trade like jargon, but clients and prospects are letting us in sooner, and we're getting more insight into their current and future operating models earlier in the process.

So that when these deals are struck, we are ready to go and we have a much clearer and granular understanding of what their ultimate destination looks like. So it is the combination of the technology, but I think it's also an additive part of the relationship and the way we've been going to market. We're just a lot smarter when the go button is hit of what we need to do, and that is paying off. And you're seeing it. I think that's why we're installing things faster than we have historically.

That's great. And then you mentioned that the revenue mix is increasingly weighted towards the enterprise-wide sales activity and advisory and business transformation and other initiatives. Are those revenue streams or onetime in nature? Or is there a recurring nature to them that helps the revenue outlook be more resilient over time?

This is Sanjay again. So if you look at the professional services market, when you look at all these banking clients or any other segment clients, they are making a platform change decision, maybe once in 20 years, 15 years. But then continuously, they are keeping pace with the changes happening in the industry. Those could be driven by regulatory requirements. They could be technology treatment. They could be industry-driven.

And so they're constantly looking for trusted partners who can help them with that change journey. And that's how we are establishing ourselves and differentiating ourselves with other providers that we could be that trusted partner for them to continue to keep pace with the change. And that's where you could see the traction we are having, be it our Data Cloud solution or be it our professional services, even AI adoption.

Sean and I, we are working together. Literally, we talk to each other every day about how we can help our clients to adopt AI. Because this is not easy, that how you implement AI-driven initiatives in your landscape that a class significant undertaking. Reskilling your workflows, adopting new ways of compliance, resilience, and we are the one, we are helping our clients with that journey.

Yes. And maybe I'll add there. I think it's really important to understand what clients are going through because they're having to reinvest their operating models in the age of AI. And so they don't see us as just a provider for that one part of their platform. They're actually saying, what are you building that we don't have to? And so we're actually getting business that is recurring business that has nothing to do with what we started the conversation with them a couple of years back with. And we're also creating new services as a result of the client demand.

And so it's really interesting because we're seeing across the industry, people want fewer partners that are trusted, that are deeper in their ecosystem, because the amount of AI tools and the perforation of that is not deriving value for them because the value comes from integrated platforms and context. And that's where we really provide a lot of value to our clients.

Our next question is from Patrick O'Shaughnessy with Raymond James.

How would you characterize the general health of the private credit space right now in light of some of the growing concerns about credit quality? And then what's the read-through in terms of your sales pipeline? It sounds like no impact yet, but are there maybe some cracks starting to emerge?

Phil, you can go. I mean, Patrick, the answer in the second part, there are no crack starting to emerge, but Phil can give clear color on that.

Yes. I mean on the private credit side, we track the flagship products, as I said before, that they're looking to launch, and we're still seeing them getting launched on schedule. I do think retail flows are down in private credit, but that didn't impact us before because we've only been in that space for about the last several months. And on the institutional side, we're seeing insurance money flowing into private credit, but that is only a fraction of a fraction of what we do. And we don't see any cracks in any particular part of our pipeline at all anywhere.

All right. That's helpful. And a question on Stratos. Can you kind of walk us through the U.S. versus the international strategy of that business at this point?

So today, the Stratos footprint, Patrick, is predominantly the U.S., and they had one Latin American business that was part of their overall kind of ecosystem. That was the MSC business that we called out as determination. But the rest of the business is all domestic.

Our next question is from Alex Bond and with KBW.

I wanted to follow up on some of the commentary around retail alts and the interval fund side. It sounds like the near-term pipeline is strong there. And last quarter, you called out trying to target some of the larger existing funds in that area. So curious if you could share how those efforts, maybe specifically with converting some of the larger existing funds in that area are progressing?

Yes. This is Phil again. I think we needed a little bit of a proof case with the first couple of deals that we signed to get them in and done and they seem to be going really well. But I think over time, we'll keep moving up the food chain to try to get larger and larger deals. So as we said before, that market is kind of bifurcated the top 15 or 20 managers have about 60% of that market. So we definitely want to move up. I just think we have to sort of crawl, walk, run. And right now, we're walking and we'll go from there.

And I think the only thing I'd add is we don't ever give out client names as Phil said, but I literally have the pipeline for our RegA in front of me. And as Phil said, we're really optimistic not just in the ability to continue to win business, but the brands that we're winning the business from are the right sort of brands that will put us in a good spot and will continue to grow.

Got it. Makes sense. That's helpful. And then also wondering maybe if you can expand on what you're seeing in the institutional business. You noted that it's difficult to time up when some of those pipeline opportunities concerning the revenue events, which is understandable and makes sense. But maybe if you could speak to which areas you're seeing the most traction in as it relates to the pipeline there as of late? And sort of near-term expectations there, that would be helpful as well.

Absolutely. In the institutional pipeline, what we've been focusing on predominantly is in dominant foundation, health care. Those are the 2 primaries. Obviously, we're not focusing on new defined benefit plans. We're retaining the ones we have that haven't funded fully with a surplus that might annuitize at some point. If you look at the losses we had in the third quarter.

One, we had one plant loss that we did what we were supposed to do get into 100% funding ratio and then the annuities. But the pipeline is truly growing in that endowment and foundation space in health care. We are putting all of our resources behind a much more targeted approach to growing the top line than trying to spread a little too thin as we may have in the past.

[Operator Instructions] Our next question is from Dan Weldan with Wells Fargo.

I'm still recovering from your Jelly Roll quote.

Thanks, Dan. If you might give it was my idea. If you don't, it was Brad.

Where do we get it? You sound positive on the outlook for private banks. You said expect to remain solid. I wonder if you could drill in a little bit in just the 2 areas. One, the recurring revenue sales events what's sort of driving that momentum? And then secondly, on AMD, you've got 3 quarters of positive flows there, a very good trajectory versus spotty historically. I'm curious on your views on sustainability in that trend.

Yes, Dan, 2 great questions. I'll start and let Sanjay give color. So if you think about historically, private banking, as we said, was basically a cell SWP only value proposition. So when you look at the breadth of recurring revenue, SWP is still at the core of almost all of the sales agendas, but then the expansion, as Sanjay touched on earlier around professional services has really just been an amazing tailwind for the business and something that we see has great durability.

And then if you take your AMD comment, that is all international. And we made a shift about 18 months ago that we have a lot of resources in the U.K. that were split focused on the institutional space and only one resource focused on the intermediary space. And I have a lot of bias given that's kind of where I spent most of my career at SEI in the U.K.

So we shifted it probably one of our best leaders in the U.K. to the A&D intermediary space, gave him some resource to hire some talent and it really has paid off not just with new names, but with reigniting relationships with existing clients. And that's why Sean and Michael and Sanjay, Dan, were calling out that we made a couple of key hires earlier this year because we really believe we have a similar opportunity in the U.S. with our IMU platform and our OCIO capabilities in the banking space. Especially as Michael talked about, a different approach where maybe we are a component in somebody else's model.

So we are really excited about that opportunity. But at the core, we really love what we see in terms of the market core SWP. But when you add professional services and asset management, that's where we get excited about some differentiated top line growth for banking moving forward. But Sanjay, do you want to provide color on kind of the margin when we have those additional solutions?

Yes, certainly. This anchors us back to what we talked about private banking market on Investor Day, right? We said that apart from going to market with core platform. We'll also be expanding significantly in professional services and asset management. And what you're seeing now that international market is already showing those results and we are expanding through those capabilities in domestic market as well.

One other thing which I would call out once again, I talked about it earlier. Our earlier focus was winning new logos because we are just leading the platform. Think about any of our existing clients, once they buy the platform and if we are not selling them anything else, there's no other opportunity for SEI to grow. We changed that paradigm completely.

And now, while we are changing new logos with our enterprise capabilities, we are also helping our clients to grow their business. And that is translating a new revenue, recurring revenue stream for us. I'll talk about Data Cloud and AI. So think about the industry will keep changing. Based on us, we continue to innovate new services for our clients and help them to keep pace with change. So that's why you could see a good combination of core platform, our enterprise professional services, data cloud, asset management capabilities that will continue to help us to grow our business in this segment.

There are no further questions at this time. I would like to turn the conference back over to Ryan Hicke for closing comments.

Well, thank you, everyone. This was, again, a terrific quarter. We really appreciate the engagement. We appreciate the support. We're extremely excited about what is ahead of us, and we look forward to speaking with you again next quarter.

Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.

Greetings. Welcome to SEI Second Quarter 2026 Earnings Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to Brad Burke, Head of Investor Relations Treasurer. Thank you, sir. You may begin.

Thank you, and welcome, everyone, to SEI's Second Quarter 2026 Earnings Call. We appreciate you joining us today. On the call, we have Ryan Hicke, SEI's Chief Executive Officer; Sean Denham, our Chief Financial and Chief Operating Officer; and members of our executive management team, including Michael Lane, Phil McCabe, Mike Peterson, Sneha Shah, Sanjay Sharma and Amy Sliwinski.

Before we begin, I'd like to point out that our earnings press release and the presentation accompanying today's call can be found under the Investor Relations section of our website at ice.com. This call is being webcast live, and a replay will be available on the Events and Webcast page of our website.

With that, I'll now turn the call over to Ryan. Ryan?

Thank you, Brad, and good afternoon, everyone. I assume most of you have reviewed the numbers by now. SEI had an outstanding second quarter. Compared to the prior year, revenue increased 15%. Adjusted operating profit increased 36%, and adjusted earnings per share increased 38%. All 3 represent [ clarity ] records for SEI.

This quarter is less about what happened during the last 3 months and more a reflection of the changes that we have made over the past few years. We are more disciplined in how we allocate capital across both investments and talent. We have evolved our value proposition and how we operate as an enterprise. It also reflects the continued activation and execution of the strategic goals we announced during our Investor Day. You are seeing those efforts translate into financial results. And perhaps most important to us, we're achieving those results while investing in the future of our business. Several of these investments have been funded, initiated and launched within the last 12 months. They contribute little to our financial results today, but we're already seeing signs of traction and believe they can become meaningful contributors to SEI's next phase of growth.

I'd like to touch on a few of them. First, the continued expansion of private markets into retail and retirement channels. We believe this trend remains in the early innings and plays directly to SEI's strengths, specifically our ability to execute at scale. As private markets move into wealth and retirement channels, Managers need administration, transfer agency, investor servicing, compliance and scalable operational infrastructure, capabilities SEI has spent decades building. The recent expansion of our [ SEC ] registered answer agency is an important milestone. Combined with our fund admin platform and our trust company, the [ TA ] gives [ SCIA ] full stack capability. We're also seeing growing interest in bringing private market exposure into retirement plans, especially through collective investment trusts. SEI has one of the only scaled independent trust platforms in the industry, making us the natural partner for investment managers, bringing private asset solutions to the retirement space.

When we look at the growth of retail alternatives, the expansion of private markets into retirement plans and SEI's outstanding competitive position. We believe these initiatives have the potential to grow into a business generating more than $100 million of annual run rate revenue in 5 years. This represents one of the most compelling growth opportunities for SEI and our position is the connective tissue of modern financial services shines through here.

Second, executing on our asset management strategy. We have moved beyond reimagining the business and into execution. We're seeing momentum in ETFs, expanding our private market capabilities and advancing a growing product pipeline that includes new ETF launches, enhanced model capabilities and strategic partnerships. Last week, we launched our latest active factor ETF [ SEUS ], bringing our total ETF lineup to 10 funds. Over the last 12 months, the ETF business at SEI has grown $3 billion to over $8 billion. We're also making progress in private markets through initiatives like our recently announced partnership with Carlyle, combines Carlyle's origination expertise, distribution and trusted brand with SEI's breadth of capabilities. This is the type of innovation we want to see more consistently. Product development that's tied to market opportunity. supported by multiple enterprise capabilities and delivered in a way that strengthens our competitive position.

Turning to Stratos, there is growing interest from SEI advisers seeking succession, liquidity and solutions without leaving our ecosystem. That interest includes several of our longest tenured adviser relationships many of whom historically may have looked to third-party acquirers. By providing an alternative path, Stratos helps these firms remain within SEI while creating additional opportunities for us to participate in their future growth. We believe this validates one of our core strategic objectives. We also have a healthy pipeline of non-SEI acquisition opportunities at attractive valuations, which represents an excellent use of capital.

While there's still work ahead, we're building a stronger and more competitive asset management business every day, and I am confident in the strategic and tactical direction of the asset management platform.

The last of the investments I'll highlight is the application of technology, data, automation and AI to improve both client experience and the scalability of our business. Recent enhancements to SEI Data Cloud and our IMS platform are helping clients gain faster access to information, simplify integrations, reduce operational complexity and make better use of their data. A significant part of that effort is the digitization of core operating process. We're digitizing [ NAV ] delivery, creating automated data flows between SEI and our investment manager clients with a very clear objective, eliminate friction, simplify operations and help find [ redirect ] more time, capacity and capital towards their growth. Our approach to AI is straightforward. We're focused on embedding AI into workflows to improve service, automate routine processes, accelerate onboarding, enhanced access to data and help clients operate more efficiently.

Before concluding, I'd like to briefly address sales events. Sales events totaled $43 million during the quarter, following the record $67 million we reported in Q1. It was one of the strongest quarters in the history of SEI. The breadth of this activity is extremely encouraging. IMS generated more than $32 million of sales events driven by a healthy mix of new client wins and expanded relationships with existing clients. The activity was also broadly distributed across the business rather than concentrated in any one client or opportunity.

I was on the road with many clients and prospects this quarter. I can only emphasize that the engagement we are getting at the C level of these large organizations is better than I have ever seen in my 28 years in the business.

Private Banking delivered more than [ $13 million ] of sales events, and we also saw encouraging activity from asset management and newer growth initiatives. Many of these opportunities are becoming larger more strategic and more enterprise-wide in nature. Clients are engaging with SEI across multiple capabilities rather than a single service or solution.

Over the last several quarters, we've emphasized that the quality of sales events is every bit as important to us as the quantity. The results we're reporting today validate that point. We're winning opportunities that leverage existing capabilities, require less incremental investment and contribute more quickly to our financial results. This is a key driver of the strong growth and profitability we're seeing across the enterprise.

As we look ahead, our pipeline remains outstanding. Activity levels are high. The opportunity set is broad-based, and we're seeing continued engagement from many of the largest and most sophisticated firm in our target markets. But none of this happens without the incredible focus and execution of our workforce. And I thank them for another amazing quarter and for their energy and passion to lead SEI every day and delight our clients.

With that, I will turn the call over to Sean.

Thank you, Ryan. Let's start on Slide 4. Ryan highlighted the outcome. I'd like to spend a few minutes on what's driving it. The results this quarter were not the product of a single event. They reflect strength across the business, the continued conversion of prior sales success into revenue and the operating leverage that comes with sustained growth and disciplined expense management.

The 38% increase in adjusted EPS from the second quarter of last year was driven primarily by core operating performance. Mid-teens revenue growth, 500 basis points of margin expansion and a 3% reduction in share count. The quarter also benefited from a handful of investment-related gains. Most notably, our consolidated co-investment in an LSV hedge fund contributed $7.5 million during the quarter through the net gain on [ VIE's ] line item. We invested $50 million in that strategy last year, and it has generated over $12 million of gains in the last 12 months after excluding noncontrolling interests. It's off to a good start. We also recognized nearly $4 million of mark-to-market gains across several other co-investments during the quarter.

Turning to Slide 5. We Revenue and operating profit increased across most of our businesses. And I think it's worth noting the strongest operating profit growth is coming from businesses that see little benefit from market appreciation. In other words, the growth is being driven by strong underlying business performance. IMS generated revenue growth of 17%, reflecting the conversion of prior sales success into revenue. Private Banking revenue increased 11%, driven by growth within the existing client base. [ Advisors ] revenue increased 30%, which did benefit from higher market values and the contribution from Stratos. Operating profit growth was broad-based, reflecting both revenue growth and continued operating discipline. Institutional was the exception with operating profit roughly flat with last year as we continue to invest in the asset management initiatives Ryan discussed earlier.

This quarter's performance reinforces the point Ryan made earlier. The quality of sales events is just as important as the quantity. Over the last 2 years, we have seen meaningful improvement in both. New business is converting into revenue more quickly, implementations are generally shorter and less expensive and the economics of those wins are margin-accretive. Result is stronger revenue growth and improved profitability.

Moving to Slide 6. Adjusted operating margins increased 500 basis points compared to the second quarter of 2025 and 30 basis points compared to the first quarter. Compared to last year, revenue increased by $82 million, while expenses increased by $34 million. Importantly, margin expansion came while we continue to invest in future growth across the business. We added resources in key areas, invested in product development and funded a number of strategic initiatives while continuing to actively manage our overall cost base. Compared to Q1, margin improvement was led by IMS and lower corporate overhead.

Private Banking margins declined modestly from the first quarter due to several significant client implementations continued investment in leadership and sales resources. Even with those investments, Private Banking margins were more than 4 percentage points higher than the second quarter of last year. In Advisers, Stratos contributed $21 million of revenue, up 11% from Q1, reflecting a full quarter of contribution from several smaller transactions completed late in the first quarter. Stratos generated $2 million of operating profit before noncontrolling interests. Excluding acquisition-related intangible amortization, Stratos EBITDA exceeded $9 million in the quarter. Excluding Stratos, Advisearnings margins were essentially flat with the first quarter and more than 3 percentage points higher than the second quarter of last year. IMS margins improved both year-over-year and sequentially reflecting continued revenue growth and operating leverage.

Finally, the sequential decline in corporate overhead was primarily attributable to approximately $3 million less severance-related expense than the first quarter.

Turning to Slide 7. The sales success we discussed over the last several quarters continued in Q2, providing further support for our confidence in future growth. Second quarter sales events totaled $43 million, bringing the year-to-date total to $110 million. For perspective, just a few years ago, $110 million would have been a record for an entire year. IMS led the quarter with $32 million of sales events. Approximately half came from new client wins, including continued contribution from the 2 large relationships announced last quarter. The remainder was driven by expanded relationships with existing clients and professional services activity associated with the several significant wins announced over the last year. By asset type, approximately 3/4 of IMS sales events came from alternative investments. This underscores our commentary regarding the durability and growth in the demand for alternatives.

Ryan mentioned his level of C-suite engagement, but he wasn't the only one racking up airline miles this quarter. I personally met with executives from several of our largest IMS clients and prospects. I can tell you that SEI's enterprise position is resonating. The conversations were constructive, engager levels are high, and there is growing interest in expanding these relationships.

Private Banking sales activity was driven by new regional banking flying wins, the conversion of existing clients from [ Trust 3000 ] to [ SWP ] and strong client demand for professional services, including SEI Data Cloud. Private Banking also continued to have success with recontracting activity, executing contract renewals representing $13 million of annualized revenue during the quarter, building on the $34 million achieved in Q1. Across advisers and institutional, net sales events were modestly negative during the quarter. We continue to see demand for newer offerings, including ETFs and SMEs though those products generally carry lower fee rates than traditional mutual funds.

Turning to Slide 8. Quarter end assets finished substantially higher than where they began in the quarter, driven by strong market appreciation. Assets under administration increased 5% driven by the funding of alternative mandates and market appreciation within traditional. LSV generated net inflows of approximately $2 billion during the quarter, a notable reversal from recent trends. Inflows were driven by the funding of a new large new mandate that was awarded following an extensive diligence process and strong long-term investment performance. Combined with market appreciation, total LSV assets increased by nearly $17 billion during the quarter. LSV's investment performance also remained outstanding. Several non-U.S. strategies, including global large cap and emerging markets continue to outperform their benchmarks, translating into nearly $17 million of performance fees during the quarter of which $6.5 million was attributable to SEI.

Income from LSV was partially offset by a onetime charge. Excluding this charge, SEI share of LSV earnings would have totaled approximately $43 million during the quarter. Within SEI's asset management businesses, net flows were relatively flat, with modest inflows in advisers, offset by outflows in institutional. New products are gaining traction. Distribution capabilities continue to improve and client engagement has increased. Those developments are not yet fully reflected in our financial results, but they represent measurable progress from where we were a few years ago.

Turning to Slide 9. We ended the quarter with nearly $400 million of cash while continuing to invest in the business and return capital to shareholders. During the quarter, we repurchased $112 million of stock at an average price of $87. Repurchase activity was lower than the first quarter, which was driven by the significant opportunity we saw during the market volatility earlier this year. Given our cash flow outlook, we would expect repurchase activity to increase from second quarter levels.

In closing, the second quarter highlights the earning power of SEI's business model. The strength of the quarter was broad-based, with growth across nearly all of our businesses and continued evidence that the sales momentum we've discussed over the last several quarters is translating into financial performance.

With that, operator, let's open the call for questions.

[Operator Instructions] Our first question is from Jeff Schmitt with William Blair.

The Private Bank margins have improved, I think, more quickly than you originally thought. And I know you've pointed to them returning to the historical kind of 25% to 30% range. Could there be upside to that and over what time period?

So thank you, Jeff, for your question. If you recall our Investor Day presentation, we talked about a [ 5-gram ] strategy for Private Banking margin improvement we are executing that strategy. That is -- it's a 2-pronged strategy [indiscernible] we are focusing on growth initiatives. And second set of initiatives are around efficiency improvement. And so what you're seeing over the last 5, 6 quarters that we are improving our margin, we are going right [indiscernible] that's the outcome of that strategy execution.

We will be judicious in terms of where we need to invest so that we can continue to deliver our backlog and also continue to invest in our new products as needed for our clients to grow their business. So it will be a balance between our growth initiatives as well as margin expense and [indiscernible] improvement. Ryan, Sean, do you want to add anything?

I mean the only thing I would add there is really with all new wind sales events, we are seeing an increase in professional services in essentially every single new deal. In those new deals, professional services has essentially exceeds what our historical margin of 20% is, which is leading and contributing to higher margins, and we expect that to continue.

Okay. That makes sense. And then maybe more broadly, are you seeing demand for outsourcing, just kind of increase in general across your businesses, just thinking of companies wanting to modernize and use AI? And I guess, are your AI capabilities kind of far enough along to help you capture some of that? Or is that what the IBM partnership may help you with?

Yes, Jeff, it's Ryan. I would start by saying at the highest level, the answer to your question is an emphatic, yes. So we are seeing a demand for outsourcing across almost all of our segments. And I think that's driven by 2 major trends. One is I think organizations really are -- the value proposition we have about helping organizations more intelligently deploy their capital towards growth is absolutely resonating. And then you combine that with the breadth of our capabilities and the referenceability of our clients in the market, it's a pretty powerful combination.

If you take that down to a sub level and talk about areas around technology modernization and AI, I'll turn to Sneha to maybe give some color on the progress we've made in AI and some of the demand we're seeing from clients.

Yes, absolutely. So it's really interesting for me from our clients is that they're all coming to us because they're going through the same operating model change that we are. And as they're looking at their own operating model, they're questioning where does that competitive advantage fit and where can they leverage partners more. And since we're a trusted partner in so much of their business, the first question now asking us is what more can you do for us?

So we're starting with just sharing the learnings of our journey and how we're deploying it, what we're seeing. We're now getting a lot of demand for our Data Cloud services and our Professional Services around the AI readiness. And so that's becoming an increasing area of client conversation and demand. And we think that, that's going to lead into even more services that will help them figure out their new operating model as we go.

And Jeff, one other thing I would add there, it's Sean. The reason -- really the primary reason for the IBM relationship, we do have a lot of labor-intensive processes. IBM is really supporting us in that automation journey, helping us co-create agents with us. And it's really -- it's so important to the business because we need to scale. The demand for our services and for our products has gotten to a point where we need to be able to scale quicker to meet that market demand and support our clients in their growth efforts.

Our next question is from Ryan Kenny with Morgan Stanley.

Just want to follow up on that last question on Private Banks and AI. You've had strong revenue growth for a while, $10 million of sales events in private banks. So is the increased demand mostly coming from AI? Or is there something broader going on that's driving outsourcing? And then just to clarify, is the IBM relationship mostly focused on the Private Bank segment? Or does it span across the company?

So first, I'd say that we'll go around here. When you look at the banking segment, as Sanjay mentioned around the call around margin expansion, the primary growth driver is still core operating platform investment processing, the SEI Wealth Platform and our back-office services. The expansion of professional services, we've talked about I would say, Data Cloud is probably the #1 demand over AI right now because without a data strategy and the right infrastructure around data, you don't have an AI strategy. So that has resonated extremely well, Ryan.

But I think the core of what we do in banking continues to remain and Sanjay has done a brilliant job of kind of expanding the segment in terms of capabilities and solution set. And I'll let Sanjay provide some color on that. But IBM is an enterprise. Everything we do here Ryan is enterprise-wide. IBM is an enterprise-wide strategy. We're starting with IMS, Michael's businesses are participating next, and then we will look at the back office services, the middle office that support banking. But every part of SEI will be participating in the IBM project.

Got it. That's helpful. And then just shifting gears to IMS. So it was noted that 3 quarters of the sales events came from alternative investments, and you've been clearly a leader in the alt space for some time. So can you just walk us through what's differentiated about the alts platform and what's driving the demand for a outsourcing and alts?

Yes, happy to answer that. So I would say right now, we have with all of the activity that Ryan and Sean spoke about and help from Sanjay and Michael, we're having many, many enterprise-level C-level conversations. And those conversations are really leading towards large alternative managers looking for transformation and trying to transform their back office. So we are in the middle of several large conversations with managers that are looking to move from insourcing to outsourcing. So we have a stronger pipeline than pretty much we've ever seen before, and we're seeing really, really good traction. And any of those large conversations could turn into massive relationships, just any single firm in and of themselves.

And then what I would add to that, Ryan, is I would say when you look at what differentiates SEI relative to the competitive set, we have an unbelievable set of people from an operational perspective. Our ability to handle sophistication and complexity we believe, is second to none. But to the point I made earlier, it's one thing to handle complexity and sophistication, but you have to do it at scale. It's got to be right every single time. These are the world's largest brands. And our delivery experience has been phenomenal, and we focus intently on that.

And I'd say the last few years, our expansion of investments into technology has allowed us to expand some of those capability sets in terms of information delivery. I mentioned in my script around digitization of the NAVs onboarding. So we're always focused on what more should we be riding in the platform. And I would say another secular trend that's kind of working in our favor, and I think we see this across Michael's business, Phil's business and Sanjay's. This firms want to do more with fewer. They do not want to continue to add more partners to their stable, but the criteria to be part of that nucleus is really around the ability to continue to innate, continue to deliver, but deliver at scale and try to stay ahead of the curve.

We've also added 2 new solutions that are going to add meaningful revenue over the course of the next several years or so. We talked about them both in Investor Day. One was alternatives and retirement and the other one is retail off. On the [ Alton ] retirement side, we signed up 5 household names over the course of the last quarter or so, and we expect similar progress in Q3. So we're making tremendous traction there.

And on the retail side, we launched our transfer agency. The first client goes live on August 3. So we're finally going to be in the retail interval evergreen bun space, which we've been just sort of on the fringes up before. So we expect both of those new solutions that differentiate us in the future. So we're looking forward to great things.

Our next question is from Crispin Love with Piper Sandler.

Great. Just on revenue growth, it's accelerated that the past few quarters was up 15% year-on-year in this most recent quarter. When you look at the back half of the year and into 2027, how do you think about revenue growth? Are current levels in that low to mid-teens range sustainable just given all of the strong sales events you've had in recent quarters as they continue to flow through?

Yes. Thanks for the question. As you know, we don't give guidance, but we will talk about pipeline. Our pipeline, as Phil mentioned in IMS, Sanjay seeing the same thing I think we're seeing momentum, as you heard in my script and Michael Lane's business and asset management. So our pipelines are strong as they've ever been.

So when we look at pipelines, we think about second half revenue, we're encouraged with what we're seeing.

Great. And then just one follow-up on just your most -- the answer you just gave on kind of the retail and retirement channels. Can you just kind of dig into a little bit more kind of why you weren't in that area already? I think is it true that you exposure in the retail [ all ] semi liquid products is, what did you say, coming live August 3? And is the opportunity there mostly going to be within clients you already have relationships with some of the larger [ salts ] out there?

Yes, that's a great question. I mean, Phil and I tag team this one. The honest answer, Crispin, it goes back to kind of scale. And I mean I think we don't launch something unless we believe it is world-class. So maybe we were a little bit late to the party but we do things pretty deliberately and thoughtfully to ensure that when it goes live, it's going to meet the standards that our clients expect, and you know the brands that our clients are, we won't do anything unless we truly believe it is going to be best-in-class. So maybe it was 18 months late, but we wanted to make sure it was truly going to be market-ready for the types of clients that we expect to see.

Phil, if you want to give a little bit of color to second part?

So the only thing I'll add is [ Alton ] Retirement is a brand-new category. So that category didn't even exist up until about 6 months ago, and we expect to see that hockey stick up over some period of time as the DOL issues new guidance to protect the alternative managers. So that's brand new. And we're 1 of 2 competitors in the space. So literally, we are practically cornering that market right now.

On the retail aAlightside, we always did private BDCs and other types of products like that. But until we had a real bulletproof like Ryan said, registered transfer agency, we weren't in a position to kind of do that and do that right. We are hoping to take away larger funds from competitors because no one likes their transfer agent. So right now, there are probably 20 or 30 large funds that are $10 billion or $15 billion or $20 billion that we're going to target. So we could sell tons of hundred thousand dollar funds, but we really want to go after the larger ones. So I think we're in a good position to do that.

And then if you just -- just to kind of switch gears a little bit to stay in kind of the same lane, if you look at some of the things that Sean and I highlighted in the script about what's going on in some of Michael Lane's businesses, those things might be at earlier stages, but the same thought process. When we think about our product lineup with Michael and the team have done with ETFs or the partnership with Carlyle, we're really thoughtful in terms of saying, okay, let's get these new solutions out to market, but let's make sure when they are launched, these are things that we believe the market really wants and believe that we're actually going to satisfy a different need.

So we're really excited about some of the early indications that we highlighted in the script around that area.

Our next question is from Alex Bond and with KBW.

You called out the Data Cloud offering as a driver of some of the strong recent Professional Services sales. Can you maybe just expand upon why this -- or the recent enhancements there have been particularly value added for clients? And then also looking at the investment in other businesses lines, it looks like revenues were higher there again quarter-over-quarter. Can you just expand upon what's driving the revenue expansion and I'm thinking it's probably spear, but any other color there would be helpful as well.

Sanjay, you want to take Data Cloud?

Yes, sure. So if you look at Data Cloud, you should think about that capability as a foundation for any data modernization information delivery modernization data [indiscernible] enterprise. That is the foundation for any AI initiative for banking finance services industry. And that was the major reason why we jumped on creating that capability. And we are seeing really good traction with both existing clients and any new client we are signing through our platforms. And now we're seeing that traction in IMS business as well. So this is -- again, we are leading that as a more of an enterprise capability.

And with Data Cloud solutions, I'll think about for a banking client, the bank is not just a wealth [indiscernible] business. They also have core banking, combine banking, insurance, other segments. We are providing capability to carbonize that entire data together and then provide information delivery and intelligence on top of that. So that's why that is resonating really well. And so it's not just SEI Data Cloud Solution, but good professional services opportunity as well with both new clients as soon as our existing client base.

And on the second half of your question, Alex, the investment in new business, you're spot on. It's [ spear ]. It's increased revenue in [ sphere ], which that's where it sits.

Okay. Got it. That's helpful. And then just a follow-up on some of the earlier IMS questions and particularly the 50-50 split there between sales coming from new clients and existing clients. And I think Phil touched on this a little bit, but just trying to determine how we should be thinking about the forward pipeline here in the sense of new logos versus expanding existing relationships? Is that 50-50 split something you think is -- can continue? Or is that going to depend on quarter to quarter? Just trying to figure out how we should think about the composition of the forward pipeline there?

I think 50-50 is probably a reasonable expectation. I think the thing that is out of our control, which is a good problem to have is the blast radius of some of the announcements we have made in the last couple of quarters are pretty wide. So the inbound interest we have gotten in the last 90 to 100 days from other organizations it's probably exceeding a norm. That's a good problem to have. But Phil, do you think 50-50 is probably fair moving forward?

It is now. I think a while ago, we were 60-40 more cross-sells than new names. But with the amount of activity we're having a lot more new names. And the interesting thing is with the 2 large clients that we announced not that long ago, not much of that revenue has matriculated yet. So we expect to see a fair amount more of that come online in early '27. But we have some of the funds are going live now and those both of those projects are tracking really well.

Our next question is from Alex Kramm with UBS.

Let's been asked. Maybe just quickly, I don't think you've talked about Stratos in much detail. You've had it for, I don't know, 7 months or so now. So just maybe just provide a quick update on cross-sell initiatives or other things that you're seeing? I think you touched a little bit on M&A as well. So yes, just give us a quick update, please.

Sure. So Alex, good to hear from you. So EBITDA, as I mentioned in the script, we were about $9 million in EBITDA this quarter. There's another call a little north of $1 million of integration costs. I think for the quarter, a little over $10 million in EBITDA at times that by 4 run rate. We're about right on the bar from where we would expect to be through Q2. We were there as well coming out of Q1, if you kind of normalize some of the timing of the deals. So we're right on point.

This is being run well. As you can imagine, 7 quarters in, we're getting to know them much better. They're getting to know us. We're working really well with thinking about what our inorganic growth strategy are, what our organic growth strategies, Ryan?

No, I was just saying, I mean, Michael, you were just -- you and Jeff just had some of the largest Stratos advisers on the campus, if you want to provide.

Yes. The good news is Stratos we are literally -- our pipeline is a record high for Stratos across both M&A opportunities as well as recruiting opportunities. So those are almost 50-50 split right now. And very significant pipelines. So we feel good about that. We closed the [ EBP ] deal. Those are on board now. Those are now W-2 advisers within the Stratos system. And we are implementing a series of other -- both infrastructure capabilities. We launched a new CTO within the Stratos business that is helping with the integration of several of the different technology needs to onboard clients faster so we can scale that business even quicker and improve the customer experience as well as we are working together with them, and we have launched with over 30 advisers and [ OCIO ] initiative to become a lead generation source for our [ OCIO ] business as well as that is a growth opportunity for those Stratos advisers.

Okay. Good. And then maybe secondarily, and hopefully, this is not so nitpicky, but there -- there was recently, I think, a few weeks ago, the benchmark capital sale from [ shorters ] to, I guess, [ Soderberg ]. I know you have a technology or a relationship there. Not sure what exactly you do there, but I know there's existing technology. So just wondering, I know sometimes these things can take a long time to play out. But maybe can you just dimensionalize what you do for them, how relevant that is. And how you feel about retaining kind of like your services there?

So Benchmark has been a long-standing SWP client, Alex, in the U.K. So [ Schroders ] continues to be a large client for SEI globally. And Sanjay and I have a meeting with the partners at [ Soderberg ] in the next couple of weeks to expand more about what SEI's capabilities are and to get a better understanding of their long-term strategic objectives with Benchmark Capital.

[Operator Instructions] Our next question is from Patrick O'Shaughnessy with Raymond James.

So you mentioned likely ramping up your share repurchase activity in the back half of the year, but you also spoke to a healthy M&A pipeline. How are you thinking about balancing the ramping up of repurchases versus keeping powder dry for M&A?

So yes, so we would expect probably second half of the year to be more in line with Q1. As far as keeping the powder dry, we've got a $600 million or so line of credit revolver that is essentially untouched. We have plenty of powder to support any of the M&A activity regarding Stratos. So no concerns there from a return of capital to shareholders either through the dividend or through stock buyback.

Got it. Appreciate that. And then a question about investment advisers and maybe just about the broader RIA custody space or adviser custody space. Are you guys currently offering or contemplating offering the building for advisers to utilize long short tax-efficient SMAs at [ Schwab and Fidelity ] our offering via their custodians?

Thanks, Patrick. We as a trust-based custody platform cannot actually hold long short strategies and offer loans or strategies on our platform. So we do not, at this time, being that we're not a bank have any plans to include those on the platform.

This concludes our question-and-answer session. I would like to turn the floor back over to Ryan Hicke for closing comments.

Well, thank you all for the discussion today. We really appreciate it. We're encouraged by the execution and progress we've seen so far this year. I think the reminder we give ourselves as leaders and a management team is to stay humble during the highs, have courage through the lows and maintain perspective and integrity throughout the whole process. I hope everybody has a great evening.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time, and thank you for your participation.

Alright. So we are pleased to have with us Sean Denham, Executive Vice President and Chief Financial and Chief Operating Officer at SEI. Sean, thanks for joining us today.

My pleasure. Nice to be here.

So last year, the story for SEI seems to be about inflecting sales momentum. And this year, it's very clear that SEI is executing. Conversation seems more about durability. What gives you the confidence that SEI can sustain this higher level of sales momentum that we've been seeing?

Yes. So it's -- first off, it's always great to be here. Thanks for inviting me. Yes, we're really confident in the sales momentum mainly because we have insight into what our pipelines look like. And so we've talked on multiple of our earnings calls about that we're confident where the pipeline sits. We're coming off Q1 where we won really 2 of the largest wins in SEI history. We won 2 large mandates in our IMS business, where those managers were historical in-sourcers of fund admin work, et cetera. They decided to move to an outsourced model.

So that was a huge stake in the ground moment, one of the best quarters in SEI history, record sales events. We do see that momentum continuing, not just in our IMS business. Our private banking business has shown significant momentum. That business is a little choppier from quarter-to-quarter. We typically win 10 to 12 new deals a year. Those can bunch in a given quarter. You saw that in 2025, where we actually in PB and our private banking business or in that unit had a really large Q4. But the momentum really is because we're executing incredibly well.

Our sales teams are laser-focused. Our business unit leaders have our sales teams really focused -- and we have a lot of momentum. And we have -- we're now selling really the entire ecosystem. We have a lot of additional solutions like professional services that has created a large momentum in the market.

And what's specifically the driver of new sales? Is it more aggressive sales culture? Is it better cross-selling? Is it demand increasing, product improving? What's the biggest driver?

Obviously, the easy answer is all of the above. But if you take them one by one, there is large market demand. So -- and again, you -- as I just mentioned, we saw that in Q1. I think as businesses continue to look at what their core business is, those recent 2 mandates, I think, will -- we expect to be a trend. So I think as firms are looking at what is core to their business. So in the investment manager space, -- they've got into the business to raise capital and deploy capital.

They didn't necessarily get into doing fund administration. And where we play in the highest parts of the market, those managers are looking to scale and having to scale the administration piece of their business as opposed to outsourcing that. I think a lot of those managers that have been classic in-sourcers are waking up and saying, do I really want to keep up with the technology, the hiring needs? And also, do I really want to be focusing my attention where focus is needed in things like AI. They're relying on us as in that outsourced model to be making those investments for them.

And are you seeing larger transformational mandates? Or are clients still taking a more modular approach to outsourcing?

Yes. It really depends on the business unit and just -- it really depends on where we're playing in the market. So -- in that IMS business where we play, those are really large mandates, and we've enjoyed to be the beneficiary of that. In our private banking space, whether someone is acquiring or investing in our SWP platform or in our tech and ops space, those are, again, transformational wins for us.

They're also transformational for those companies or our now clients. There's also a little tuck-ins here and there like around professional services. So whether we're selling professional services as a package in our private banking business unit or we're having one-off wins around selling Data Cloud into our IMS clients. So it really depends, but it kind of spans across the business and whether they're large mandates or just little deals.

So on the IMS side, alts have been a major growth engine. And what do you view as the differentiator on SEI services versus some of the other competitors out there? What's driving the mandate wins?

Yes. So honestly, it's really execution. So where we play, we focus our attention on the more complex parts of the market. So 70% of our IMS business is in the alternative space, 30% on the traditional. And then inside that alternative space, those can be the more difficult, whether striking NAVs or everything that goes along with that work around fund admin. We're really good at that. And case in point, again, I don't want to keep bringing up those 2 wins, but I think they're a really, really good example of those are probably 2 of the largest wins that have been out in the market over the last few years.

And in each of those cases, SEI is the first phone call. And we're going to be in those RFP situations. They're going to be competitive. But in each of those, we were one of the winners of both of those large wins. And that's because of the execution of how we go to market. We pride ourselves. A lot of people can say it. It's actually hard to do, but we actually provide really strong white glove service. I was actually with one of our clients yesterday who brought that up.

And some of the things that we're doing around AI and automation, the question was how, if at all, will that affect the white glove service we've you sold us on? And will that change at all? And the answer clearly is no. And the way we construct our teams, the way we support our clients, we believe, is a differentiator in the market.

And then what's driving the demand for outsourcing? What are some of the biggest pain points that you are solving for alternative asset managers?

Yes. I think it's a couple of things that I said. And so as the largest managers in the world continue to launch new funds, as they continue to scale, as they have larger capital to deploy, they did not get in the business to do that. So do they really want to be scaling the headcount as we sat here today, maybe less today than a year ago with the advent and increasing rise of AI and the role that plays in the administration business.

They don't necessarily want to be using their capital to focus on the technology that's required, the headcount that is needed to scale at least where it was and all the investments they need to make in AI. They're staying on top of it. The -- each of these managers have really strong governance systems where they call us, they want to understand as their outsourcer, what we're doing and how we're thinking about disruption, how we're thinking about investment, where AI is going to play a significant role, where automation is playing a large role. And then what is our governance that surrounds that. So while they -- while they are outsourcing in a meaningful way to us, they still have those same process controls that you would expect from them.

Let's shift to private banking. So private banking margins have remarkably improved over the last several quarters. What is structurally driving that improvement?

Yes. So number one, number two and number three is great leadership. So Sanjay Sharma, who took over that business 4 years ago, has an engineers' mindset, who approached the business in that way. And so when Sanjay took over, we were anywhere from maybe slightly negative margins depending on the quarter to 0 margins. And he really just instilled a level of discipline from an overall cost standpoint, how we think about technology spend, et cetera. He did a really amazing job there, rightsizing that technology team, the workforce, et cetera.

On top of that, as you can increase revenue the way we have in that space, you're going to improve margins. And so being able to scale PB and how he did that, our previous focus was really focused on the largest institutions in the U.S., which about half of those are our clients. Moving down market was really critical and integral to the success of not just revenue growth, sales events but also margin improvement. So that's number two.

Number three, the advent or the newly launched professional services that has been really successful in our private banking space that's now starting to drip in other parts of the business. That was huge. So if you rewind 2 years ago, we were winning great work, selling our SWP platform, our technology and operations together. We are doing implementation work, which you would -- which we characterize as professional services. But we've actually identified 15 to 20 additional services where those margins are closer to 30% to 40%. And so every new deal that we're doing has 3 or 4, 5, 6, 7 different professional services that are going along with our technology and our classic ops platform. That's been huge for us.

So when you can add our historical margin rates on those technology and operations, add on top of that 5 or 6 professional services. So where a deal maybe was $2 million to $3 million a few years ago, those deals now are $7 million, $8 million with much higher margins, that's where you're seeing the margin improvement. And the next question we often get is, okay, can that continue? And so we've gone from 0 maybe 4 years ago in margins. We've touched in Q1, 20% margins. Sanjay, when he took over the role with Ryan Hickey, our CEO, said we expect margins to be able to get back to historicals. As a reminder, historical margins were somewhere in the 25% to 30% margin rates. We still see an opportunity to go further there.

And is that a multiyear story?

Yes. It's -- I don't think you're going to necessarily see linear growth up to the right there. We're probably a little further along than what we expected 4 years ago when we built out the 5- or 6-year plan to get there. I wouldn't say probably we're definitely ahead of schedule there. But that's actually not how we run the business. So we're not looking quarter-to-quarter, hey, it was 20% last quarter, how do we get to 21% next quarter. You may see a little choppiness. You may see 20% down to 19%, back up to 20-ish, but that's kind of our run rate right now, and that's where we're focused. Yes, so that's how I would think about it.

And how do you manage margin expansion goals against needing to invest for growth?

Yes. So that's the hardest part about being a public company is SEI, we have a very strong balance sheet where we are -- we have no debt, et cetera. So capital really is not the issue for us. It's where we can make the right investments to maximize that I call it expense versus capital, how we can maximize the expense of those investments with future needs, et cetera, versus what we can really afford from managing our own internal expectations and what the Street's expectations may be.

I think we're doing a lot better job today than we were doing a couple of years ago. We've instilled a lot of processes, accountability controls to make sure every dollar spent is really in a fashion where we are going to have the maximum return on that invested capital.

All right. Let's talk about the transition underway in asset management. So there has been an improvement in net flows. What is SEI doing in product development, distribution and marketing to continue this improvement?

Yes. So Michael Lane has been with SEI, former BlackRock, led the iShares program at BlackRock, came to SEI as a reminder, a little less than 2 years ago. At Investor Day, we talked about Michael's vision of reimagining asset management. And he's done that. I think we are moving from the phase of reimagining asset management to now executing on a lot of the bullets he laid out there. But it's really refocusing on the ecosystem sale, where historically, we may have led in that space with trying to sell custody against Schwab or Fidelity just on a one-on-one basis.

We're probably not going to necessarily win that deal. But when we couple it with when we couple it with our technology, our asset management, some of the other services that we can provide, especially as we move upmarket, we're finding that, that story and that sale becomes a lot easier story to tell, and it's resonating with the market.

Over the last, I would say, a couple of quarters or definitely over the last year, we've had some of the largest wins in SEI history in that space or in Michael's business. And it's a result of kind of changing the mindset of leading with custody, how we package custody with our asset management product, building out our investment capabilities, reducing our reliance on sub-advisers, what we should be doing in-house versus externally. We've upgraded our distribution talent. We've been investing significantly in upgrading our talent in Michael's business. We've been expanding our alts positioning in partnerships like our recently announced partnership with Carlyle. So there's a number of things that we're -- that Michael is launching, and that's, I think, a big driver of the -- where you're seeing the increase in flows.

And then in the investment advisers business, how does the opportunity for SEI change as the wealth management industry consolidates? You're seeing RIAs simultaneously getting larger, more sophisticated. How do you adapt to that environment?

Yes. I mean we see ourselves as a beneficiary as we see consolidation. As RIAs continue to consolidate, you see more of that. They're much more receptive to what I just mentioned of the buying into an integrated ecosystem. We still have -- we still sell individual capabilities. You can still buy custody, you can still buy our asset management products. But when we can tell an ecosystem story, we become the beneficiary. So as we see consolidation, we really just become a beneficiary. They're looking for a complete platform, and we're really one of the only firms that sells that complete platform.

What about Stratos? What's the long-term vision for the Stratos platform?

Yes. So Stratos was a really important transaction or deal for us. And just to remind, the reason why we felt we needed to do the Stratos deal, Hickey -- Ryan Hickey, our CEO, probably 3 or 4 years ago said, he talked about 2 areas where we would expect some inorganic growth. One of them was in the U.S. RIA. And the reason for that was multifold.

The first was we felt we needed to be closer into the advice space. Stratos, Stratos did that for us. And so where you'll see margin compression, you'll see pricing pressure on different parts of the business or inside that -- inside the financial service industry. The one component that has been relatively untouched is the advice base. So whether an adviser charges 80 to 100 basis points for advice 10 years ago versus today, it's been relatively unchanged. So we felt we needed to be closer to the advice base.

On top of that, over the last few years, we had seen without having an RIA, we felt we weren't providing our adviser base who have been with us a very long time with an opportunity to potentially monetize their business. So as they were maybe thinking about an exit, we were seeing some outflows, not that they weren't happy with SEI. They really loved our offerings, our platform, et cetera, but we didn't have an answer for it.

So there was a little bit of a defensive position in order to making sure we had an RIA, so our advisers had a home to land in if they got to the point around monetization. So those were 2 key areas. The third was the obvious 1 plus 1 equals 3. So now having an adviser channel where we can sell -- provide our custody platform, our asset management platform into those advisers has been critically important. And I think a third thing that has been -- was a little bit of a surprise where we didn't have as much of a focus, at least in our original thesis was in our institutional business. So as we've educated the Stratos network advisers on our capabilities, including what we do around OCIO, in foundations, et cetera, there has been a lot of curiosity from the advisers.

And just as a reminder, we only closed the Stratos deal maybe 6 months ago, almost to the day. I think it was around December 1 or 2 or somewhere around there. So sitting here June 6, it's been about 6 months. But we've had a lot of interest. So we're continuing to educate that market. We feel like we've now just expanded our sales force, not just in institutional, but across the adviser network in our investment advisers business unit from a sizable team, but to a much more scaled team across the country. And so that's been a really nice added benefit.

But that's kind of the thesis for Stratos. And what early returns have been is through Q1, it's -- as we mentioned at our -- when we did earnings, it's met up to all of our expectations, including the cultural fit, which was really important to Jeff Concepcion, the founder of Stratos and really important to us.

All right. Let's talk about AI. So a lot of opportunities for you. Before we get to that, the market narrative has shifted in the last few quarters from opportunities to risks. And how do you view AI changing barriers to entry in the servicing businesses? What are the risks that you worry about? And how should investors think about SEI protecting the moat that's been built?

Yes. So obviously, we can't do a session without talking about AI. As we think about it, first off, in our business, we do believe we've built some moats. What -- how we think about it, AI lowers the barriers for point solutions, but not necessarily for integrated regulated platforms. And that's really what we have. We have integrated regulated platforms.

Our client base looks at us in a way where they entrust us with their outsource models and we obviously take that very seriously. So having -- it's not just one solution that we provide. We built moats around technology operations and that regulated infrastructure. So we think about AI from a risk standpoint like a brick wall, and we've said this now a few times publicly.

We don't believe that there -- the brick wall necessarily has the opportunity to be completely disrupted, but we do see there could be bricks in that wall that have the opportunity to be disrupted. And that's really kind of those point solutions. So there's a number of things that we're doing.

Number one, we've -- a number of years ago, we created a Ventures Committee. That Ventures committee is led by Sneha Shah. Today, we actually announced elevated her role to the Head of AI for the company, someone who wakes up every day thinking about artificial intelligence and the role we play from a governance, et cetera, technology and everything that goes along with it. So that's one thing we do.

So the Ventures committee spends a lot of time working with the venture capital groups from around the country, identifying is Jane Doe, John Doe sitting in a garage trying to disrupt certain parts of our business. And so making sure we understand what is out there, is there investments we want to make, and we've done that in the past. We've made investments into companies to get closer, have a front row seat to certain things we want to be smarter about. So that's in the Ventures committee, that's in the PE community, et cetera. That's number one.

We've also classically, as a lot of companies are doing today, have an internal disruption team, and we've identified areas of our business that we think are ripe for disruption. And so that team all day long has a very handsome budget and are helping -- are creating agents and brainstorming with our business units on the opportunity for disruption. So trying to disrupt ourselves before there's opportunities for others to do so.

So that's number two. And I think those are probably the 2 largest areas where we're focused. And then just everything else that we're doing around creating the right levels of budget for our technology teams. We've announced the partnership a few months ago with IBM. IBM has been a great partner over the last 4 or 5 months, doing a full assessment of the organization.

And that's really to make sure we're using agents that classically in our fund admin business and other parts of our business has been very labor-intensive. So how do we think about automation at scale? How do we think about where the right spot for agents are at scale. And so those are the 3 areas that we think about from a risk. But we feel and I think our clients feel that we're doing all the right things today.

So it sounds like you are very proactive in thinking through risk on AI.

Yes. Look, we're humble enough and not arrogant to think that we have not -- that we have figured it out because we have it, no one has figured it out. But I think we're doing a lot of things that other companies are doing. We're putting the right tools in the right hands, creating the right budgets, putting the right governance controls around everything I just said.

So I think we are thinking about it the right way. I don't feel the million-dollar question that I think companies always ask themselves, are we behind? Are we on par or are we slightly ahead? I don't think we're behind. And so I'm really comfortable where we are. Again, I think we have the right process controls in place right now. And I think the 3 or 4 things that we're doing has put our clients at ease and -- but again, we're not being lackadaisical.

And what about opportunities? Clearly, there are a lot of opportunities for AI to enhance the SEI business model, maybe enhance margins. What do you see as the biggest positive use cases for?

Yes. I think the same things I just talked about from a risk are really the opportunities for us as well. I had mentioned 3 or 4 times at the opening of this that as companies have in our IMS business classically thought of themselves as in-sourcers I think those folks with the rise of AI are thinking, do we really want to be making those same financial investments, time investments in order to get up the learning curve on AI? Or should we be relying on third-party partners to support us in that. That is an opportunity.

There still are, I don't know, 20 to 30 large insources of fund admin that I think with the announcement in Q1 of those 2 large insourcers to outsourcers that have become client of SEIs. I think they're starting to ask themselves questions of everything I just said. Is this really the right business model for us in early days, but we've had some additional conversations with those folks. I think with the kind of the blip in the market in Q1 around when the market stepped around when the Street kind of woke up and said, "Hey, how are we thinking about AI? What are the firms that are ripe for disruption? We had already been thinking about the scaling of the automation with IBM and creating agents alongside of them. So that's not new. That's been in the works for a while now. Yes. So that's kind of how we're thinking through it.

Turning to capital allocation. SEI continues to generate significant free cash flow. Historically, SEI has operated with very little to no leverage depending on the period, sometimes negative leverage. And then you made the Stratos deal. So looking forward, how has your framework around capital allocation changed over the last year or so?

Yes. So it has changed modestly. At Investor Day, we spoke about moving from a negative 1x leverage model to maybe somewhere in the future maybe to a one time positive. And so that is still directionally where we're headed. And I think the uses of capital, we've said publicly, we will continue to do this. We expect to still return 90% to 100% of free cash flow back to our investors. That will be in the form of dividends and the remaining will be stock buyback.

I think in Q1, we purchased back about $200 million of our company stock. We saw a little bit of an opportunity there with the drop in stock price related to some of the things that happen in the market around AI. That's proved to be beneficial. But so our strategy really hasn't changed. I think where you will see an opportunity for us to move from that negative onetime to closer to 0 or maybe even positive we own 57.5% of Stratos. There are markers over the next 7 years where we will acquire the remaining portion of that. And so that is where we would expect to take on some debt really for the first time in many, many years or at least take on debt and not immediately repay it back.

As we think about other inorganic opportunities for us. Historically, we've talked about 2 things, again, the one was U.S. RIA. We checked the box there. We made that acquisition. We talked about European fund admin. And so I think our thinking has changed a little bit there. I think we had thought about over the last couple of years, whether we needed to do a big bang, something to scale our IMS business overseas. I think we've stepped away from that a little bit. You may see small tuck-ins to support some maybe missing solutions in our overall solutions deck in IMS. And so -- but I wouldn't expect anything significant other than repurchasing the remaining options that we have on Stratos over the next 7 years.

And valuations across fintech and wealth tech have reset meaningfully from peak levels. So is that an opportunity for you?

Yes. We are trying to stay pretty vigilant in our strategy. So I talked about being strategic on a couple of things, the U.S. RIA, maybe something in the European fund admin space. We do get inbounds a lot. We evaluate those inbounds. Those are more opportunistic than strategic. I think we've been pretty steadfast when those inbounds come in. Yes, we'll take a look. We'll understand, is there anything we want to rethink. We have an M&A committee as all firms do. And so we'll visit those, but we're really trying to stay down the middle of the fairway on our strategy as opposed to be more opportunistic.

Let's talk a little bit about culture. So SEI has always had reputation for innovation, from your roots and an entrepreneurial culture despite now you're now a much larger company. So how do you preserve that culture as the business scales?

We talk about that all the time. Ryan talks about that all the time, whether it's in a town hall, whether it's with the leadership team, but it's -- if anyone's ever been to Oaks, if you walk around the campus, it's a beautiful campus. The way we -- where Al West, our founder, constructed the campus was very intentional to spur that entrepreneurial spirit. And I think making sure we never lose that is so critical.

I think if you look at even some of the things we've done over the last few years, we talked about some of them just now, striking that, hey, where are we missing? What do we want to invest in? We talk a lot about on-campus best idea wins. We've had a lot -- we have contests around best idea wins. It's not just a term, but it's something we take to heart. And there's a lot -- I won't go into them, but there's a lot of things we've deployed by using the best idea wins concept.

Some of the more meaningful wins or opportunities around striking -- keeping that entrepreneurial spirit alive was really the creation of professional services practice. So that came through truly be an entrepreneur. When Sanjay took a look at the private banking space, and it wasn't just all him, it was his team. We started looking around everything that third parties were selling to support the implementation of the SWP platform. It could be an assessment of pre-RFP, it could be the change management or the sunsetting of the current technology, it could be the transformation, the origin of our Sphere platform, which you can think about that as our cybersecurity platform that we're now selling into the market.

That was all born through the classic SEI model. We had built a world-class cybersecurity. We built it for ourselves. We built our cybersecurity platform ourselves for ourselves, for our technology. And as a result, it became so strong, we started saying, "Hey, is this something we should be marketing outside? And that's actually how that was created. A number of our businesses that we have today were created because we were actually doing it for ourselves. We did it really, really well.

And clients were asking us, "Hey, that's really interesting. Would you mind talking us about that, and we ended up creating services. That's how professional services were born. So striking that balance of how Al founded the company, it got to a certain size and scale, and we did have to adapt. We couldn't run the company exactly the way we were in order to get where we needed to go. And I think Ryan has done an amazing job of striking that balance about keeping that entrepreneurial spirit alive but also advancing the company forward at the exact same time.

So to wrap up, when you look across SEI today, where do you think the company is still underappreciated by investors?

Yes. I love that. That's my favorite question, and it's one that actually most of our analysts and investors ask first. I think in a couple of areas. I think our asset management business is -- the market hasn't built into the opportunity that we have in front of us. And by the way, rightfully so, I think people are watching. I think they understand the reimagination of asset management. I think they understand the 4 or 5 areas where we're building out product or we're investing in our technology platforms. I think they understand why we acquired Stratos. And I think they understand that.

I think they're waiting and seeing how we execute across that. I think another huge one is we have a massive opportunity in selling asset management into banks. We've done a little bit of that, but I don't think we've done that at scale. We're putting a lot of new leadership roles in place in order to make sure the right level of attention. So I would say those 2 areas are probably the area that the market hasn't priced in quite yet.

Great. Well, Sean, thank you so much for your time today.

Thank you, Ryan. Thanks for having me.

Go ahead and get started here, everyone. Good afternoon, and thank you for coming. My name is Jeff Schmitt. I cover wealth management and capital market stocks here at William Blair. I would like to introduce SEI Investments. They provide outsourced technology and investment solutions to banks, financial advisers and asset managers. We're pleased to have with us Sean Denham. He is the CFO and COO of the company. He'll discuss the business. So thank you, Sean, for joining us. And then just one quick note, just go to our website williamblair.com for a complete list of disclosures. So with that, I will turn it to you, Sean.

Thank you, Jeff. Is this -- can you hear -- yes hear me okay? Great. So nice to see everyone. I recognize a lot of faces, really excited for the faces I don't know. I've been in the chair -- in this chair for a little over 2 years now, having a lot of different investor and analyst conversations. And the thing I get the most about individuals that are considering new coverage or potentially thinking about investing in SEI is, "man, you guys are really complex and difficult company to understand." I disagree. We do have 4 different -- we have 4 segments right now. But what I find is the investors or the analysts that really covers well and make the effort to really dive down and do the research and have the conversations with us all agree, we're actually not that complex of a company.

There's many more complex companies out there than us. I think the struggle historically for folks that are looking at us is that there's not one market comp, which can be a struggle. So what I'm going to do today is walk through for those who don't know us, our 4 different businesses. There is a lot of overlap. There's a lot of synergies across the businesses. So I will start there. So first off, our Investment Manager Services business, or IMS business, is our largest business. It's our fastest-growing. We have really strong margins. But really what that business does is fund administration for traditional and alternative investment managers. Again, really strong, great growth rates. We'll unpack some of the financials in each of these businesses in a moment. But we have a lot of tailwinds in the business right now, including thinking about in-sourcers, classic in-sourcers fund administration that have moved to an outsourced model, and we are their first phone call.

Our second business is our Private Banking business. This is SEI's legacy business. We've been in operations for 58 years. This is the business AL West founded the company on. We provide in our Private Banking business, front office, middle office and back office technology through our SWP platform. So our SEI Wealth platform and outsourcing operations to the wealth management arms of banks.

Third is our Institutional Investors business. That is essentially an outsourced CIO business for primarily endowments and foundations. We also performed a lot of work around defined benefit plans. So CIO services around benefit plans and pension schemes.

And fourth is our Investment Advisors business. So that's a full-service platform for investment advisers. We used to call that our TAMP business, so our turnkey asset management platform, but we've really stopped using that term because some of the things we've done have kind of outweighed and have gone beyond a classic TAM business. And included in the Investment Advisors business is the acquisition we made back in December of 2025, so just a few months ago of Stratos. Stratos was a -- or is a $450 million initial acquisition, where we took a majority stake in that business. That is an RIA platform, which has been an incredibly strong cultural fit.

Performance has been good and has met our expectations through one quarter. We see a lot of synergies between our classic or historical asset management business, including our custody platform where we're really, really excited about. So that's at the highest level of where SEI sits. And again, you'll see there are some of our clients there, and you'll see our competitors. And what you'll notice is there's not really one competitor that sits across all four of those business units or segments, which again, leads to sometimes the term, hey, you're really difficult to comp in the market and at times difficult to understand. But again, I think if you look at the individual businesses, you'll see that we're actually not too complex to understand.

Okay. Let's talk about performance for a moment. So we've had incredibly strong performance over the last 4 years. And that really starts with in 2022 when we announced Ryan Hicke as our new CEO. Ryan is the second CEO in SEI history after the founder, AL West, turned over the reins to Ryan after a great 50-year run by AL, created something really beautiful in SEI, but the performance has been outstanding really across all 4 of our key indicators. So you'll see revenue growth there. You'll see our huge growth in net sales events. We can unpack that a little bit as we go into the performance of each of the business. You can see the vast improvement in our margins and our EPS growth.

So we're really, really proud of what we've accomplished over the last 4 years, I think prior, and I was on stage here a year ago. And last year, we talked about the history of SEI from the original concept by AL all the way through where we were in 2025, now we're in 2026, but we've had really great momentum over the last 4 years. A lot of that credit goes to Ryan, his vision as CEO. We feel differently at SEI today than we probably did 4 or 5 years ago. There's been a massive tone change. We have certain leaders of the business, Phil McCabe in our IMS business is legacy SEI; Sanjay Sharma, who was our Chief Technology Officer, Ryan, on his very first day as CEO, named Sanjay as the Head of Private Banking. We brought Michael Lane in from the outside. Michael is ex BlackRock, who led the iShares program for many years at BlackRock. I came from the outside.

And so what you'll -- what may be a trend you see is that bring some new outside-in thinking really has done wonders for SEI. I often say one of the greatest strengths of SEI has been over the last 50-some years is that no one ever leaves. It's a really strong culture and people love working at SEI. I think one of the weaknesses of SEI is that nobody ever left SEI.

So I think bringing in some of that outside in and blending that with the current leadership team that's been there for a while has been a really good recipe. And what Ryan does really well is leading the executive team and working well with the Board, bringing in different thinking and what we have done over the last couple of years is move and I think some of the results can be characterized in this way. We've really shifted the business from a horizontal model -- I'm sorry, from a vertical model to a horizontal model.

So SEI prior to probably 2 years ago, those 4 business units represented here, they were almost run as 4 completely distinct businesses with very low synergies across the business. So think about our IMS business having a complete opportunity of that leadership team to run their complete tech stack, complete the way they think about marketing, the way they set compensation. Those were really truly 4 distinct companies. And moving from a vertical to a horizontal model has really, really served us well. And so I think if Ryan was sitting up here, he would say that the executive team is operating more cohesively than we have in a few decades.

And I think some of that results in what you see here. So the next question, which is the obvious question is, can we continue the great results that we've been enjoying? And I think the answer to that is yes. I think that we're coming off -- Q1 was our greatest quarter in SEI history. Our largest sales event quarter, our largest earnings per share quarter. Margins have improved dramatically. So we're really well positioned to continue that momentum. But really what it comes down to is execution. And so we have -- this is a slide we used at Investor Day back in September. So it was our first Investor Day we had done in 3 years, the first Investor Day we had done since Ryan became CEO.

And there's really 5 focus areas of the organization right now. And by the way, we came up with these our own. We didn't have to go hire McKinsey or Bain to come help us create this strategy. So we saved a few dollars there. But we do think there's really 5 key areas where we're excited for our path going forward. In no particular order, really reimagining asset management.

That started with bringing Michael Lane in from BlackRock 19, 20 months ago. He's not quite -- somewhere around there. He's not quite on his 2-year anniversary yet. I think when Michael got here not too dissimilar from when I joined SEI, we had a lot of what I uneloquently say, we had a beautiful -- we lived in a beautiful neighborhood. We had great bones to the house, great bones, but we had a lot of broken windows that we had to fix. And over the last 2 years, we started fixing those broken windows. I think where we are in our journey, and Michael experienced that as well, I'll get into asset management in a second.

But we had to pull those in, first off, identify all the broken windows. We pulled them out and we started systematically replacing those windows. A lot of that went to the move from vertical to horizontal. But what Michael has done an amazing job of is really coming in, looking at where we were in the market, where we are playing in our TAM. And honestly, the way I think about revenue growth or revenue in general. There's 4 drivers of revenue. That's all there is. There's greenfield, new logos, white space, pricing and retention. Really, where we were focused on asset management was retaining the smallest advisers, our smallest advisers, clients, probably not the best strategy for growth.

And so Michael came in and had a -- I won't go into it, you can look at the Investor Day, but he had a 5- or 6-point plan. As all great leaders do, you have to have a 5- or 6-point plan when you come into a new organization and he systematically has been working on each of these points. That's including kind of reimagining our asset management product portfolio. We brought -- he brought Bob Hum with him from BlackRock. He's been amazing, but really reimagining what we're doing in asset management. I think that was early days. That was more of September.

I think now we're executing on that asset management story. I'll talk more about that in a little bit. Enterprise excellence, huge one. So from a CFO standpoint, I had that hat originally. It was always kind of the design I would take on the COO hat. So we spent a lot of time operationalizing the business in a meaningful way. I think that's led to dramatic margin improvement.

The third is strategic capital allocation. I'll speak to that in a minute. And then also boosting international returns. International is a great growth area for us right now. We've been in U.K., we've been in Dublin. We've been in Lux for a number of years. But I think thinking about what our go-to-market strategy specifically is across the business units is something that we were maybe falling down on it. We weren't spending enough attention on that. So we put Sanjay Sharma who I mentioned earlier, he's a great, great, great, great executor. He's got an engineer mindset. So we asked him just a few months ago to take on in addition to his private banking responsibility to really focus on international, and Sanjay has been spending a lot of time there. And then really just investing in improving growth engines like our IMS business.

Okay. So let's unpack a little of the performance of each of the businesses now just more a bit more. So in our Investment Managers business, again, really, really well positioned right now. So there are incredible strong market tailwinds, especially where we play where we specialize -- while we're in traditional, really kind of across, we do fund administration across the entire portfolio of everything we can do from traditionals, mutual funds, et cetera, into our alternative platforms, real estate, infrastructure, private credit and private equity, et cetera.

We are the #1 fund administrator in the world in private credit. There's been a lot of tailwinds in growing alts. We're really well positioned there. We are the first phone call, and it's something we talk about internally. We strive for us to be that first phone call in IMS, in our IMS business when a new fund launch is occurring. In Q1, when we talk about the shift from in-sourcing to outsourcing. In Q1, we announced 2 really large wins. So that would be in our sales events numbers of approximately the fifth largest and the 15th largest investment manager in the world that had decided to make a move from in-sourcing and outsourcing. We were in that RFP. It's been about an 18-month process of going through that and we won that mandate.

Now inside that mandate for each of those new wins for us, from a risk profile, the mandate included 2 fund administrators. And so we were one of those, really proud of that and excited for that. In saying that it's not a 50-50 split. And this goes out to how we are executing it really well. We are, in my opinion, the best fund administrator in the world, especially in private credit, private equity and some alternatives in the alternative world. So that -- just because we won those mandates, it isn't just they split it 50-50. We're winning the lion's share of that mandate, which I think is a testament to how well we're performing in that space.

And then you'll just see the '22, '23, '24 and '25 growth. We're growing it across both all pieces of business, both across traditional alternatives and global. So doing extremely well there. The pipeline remains strong. The sales events numbers that we announced in Q1 was in all of them. We will continue to bring on additional funds through those 2 new large mandates in addition to our normal growth of our business. But again, definitely our fastest-growing and most profitable business right now.

Shifting over to our Private Banking business. When I first came to my first investment conference for SEI and every analyst call I ever had. Out of 20 questions, 19 were around when are you going to improve private banking margins. We've done that. And again, Sanjay gets really all the credit for that. So we were enjoying 0 to negative margins for a number of years in private banking. Our historical margins rate for 25% to 30%. And when Sanjay took over, he said, we have a path forward to get back to historical rates. Well, in Q1 of this year, we passed 20%, really far advancing the speed of which Sanjay, I thought I think initially thought we would get there.

And there's a few reasons why we're doing that. Number one, really cost discipline, making sure we're investing in the right areas of our SWP platform, rightsizing really our headcount. So everything you would expect from a demanding engineered-type thinker, Sanjay is the best. He also increased our TAM. So we were really focused on the largest of the large. So our SWP platform currently or -- currently, we look at the market, there's about 20 of the largest banks in the United States. We have about half of those banks are on our SWP platform, and we do the front office, middle office and back office services for them. We were really focused in that for a very long time. Those are -- those come about very rarely every 7 to 10 years. Those RFPs might come around and we spend a lot of time focused there. Well, Sanjay went actually went down market. When Michael Lane went upmarket, Sanjay went down market. It was really -- it turned out to be really profitable for us.

And so moving to the regional community and the community bank space, specifically the community bank space, where SWP is more plug and play, we can install our platform much quicker. There's a quicker return, lower cost of delivery, et cetera, it's really profitable for us. What Sanjay also did over the last couple of years, which has been really, really exciting for SEI, I'm very bullish on this was the advent of professional services.

So he took a look around the private banking space and said we're installing our platform. We're doing all the operations and then they're hiring third parties to come in to various services around our offerings. And Sanjay said, we can do that. And so we've started over the last couple of years to develop some professional services that have paid off really, really well. So 2 to 3 years ago, 4 years ago, when we would announce a win in the private banking space on our SWP in ops platform. That was it. So those might be $2 million to $3 million deals, $4 million deals.

Now those deals are now $10 million deals because we're selling other offerings like our Sphere offering, which is kind of surrounds our cybersecurity platform. There's other things like change management services, our data platform, which has been a big seller for us. So there -- all of a sudden, we're starting to bring the whole firm to bear. In one area which I'm also excited about, which we really haven't dug into too much, and I think it's an opportunity for us in selling asset management to private banks. So being on our platform, we know where every single penny and dollar is, every single penny and dollar is for about 120 banks across the United States and globally. And we know whether those banks in their asset management product inventory, how much is in alts, how much is in traditional, where it is. And we've really done very little with that, and we have sold very little of our own product into those banks.

So we see that as an opportunity. We recently announced the hiring of the national leader for selling asset management to banks. I'm not exactly sure what her title is going to be. So anyway, really strong momentum in private banks. We do believe margins will continue to prove at what rate, not exactly sure, but we've made steady progress there, which we're really proud of.

This is an interesting chart. This encompasses both our institutional and investment advisers business. So in Q3 this year, we will go from 4 segments. I think Q3, hopefully, if everything works out right, from moving from 4 segments to 3 segments. So we'll combine the institutional investor segment and the advisory segment together. But I think just looking at the graphic at a very high level, you can see over the last few years of the improvement of what we've done and why I'm really excited about this business unit.

So we've really been able to increase flows really across both of our businesses. The advisers business has been very successful, as I mentioned, under Michael's leadership, a lot more room to grow. Again, as you're building a massive ship like Michael is right now in asset management, it takes a little time. He's been, again, in the seat for about 18 months. But I do think over the next year, we're going to see even larger improvement, including hopefully more adoption of our own products that we've created. We've curated about 8 new ETFs over the last couple of quarters.

We have an inventory plan of additional launches going forward. So the opportunity to take a look at the model portfolios that we curate with our clients and for our -- for instance, in our institutional business, do we have the ability to take some of our own products. We have fiduciary responsibilities that go along with that, you can't just take out certain products and put our products in, but we have an investment manager unit that looks at all that. So -- but do we have an opportunity to take some of our own curated products and put those into some of those models, I think there's an opportunity there is just one example.

Okay. So what do we do with all of our capital that we have. So we have committed and we have returned and committed to return about 90% to 100% of our free cash flow back to our investors. And that's obviously in the form of dividends. We have a very strong buyback program. I think, Brad, last year, we -- in trailing 12, we purchased back about 7% of our own shares. Brad is nodding, Brad is Head of Investor Relations for SEI. If you don't know, Brad, he's great.

And what you'll see there is an incredibly strong balance sheet, probably too strong of a balance sheet. At Investor Day, we talked about moving -- right now, we're at about a negative 1x leverage model. It's probably not the best model. We've historically worn that balance sheet as a badge of honor. I don't necessarily have that same take. I think we should be using the balance sheet in maybe a more, I don't want to say an aggressive way, a different way. And so we have spoken about at Investor Day and since then of taking on more debt, but doing it in a very smart way. And so we're not going to just go do deals for the sake of doing deals.

We want the right deals. Stratos deal for us was a good deal. We're really happy in what those returns are. But when you just take a look at this and the amount of buybacks I think we're relatively unique. There are companies that do buybacks, but the amount of free cash flow we use in those buybacks, you may consider unique.

So that is kind of SEI in a nutshell in 25 minutes. Jeff, happy to -- I know we have a session right after this, if there's any questions in a breakout session, but I'm happy to take any questions right now. And Jeff always has a ton of tough questions for me so if ...

No, but please feel free if anyone has a question. Or else I will. I have a question on IMS. So your fund administration clearly, your strongest growth driver of the business. Could you maybe discuss like how are you differentiated what stands out there? And what gives you comments you can kind of maintain, I mean you probably averaged double-digit revenue growth for a while?

So I mentioned it, but honestly, it's execution. And so I said probably everyone sits up here and says they're the world's best at certain execution. But we really believe we are. And so -- and that comes in the form of -- these are -- don't quote me on these numbers, but when there's closed-end funds, that fund closes and they launch a new fund, industry averages for fund administration of renewals of that same administrator is high 70%, low 80%. We're in the kind of mid- to low 90%. I think that's a really good indicator of our performance. I mentioned the 2 large insourcers to outsource model or investment managers have changed their model.

We won both of those mandates, 2 really large ones. They don't come to market that frequently and the fact that we won both of them, and we're winning the lion's share of that work, I think it's a good indicator of really what our performance is, especially in the alternative space.

How many have the type of global capabilities you really have there?

Yes. Great question. So we recently -- I don't want to say announced, but we spoke about it. We are opening a Singapore office, and that's not because we, at SEI like to plant flags all over the globe. We've had some of the largest managers in the world have come to us and asked us, "Hey, we want to use you overseas, specifically in that Pacific Rim area like Singapore. And so we've announced we're opening an office in Singapore. That's based off of demand. And so when our -- the largest managers in the world say, "Hey, we want to use you there, but you need a presence there. That's exciting for us. So again, we're not here to plant flags and really extend cost. We try to be as efficient as we can, but that -- I think that's a good indicator from what our global footprint is.

We also publicly had talked about, Ryan did our CEO a few years ago about where are the 2 inorganic growth areas where we may be thinking about. One was the U.S. RIA. We just did that deal. We -- Stratos is the perfect one for us, great footprint, great one to kind of build off of, not that we're necessarily thinking about #2 there. And -- but the second inorganic growth area was a European fund admin. Do we want to expand or do something significant there? There's always the classic buy versus build analysis that's done.

We put some of our best U.S. talent overseas in Europe and really found out that we could actually build something and create great momentum just from a build standpoint. There are certain pieces of our admin business. If you look at the total pie of every single thing a fund administrator can do for a client, we probably do 96% -- we currently have about probably 96% out of 100% of the things somebody would buy. There may be certain tuck-ins that maybe we want to buy to round out and complement the rest of our IMS business or fund admin business that we still need to do. But that's how we think -- are thinking about our global footprint.

[indiscernible]

So we'll take private banking for a moment. So we have asset management that sits kind of in our investment advisers. Classically, those investment products that we sold into the adviser or in our model portfolios for our OCIO business has really sat there by itself in a vertical. We can sell those same products into private banks. So they have investment product portfolios. We think -- so I think that's probably the most obvious synergy. Also from a professional services standpoint, we are selling 99% of our professional services right now, our consulting services inside our private banking space. We see opportunities in our IMS business and actually in our asset management business as well. So there are -- there is some overlap. But historically, asset management has sat over here. We don't jump over the fence to other parts of the business. The kind of lived in silos. So breaking down those silos and moving to the horizontal model, there are things we can sell across the platform.

[indiscernible]

Yes, we had and so I had mentioned that we were bringing in someone to lead who has done -- been there, done that before, who has led asset management and selling directly into banks. So that person is going to be coming on board here in the next, I don't know, month or so. And we are upgrading all of our people who have historically -- not all, but our sales force who have historically sold technology and ops. I know technology and ops. I know technology and ops. I can't sell asset management. They now have gotten their Series 7. So now they have the opportunity to go sell into those relationships. So that's just some of the thinking. It's a couple of examples.

I think we're out of time here. So Sean, thank you.

Thank you very much, Jeff. Appreciate it.

Thank you all.

Hello, and thank you for standing by. Welcome to SEI First Quarter 2026 Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to Brad Burke. You may begin.

Thank you, and welcome, everyone, to SEI's First Quarter 2026 Earnings Call. We appreciate you joining us today. On the call, we have Ryan Hicke, SEI's Chief Executive Officer; Sean Denham, our Chief Financial and Chief Operating Officer; and members of our executive management team, including Michael Lane, Phil McCabe, Mike Peterson, Sneha Shah, Sanjay Sharma and Amy Sliwinski.

Before we begin, I'd like to point out that our earnings press release and the presentation accompanying today's call can be found under the Investor Relations section of our website at seic.com. This call is being webcast live, and a replay will be available on the Events and Webcast page of our website.

With that, I'll now turn the call over to Ryan. Ryan?

Thank you, Brad, and good afternoon, everyone. This was a defining quarter for SEI. Q1 was not simply a strong start to the year. We believe it is emphatic evidence that the strategic and operating changes we have made set a new standard for what SEI is capable of delivering on a sustained basis.

Q1 adjusted EPS totaled $1.44. That's more than a 20% increase from last year, driven by both top line growth and margin expansion. We also delivered $67 million of net sales events in Q1, including $57 million of recurring revenue and $10 million of professional services. This is an outstanding outcome. It exceeds our prior quarterly record by more than 40%. The scale and quality of these sales events reflect demonstrable progress in our core growth engines rather than a single market tailwind or discrete event. This distinction matters. It gives us confidence that what we delivered in Q1 is not an anomaly.

During our Investor Day last fall, we outlined 5 strategic pillars that guide how we run the company, how we allocate capital and how we show up for clients. Q1 was decisive validation of that strategy and our ability to consistently execute against it. Let me walk through those pillars, how they showed up in Q1 and why do we feel good about the trajectory ahead.

First, we invest in proven great engines, most notably alternative investment managers and professional services. In IMS, demand for outsourcing remains strong, particularly among larger and more complex alternative managers. First quarter sales events reflect the initial phase of multiple enterprise-level mandates with first-time outsourcers, the "big deals" we've been talking about. These relationships are designed to expand over time as the clients deepen their partnership with SEI and as their fundraising and new product launches progress. These relationships also have the potential to grow into some of SEI's largest overall clients. The momentum in this business is incredible, giving us confidence that what we saw in Q1 is a starting point, not an end point.

Professional services also continues to support growth. Clients are engaging SEI earlier and more strategically across a broader set of needs, which is improving win rates and increasing durability of relationships as evidenced by the previously announced Huntington Bank win.

Second, reimagining asset management. I think we're actually now past the reimagining stage, and we are executing against our evolve strategy at pace. The strategy is showing meaningful results. Q1 represented our best quarter in several years with the improvement in flows that built through 2025 continuing into 2026. We saw progress across both the RIA and IBD channels where our strategy of delivering a broader SEI ecosystem to more scaled advisers is showing results. Engagement is improving every day, particularly with larger firms that value integrated solutions. Stratos integration is also well underway with multiple work streams focused on scalable infrastructure and building a centralized investment hub. We are encouraged by strong inbound interest from advisers seeking a long-term capital partner like Stratos. And in our institutional business, we remain on track towards net positive flows later this year while maintaining discipline around client fit and flow quality.

Third is enterprise excellence. The partnership we recently announced with IBM reinforces and accelerates the direction we are taking around infrastructure modernization, automation and responsible AI deployment. As I have said in the past several earnings calls, we are applying AI and automation where it creates real impact, reduces friction, lowering unit costs and expanding capabilities and services for clients and employees. These initiatives are translating into margin expansion with Q1 delivering higher margins at the consolidated level. Enterprise excellence is about running the company smarter, not just tighter and with increased accountability. Our margin expansion reflects real progress against that priority. We view AI as a force multiplier of time, and our execution of these programs will create additional capacity and opportunity for our employee base.

Fourth, we continue to focus on boosting international returns. We are taking a more disciplined approach to how we operate outside the U.S. with clear accountability for growth, margins and capital deployment. In Q1, we began to see traction across both Professional Services and Asset Management with more than 1/3 of Professional Services sales events generated internationally this quarter. We also continue to build out our Singapore presence as part of our global expansion priority. This remains an important opportunity as we apply a more integrated enterprise-wide operating model across our international platform.

Fifth is strategic capital allocation. In Q1, we repurchased over $200 million of SEI stock. Given the strength of our operating performance and long-term growth outlook, we believe our shares represent an attractive use of capital at current levels. Share repurchases will remain a meaningful lever within our capital allocation strategy, especially when market pricing does not, in our view, reflect the trajectory of our business.

Beyond share repurchases, we also activated several investments targeted for later in the year, which are reflected in Q1 results. This was also our first full quarter with Stratos, which is deepening SEI's participation in the advice value chain and strengthening the overall reach and relevance of our platforms. We remain committed to disciplined capital deployment that balances reinvestment, M&A and consistent returns of capital to shareholders.

Before turning the call over to Sean, a brief word on AI. We believe AI strengthens our value proposition and supports continued margin expansion and growth. It is a clear positive and accelerant for SEI. Our combination of regulated infrastructure, proprietary data, mission-critical processes and talent positions us well to apply AI in ways that can improve client outcomes and productivity. We have been proactive, investing over the past 2 years in AI native capabilities, automation and AI-enabled expansions and extensions across our platforms. In parallel, we are selectively experimenting with more disruptive ideas that have the potentially to substantially expand our addressable markets that we can serve. Importantly, clients are increasingly turning to SEI as a partner to help them think through responsible, scalable AI adoption in complex regulated environments.

Stepping back, we believe Q1 represents a statement quarter for SEI. The quarter reinforces our confidence in the scalability of our business and the demand for our capabilities. But finally, I want to thank SEI employees for an outstanding quarter. The results reflect their focus, execution and daily and unwavering commitment to our clients.

With that, I'll turn the call over to Sean.

Thank you, Ryan. I'll begin on Slide 4 and to reiterate Ryan's comments, SEI delivered an outstanding first quarter. On a GAAP basis, EPS increased by 20% and operating profit increased 21% versus Q1 of last year. On an adjusted basis, EPS increased 21% year-over-year. The sequential decline in adjusted EPS from Q4 was expected and reflects items we discussed last quarter. Most notably, a higher effective tax rate and lower investment income and performance fees from LSV, which tend to be seasonal in nature. In total, our tax rate, LSV and other below-the-line items drove a combined $0.15 headwind to EPS relative to Q4 last year.

Adjusted operating income, which excludes these items, increased by 6% from the fourth quarter. This quarter also marks our first period reporting adjusted financial metrics. We believe this enhanced disclosure aligns our reporting more closely with market practice and provides investors with a more effective basis for compares. For additional context, we have also included historical quarterly disclosures on an adjusted basis at the end of our press release.

Turning to Slide 5. SEI's adjusted operating profit increased 6% sequentially and by 24% year-over-year. Performance was strong across the enterprise. Private Banking delivered a notable increase in revenue and more impactfully, operating margins. This reflects continued execution in deeper client engagement as banks increasingly partner with SEI earlier and across a broader set of strategic and operational needs, not just investment processing. For example, we are now playing a more active role in client implementations, resulting in less lag time between contract wins and revenue recognition. In addition, we were pleased to announce the Huntington win during the quarter, which underscores our relevance and credibility in the regional community bank market, especially at the higher end of that segment.

Our Advisors segment had a healthy start to the year, but the first full quarter of our Stratos partnership reflected in the Advisors segment makes comparison with prior periods challenging. Given our 57.5% ownership, Stratos is fully consolidated in our results. Stratos contributed nearly $20 million of revenue and $3 million of operating profit to advisers in Q1 before considering noncontrolling interests. Excluding depreciation and amortization, primarily acquired intangible amortization, Stratos generated $8 million of EBITDA at the consolidated level. Several planned transactions also closed during the quarter, so the underlying run rate contribution is modestly higher than reflected in Q1 results. Excluding the impact of Stratos, all of SEI's businesses delivered year-over-year revenue growth, operating profit growth and margin expansion. This performance reflects execution against the strategic priorities Ryan outlined earlier, so I will not reiterate those themes here.

Turning to Slide 6. Consolidated operating margins were very strong, continuing the improvement trend we've seen over the past several years. At a segment level, the improvement in Private Banking margins, both year-over-year and sequentially reflects continued execution against the 5-Point Plan Sanjay discussed during our Investor Day. Key contributors include Professional Services growth, increased adoption of our Asset Management offerings internationally and operating leverage against deeper engagement with our clients.

For our IMS business, the modest sequential decline in margins versus Q4 was expected and primarily driven by the absence of the revenue accrual true-up we referenced last quarter, which accounted for approximately 150 basis points of the decline. The balance reflects onboarding costs associated with the substantial sales events delivered in the quarter. Advisors margins declined due to the inclusion of Stratos, which was weighed down by intangible amortization, as I just discussed. Absent the impact of Stratos, Advisors margins increased approximately 50 basis points relative to Q1 last year. At the consolidated level, adjusted operating profit margins improved versus both the prior quarter and the prior year on both a GAAP and adjusted basis.

Slide 7 summarizes our sales events for the quarter. We debated opening the presentation with this slide, but decided it was best to remain consistent. Sales activity in the quarter was exceptional. Investment Manager Services led the business with more than $50 million of net sales events driven by the large enterprise mandates Ryan discussed earlier. Together, portions of these wins accounted for just over half of total IMS sales events. As Ryan noted, we expect these relationships to continue contributing to sales activity in IMS over the coming quarters and years.

Before moving on from IMS, a brief comment on private credit and a broader market commentary. We are not seeing any slowdown in IMS demand. Our exposure to retail private credit, including public BDCs, currently remains limited and the vast majority of our private credit exposure is institutional. We continue to see strong pipeline activity across existing and prospective clients and with the launch of our registered transfer agency in Q3, we would expect our retail exposure to increase with evergreen fund launches. IMS led the quarter, but the strength of those results should not diminish the continued progress we have seen in both Private Banking and Asset Management.

While the magnitudes differ, all 3 businesses are contributing positively to growth. Asset Management delivered its strongest sales events quarter in several years, driven by growing demand for ETFs, SMAs and our custody-only platform offerings. We are encouraged by the momentum in this business and expected continued progress as we expand our product lineup and distribution capabilities.

Investments in new businesses generated approximately $4 million of net sales events, including engagements won in conjunction with Private Banking. This is another example of how our investment in Professional Services is supporting growth across the enterprise. Additionally, while not reflected in sales events, we successfully recontracted 8 Private Banking clients, renewing an average contract term of approximately 4 years and retaining $34 million of recurring revenue with no material impact to run rate profitability.

Turning to Slide 8. We saw continued asset momentum during the quarter. In Asset Management, growth was led by the Advisors Business. Last quarter, Ryan mentioned that we're accelerating Investment Management product launches in ETF, SMAs, models and alts. This quarter, we are seeing progress against those initiatives, driving approximately $1.5 billion of net inflows.

Institutional investors experienced less than $1 billion of net outflows, almost entirely attributable to a large defined benefit client annuitization following the achievement of funding objectives. This outflow is a result of SEI advising a client to successfully meet their long-term investment objectives. Based on current pipeline visibility, we expect improved flow performance in this business over the balance of the year.

Regarding market impact. SEI's portfolios remain highly diversified across equities, fixed income, alternatives, cash and geographies with a relatively higher weighting towards value which mitigated market headwinds during March. And as you may have noticed, market performance in April has been pretty encouraging to put it lightly. LSV had a strong start to the year with key products in Global and U.S. Large Cap outperforming benchmarks by single-digit percentages in Q1, more than offsetting market weakness in March and approximately $2 billion of net outflows in the quarter. Assets under administration and on platform increased 4%, driven by strong new business wins and lower mark-to-market sensitivity.

Turning to Slide 9 and building on Ryan's comments on capital allocation. In Q1, we repurchased $208 million of SEI shares. While repurchase activity was elevated during the quarter, we continue to maintain significant capacity intend to remain active buyers. We ended the quarter with $363 million of cash on the balance sheet and substantial financial flexibility. This balance sheet strength provides ample capacity to continue investing in the business while maintaining a disciplined and opportunistic approach to capital returns.

Stepping back, the first quarter represents an amazing start to the year for SEI. We delivered meaningful earnings growth, improved margins and exceptional sales activity while continuing to invest to support the opportunities we are seeing across the business. The quality of our results reflect disciplined execution against the strategic priorities we outlined at Investor Day, and it reinforces our confidence on the path ahead. There are a lot of exciting things happening right now at SEI, and there's more to come.

With that, operator, please open the line for questions.

[Operator Instructions] Our first question comes from the line of Alex Kramm with UBS.

Just maybe starting with the strong sales in IMS. I was hoping you can give a little bit more color around, I think you said multiple first-time deals, so maybe a little bit more about how competitive these wins were? And then most importantly, you said the pipeline remains very strong. So is this a run rate that we should be expecting in terms of new sales? Or is this going to be lumpy? Yes, just a little bit more color on how this year could shape up here given the recent strength here.

Sure, Alex. It's Ryan here. Thanks for the question. I think we'll turn that one to Phil. And then, Phil, if you want to kind of unpack them in a couple of different ways, we can add on.

All right, that sounds great. Thank you for the question. A couple of quick highlights. So by every measure, we had a phenomenal quarter. We won 2 of the largest and most complex alternative managers in the entire industry. It was an extremely competitive bake-off that lasted over a period of a full year. Both of those managers who are moving from in-sourcing to outsourcing, one of them is in the top 5 globally and the other is in the top 15 globally alternative managers. So we believe there's meaningful room to land and expand, like we always do over the course of the next several years. Both of these clients will be in our top 5. But these deals are in addition to what we would normally sell on a quarterly basis.

So from a pipeline perspective, we're really strong. We are supported by the enterprise mindset from Ryan and Michael and Sanjay, we're all out in the market selling together and we're probably talking to 20 of the top 50 alternative managers right now. So we expect sales events to continue to trend up year-over-year. And one last fun fact. We're actually now we are the third largest fund administrator in North America. So we're moving up the league tables.

Ryan, anything to add? Anything I missed?

No. I think you nailed it. I think the appetite for outsourcing increases literally daily and the more effective we have been in helping our firms deploy capital in different areas for their growth acceleration, it has just increased the partnership and deepened our relationship. So as you said, I think if you're looking, Alex, from kind of an average quarterly basis of sales, we would expect those numbers to continue to grow. Some quarters will be a little bit lumpier than others based on size of deals and timing, but the pipeline and the market and our positioning in this space is extremely strong.

Okay. And then maybe staying on the same topic, and you already addressed this somewhat proactively in terms of what's going on in private credit and private equity right now. But maybe we can go a little bit deeper there and not to lead the witness here too much, but we've seen in the past, for example, during the financial crisis on the hedge fund side, in particular, and made off, there was a lot of outsourcing demand that already all of a sudden came out of some of that stress and some scrutiny around that space.

So again, not trying to paint to rosy of a picture here, but just curious how the discussions have changed given what's going on? Do you think this could actually be maybe an accelerant to saying, "Hey we need to open the kimono a little bit, and this will be maybe one of the ways to do it." So yes, just curious about what you're hearing live?

So just to answer that real quick, this is Phil, the 3 of our largest clients are looking at launching flagship products this year. So we're not seeing any slowdown in demand, especially on the institutional side. And I do think as if the market was ever to get a little bit more interesting or challenged, we're playing in the very, very large end of the market, and these clients are really, really good at what they do. So -- and I know in the script, Sean said that we're a little lighter on the retail side of the market, but we expect that to pick up when we launch our registered transfer agency solution over the course of the next couple of months.

I think it's also really important to distinguish, when we talk about this business, 70% of IMS is driven by exposure to alternatives and 25% of that 70% is private credit.

Ladies and gentlemen please standby. All right we'll move on to the next person. Our next question person -- our next question comes the line of Jeff Schmitt with William Blair.

So in private banks, I know the margin can jump around, but it was up to 21% in the quarter. Professional Services growth is obviously helping. But how much of that was driven by the reduction in the workforce? Or were there any other onetime items that were in there?

So Jeff, can you hear me? It's Ryan.

Yes, I can.

Okay. So I'll open up here for Sanjay. The reduction in workforce had little to no impact really specifically in banking. That was across the enterprise. That really was part of a Q4 initiative as we talked about. I mean, Sanjay can talk about, I mean, the execution against the 5 specific things that we discussed in New York in September, and we've been talking about the last couple of years, he literally continues to execute against that quarter-over-quarter. But Sanjay, do you want to highlight some of the specific things that drove kind of the increased margin this quarter?

Yes, absolutely. That's a clearly good question. If you look at the 5 pillar strategy we talked about on September 18, 2025, 2 of those 4 pillars were Professional Services, was one of them. And then second was how we're going to market with the new logos. Professional Services events, we have significant events in third quarter and fourth quarter, and as you could see that our revenue realization is much faster for those kind of deals. And in Q1, that's a good reflection that, yes, we sold new Professional Services in third quarter, fourth quarter, and we realized that. And that is one dimension of it.

Second is we are very judicious how we're going to market and the new contracts we are signing, they are coming with a higher margin. So it's a combination of those. Thus, of course, our GCC initiative is playing big role here. We are leveraging GCC. We talked about be judicious about our Software-as-a-Service expenses. So when you combine all those things together, you would see that -- and you will see in the coming quarters as well. We are continuously making progress on all those 5 pillars.

Okay. Great. And then it sounds like transaction multiples for RIAs have been on the rise. Is that the case? Are you seeing that in the market? And do you think that would be -- do you see that as being a hindrance for your roll-up strategy for Stratos? Or are there still good opportunities out there?

Michael, did you hear the question?

I didn't.

Jeff said, it seems like EBITDA multiples are rising for RIAs or IBD roll-ups. Do we think that's impairing our strategy with Stratos and their M&A strategy?

No, not at all. We do see that the multiples on the high end definitely have been increasing. And if you look at the scaled firms, there was a report recently came out that the typical multiple would be between 22 and 24. And remember, we acquired Stratos that are much less multiple than that. And so you do see it at the very high end in the scale players. But when you go into the marketplace where you're looking at the $100 million RIAs up to about $1 billion RIAs, you still have a very reasonable multiple arbitrage opportunity between what you buy them at versus what they would then reprice at when they become part of the scale player. So we're not seeing any slowdown at all right now.

Our next question comes from the line of Crispin Love with Piper Sandler.

I had some feedback issues earlier in the call. Just one follow-up on the IMS sales wins, you mentioned 2 of the largest and most complex alts being part of those wins. Can you discuss any concentration on the wins in the quarter? I mean how much of the $51 million came from those 2 or just any other concentrations worth calling out from the sales?

I can take it. Crispin, this is Phil. Those 2 deals were less than 50% of the concentration for the quarter. So not even -- and we expect a lot more later.

Perfect. And then just on margins, 32% core margins in the quarter, commentary seems to be very positive. Can you just discuss the outlook for margins still expecting -- are you still expecting high 20s range? Or could there be a new run rate here, maybe high 20s to low 30s. And then just if there's anything onetime that impacted the core margin in the first quarter that's out of the ordinary?

Crispin, it's Sean. Thanks for the question. So the main driver for overall margin improvement really just the fact that revenue growth is up 2%. We're doing a much better job of managing our expense. We had nice sequential improvements in PB and institutional but primarily, it was driven from revenue growth. And so as we have large or improvement in revenue and sales and revenue growth, we expect margins to improve. So our fixed costs are pretty well fixed. There are some variable costs. But for the most part, you're seeing the appreciation of margin due to revenue.

Our next question comes from the line of Ryan Kenny with Morgan Stanley.

Can you hear me? .

Yes.

All right. Great. So on the AI theme, you touched on it in the opening remarks a little bit, but can you just dig in a little bit deeper because I think there is a perception in the market that some of the businesses that you operate in, like fund administration maybe could be at risk of disruption or maybe you could see fee rates come down over time if you're expected to pass on efficiencies that you gain. So could you just dive a little deeper on how you view yourself as more protected from AI disintermediation?

Yes. I mean, we'll answer that in a few ways. Ryan, I hope you're doing well, and then I think Sneha's in the room if she wants to provide some color. I mean, the second half of your question, I think we really need to also continue to focus on continued productivity and efficiency through leveraging technology and process engineering has always been part of our strategy and has always been part of how we pass on and maintain margin expansion or pricing levels relative to the competitive market. So AI will definitely be a bit of an accelerant to that.

But if you think about how we're looking at it right now, and I mentioned this a little bit earlier in the call, we really see this right now as a significant positive for SEI. And we're not naive. We know that there's disruptive possibilities out there. But when we look at our ability to provide a full suite of capabilities and platforms to our clients. Our clients are looking to SEI to figure out how to harness these capabilities to expand our services, potentially drive more scale and productivity, so we definitely see it as a positive. And when you look at the suite of capabilities that we provide, certainly, there will be organizations firms that try to go displace that brick by brick, if you will. And it's our job to maintain that positioning for that whole wall of our services.

But right now, and just Sneha you can weigh in, we're really excited about what we see. And we definitely are excited, Ryan, around the engagement we have with clients looking to SEI to partner with them around how to harness and drive more growth here.

Yes. I'll just add, Ryan, thank you for that. But I think that there's 2 elements of this. The one is the ability for us to do more with like the amount of resources that we have, which we're actively driving. We've got AI-enabled employee base, and they're using it actively in their database jobs. We're also seeing the way to deliver growth more efficiently. So [ Astil ] is winning, he is doing it without adding more cost, which I think is really helpful, which is why you're seeing a little bit of a margin expansion.

And then we're seeing this adaptability of not just us but our client base as they become more efficient and we become more efficient, discovering new areas of growth. And so we're seeing, for example, in the banking client base a lot of interest in us helping them become more AI native. And so doing work with data cloud and professional services and helping secure their data through our security services. And on the IMS side, we're seeing a lot of interest to say what additional services can we provide those same clients as their growing that we wouldn't have done naturally because now AI is making that possible. So we see it really as a net driver of growth and both for our people and for our businesses and our clients.

And we get the question a lot on fee rate impact from AI. But as you mix shift into areas like alts, could your reported aggregate fee rate actually go up or stable? How should we think about fee rate in the various businesses?

Right now, we've seen a tremendous amount of stability in our fee rates, been able to continue to win new business at premium prices and deliver a premium service. So I don't know, anybody else wants to add anything to that? We just -- we haven't seen yet, Ryan. I mean we're certainly aware there's a tremendous amount of change happening in the market. We actually are excited about that. I mean if you think about our cultural posture, and the position that we have around leaning more into accelerating good ideas for good outcomes. That's just the way we think right now.

I'm full of quotes that Sean likes to listen to, but a ship is safe in the harbor. That's not what ships were built for. So we are being aggressive with experimentation. We're being aggressive with innovation, and that's just the kind of mindset we want to bring here. But right now, specific to your fee rate question, we're actually really excited about our current position, and we don't plan to kind of lessen our focus and let that position get diminished or deteriorated?

Phil, do you want...

From an IMS perspective, we're not seeing a lot of fee pressure at all. But what we do expect from AI is faster NAVs, higher quality, adjacent markets that we're getting into. So our clients are expecting that from us. And they're -- again, we're in the higher end of the market and they just want things better, faster and perfect.

Our next question comes from the line of Alex Bond with KBW.

Another follow-up on the wins in the IMS segment this quarter and just the impact on the margin. In the past, you've spoken to the fact that through the onboarding processes for large wins like this, the IMS margin may dip slightly before reaching the full run rate once the implementations are completed. Can you just help us size up the timing and magnitude of these processes or processes on the IMS margin over the next few quarters?

Sure. I'd love to. We're going to convert these clients in a few different tranches over the next year or so. We expect the revenue, it's going to increase more and more quarter-over-quarter over the next 15 months. From an event perspective, we're going to continue to land and expand as we always do. This year, revenue and expense will be flattish for those 2 deals, but we're going to get back to normal margins for those 2 deals in mid-2027, and we're going to start to see pretty significant revenue in that time frame as well.

Got it. Great. That's very helpful. And then maybe just moving to the Professional Services suite. I think you all also made reference there previously to expanding that offering within other areas of the business like IMS and certainly appreciate the new breakout there this quarter. But can you maybe help us think about the opportunity set within IMS or other areas of business for the Professional Services offering maybe relative to -- within private banks where you've seen the majority of sales for Professional Services to date.

And then also maybe just how sizable the international opportunities for Professional Services given the strength that you all noted there this quarter as well?

Yes, you're welcome. That's a great question. So I think if you think about kind of the breadth of the capabilities in Professional Services, some of the things that have the most momentum in demand right now across all the client bases. And some of this is early in some of the segments. But the AI-enabled data cloud platform is probably one of the most attractive capabilities we have, where we help our clients really harmonize ingest and create business intelligence off of their data sets off of our data cloud platform and Sanjay and his team really pioneered that really in the banking segment, but it absolutely has applicability in Phil's segment and as well as Michael Lane's when you're looking at larger RIAs and also kind of the more enterprise scale organizations.

I would say integration services continues to have significant demand. Sean called that out around kind of truncating if you will, some of the lag time between signing and implementation because we're taking on more responsibility for other integration services and workflows, if you will, as part of the implementation. And I would say, coming back to, Alex question that Ryan had just asked a couple minutes ago, we're also starting to see demand for firms that want to think about how do they become more AI-enabled. How do they become an AI-native organization. So there are a variety of ways that we are able to add value from professional services. And we also had a tremendous quarter with our cybersecurity capabilities with SEI Sphere in there as well.

So that's just some color. I mean, Sanjay you're a little bit closer to it, especially on the banking side, but also it's the -- Alex's question around international.

Yes. So first of all, a great question. I really appreciate asking this question. On Professional Services side, Ryan and Sean, they also called out, but we are engaging with our prospects very early now. And we are changing our playbook a bit rather than just leading with our platform change initiatives. Now we are leading with enterprise capabilities, and that is creating a different growth opportunities for us.

I would think about how many banks or institutions are looking for platform change every year, not many, but almost every financial institutions is looking for some professional services so that they can keep pace with the change. And that presents significant opportunity for SEI. And we are seeing that opportunity not just in here in the U.S. market but in the international market as well. That's like 1/3 of our Professional Services wins, they came in the U.K. market for last quarter. And we are seeing that momentum building up. And that's where I'm partnering with Michael Lane and Phil in terms of how we can continue to expand that at the enterprise level.

Our next question comes from the line of Patrick O'Shaughnessy with Raymond James.

Another AI question for you. How are you guys thinking about AI potentially disrupting the wealth management advice industry broadly in terms of disintermediating your clients, whether it's AI native software or something else?

Michael, do you want to take that one?

Sure. Good to talk to you, Patrick. So that -- it's interesting. This has been a topic of conversation that dates back 25 years from when the first robo-adviser came to play where they thought that coming out with a robotic advice to offer up the advice for 25 basis points or something in that ballpark that would disrupt the financial adviser business. And what they found over time was that the robo advice marketplace didn't work. It wasn't a good B2C. It needed to actually be a B2B fill or a B2C2B or whatever, but it was it didn't actually do what people expected it to do, which was to take over the financial adviser business.

AI will supplement and make advisers more efficient. It will enable advisers to have I think, a greater ability to serve more clients in a more efficient way. And when you look at the statistics about what's happening in the wealth marketplace where there's going to be a shortage of financial advisers, we're going to need AI in order to be more efficient in the wealth space to serve more people. The demand for advice is increasing, the number of advisers is decreasing. And so we have to actually use AI in the wealth marketplace to serve more.

So I don't see it disintermediating. I've been involved in that question for a long, long time. I think that at the end of the day, when people start to achieve a reasonable amount of wealth, they want to talk to a human being. It will supplement the advice that's given though.

All right. Very helpful. And then institutional investors, it sounds like you guys are incrementally more optimistic there. Can you just give a little bit more color on kind of what sort of sales are in your pipeline there? And also kind of how to think about the fee rate impact as you get those new wins on board?

Institutional investors. Just your view on kind of the pipeline there, fee rates moving forward?

Yes. The thing that I love about the institutional business that we saw the first quarter, although you saw a negative revenue from the institutional business. It was driven by the fact that we helped -- as Sean said, we helped a significant client achieve a funding status that enabled them to derisk the portfolio and take it off to the books. I mean that's what we do in the institutional business on the defined benefits play is we -- if we're successful, we help firms actually achieve their goals that they can derisk. So largely, the first quarter, the event was a result of a single plan that derisked.

When you look forward, where we're spending a considerable amount of time and energy is continuing to deepen our penetration in areas where there are demographical shifts that will grow the area of OCIO, for instance, endowment and foundation. With a great wealth transfer, not a portion of those assets that will transfer now the estimates are over $100 trillion. When that $100 trillion continues to transition from generation to generation, a portion of that is going to go to not-for-profits, it's going to go to foundation. That's going to grow that part of the business that's going to result in the need for more outsourcing of investment management. And so we are leading more and more into that space.

And so we feel strongly that over the next few quarters, that the business -- our institutional business has growth opportunities. We will start to see a rising pipeline in areas like endowment and foundation, health care, and where we have an occasional defined benefit that derisks like we should be celebrating those wins as helping clients achieve their goals. They're going to happen once in a while in the DB space. But we feel good about where the market is going, the demographics are going and where we're positioned as one of the largest OCIO providers.

Our next question comes from Alex Kramm. We have a follow-up question from him. He's with UBS.

Just a very quick follow-up. I don't think this has come up, but can you just give a quick view on your integrated cash programs? I mean there's been a little bit more noise around brokers, investment managers and some of their cash programs and new offerings, some large banks have talked about this like optimizing cash program. So just wondering if you could outline? I know it's a relatively new program for you over the last few years, but how sticky do you think there is? And if there's any risk from those assets going out or that cash going out of the door at some point?

Absolutely. We have been reading the same headlines that you have about a certain large bank who came out and talked about how they were going to be looking to optimize cash across different programs. And so we are very aware of the cash management programs and the pressures on cash management programs, both from what's happened over the last couple of years -- last year in the reduction of interest rates and the reduction of yields to the firms that have these cash management programs.

As you said, we -- ours is relatively young. It's only about 2.5 years old. Ours was structured differently than many of the competitors that are being discussed in the media. Ours was structured as a 1% operational [indiscernible] cash, which was meant to cover operational expenses. It wasn't a percentage of a portfolio. It wasn't a percentage of a model. It wasn't something that was more of a fiduciary percentage of somebody's portfolio. That's a huge differentiator.

And from our perspective, what's very different as well is when you look at a lot of the different players in the custody business, their cash positions tend to be significantly higher. The average balance is being up to 4%, whereas if you look at our cash balances with a minimum of 1%, the aggregate in totality is still less than 2% that we tend to see across the entirety of our book. And when you also then look at because of being a diversified business, the total cash revenue from our suite programs is 3% of the gross revenue of SEI. Even in the Advisor business, it's still only 12% of the total revenues.

And so from our perspective, yes, there is pressure that will come on those. It's not new. There are several companies out there that already have cash optimization programs. where they will take anything above the minimum required to be held and they'll sweep that into higher-yielding investments. So that's existed for years. I think we got a lot of news out of that because there was a large bank that came out and said they were going to use that. I think because AI was put in front of it, also signals something. But at the end of the day, it's been algorithmic for quite a while, and we haven't seen any impact on that.

Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Ryan for closing remarks.

Thank you again for the discussion today. We appreciate and we are encouraged by the execution and progress we've seen early in the year. Have a great evening.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.

Next, we have SEI investments. And on their behalf, we have CEO, Ryan Hicke. Ryan is going to run through a few slides. And if we have time left at end, I'll ask a few questions. So with that, Ryan, thanks for joining us.

Thanks, Patrick. Thanks for the invite down. I appreciate you having us. Welcome, everybody. As Patrick said, I have about 10 slides, which we'll go through probably in about 15 to 18 minutes and provide some time for questions or some time for some extra sunshine. That's Brad's slide.

So for anybody in the room that is not familiar with SEI, the way that we think about the organization is we believe that we have world-class pillars and world-class platforms in 3 primary areas of wealth management. Asset management, administration and recently with the acquisition of Stratos last year, we expanded that footprint into advice. And we incorporate those platforms and services, and we go to a variety of markets. So those markets tend to be large investment managers, banks, intermediaries, including RIAs, both globally and inside the U.S. And we package those platforms in a variety of different forms to help those organizations truly drive their strategic growth.

So if you think about SEI and you're not familiar with the company, we have an investment managers services unit where we are taking our administration platforms, which is operational capabilities, combined with technology to deliver fund administration to alternative and traditional investment managers.

In the banking business, we take our technology capabilities around investment processing, combine those with back-office capabilities in our trust company, take that out to large global banks, but also predominantly focused on regional and community banks inside the U.S. and private client investment managers in the U.K. and other areas. And then on the asset management side, historically, we have taken that out to 2 markets directly to the institutional space, defined benefit schemes, foundations, endowments with our OCIO capabilities and then also leveraging that asset management expertise with investment processing to the intermediary adviser broker-dealer community inside the U.S.

So that's really kind of the footprint and how we go to market as a grounding. I took over responsibility as CEO April of 2022. I'm coming up to 4 years. But my entire career has been at SEI. I started with SEI in 1998. This slide, though, is really exciting evidence of how the changes in strategy and changes in positioning over the last few years are starting to bear themselves out in results. So if you can see on the left-hand side of the slide, the company has always done well.

We've always had a really robust balance sheet, tremendous cash flow been really significant in the markets in which we operate and have always had a tremendous appetite to continue to reinvest in our businesses for future growth. I think over the last 3 or 4 years, that deployment of capital, the addition of talent and a little bit of some changes to our operating model have really translated into differentiated results that you can see in the middle -- and then where do we expect that momentum to continue.

We did an Investor Day in September. That presentation is available on our website. It goes into significant detail, both corporately and unit by unit of how do we expect to continue to accelerate these results, deliver these results, not just at the enterprise level, but also at the unit level. But when we think about where we are today and what I'm going to focus on maybe for the next 10 minutes is really we're grounded right now strategically in 5 key areas that we believe are going to be our major accelerants to continued growth.

And I'm going to spend probably 1 minute or 90 seconds on each one and just try to unpack what are we doing and what does it mean? And how is that differentiated? So when we talk about reimagining asset management, think about that, though, in the context of how I described the company a few minutes ago of how we have gone to market historically in our adviser business, domestically and our institutional business has really been oriented on what we would define as turnkey asset management and we have evolved and graduated from that over the last, I'd say, 7 to 8 years to really open up more of the architecture for advisers to move upmarket in terms of larger advisers.

Today, we have about 8,000 advisers across the U.S. who are SEI clients, both broker-dealer affiliated and pure RIA about, I'd say 80% of those are consuming SEI asset management as well as our custody and administration capabilities. The remaining are just taking the custody platform but there is a significant market opportunity for us to expand that foundation and expand that core.

So we've increased investments in our go-to-market strategy, more salespeople. We brought in a new leader of that business 18 months ago. But we've also coupled that when you think about moving up market and moving into that larger RIA space, moving into more of the consolidators and aggregators, we've had to expand the investment management lineup.

So we have invested in more products, more capabilities beyond just mutual fund portfolios. We've introduced more ETFs into our lineup, more SMAs, more direct indexing and also brought in some third-party technology capabilities around unified managed household and direct indexing to really expand that aperture for us to not only be able to service larger clients, but to give firms more choice in that space.

And then when we talk about growing the wealth management capability, we felt strongly as an executive team a few years ago that we needed a strategic foothold in the [indiscernible] space, that there seems to be a clear enduring and durable value to the willingness for private clients to pay for really strong fee-based objective advice. That was the thesis behind us taking the investment in Stratos and the idea behind Stratos was really twofold. How does SEI expand its footprint into that advice space so that we can start participating differently in that revenue stream moving forward but also how do we now have real-time interaction with advisers and end clients to really help inform how we're developing our solutions and capabilities to drive more growth in all of our intermediary businesses.

The second talks about boosting international returns. And the slide is probably a little bit more dramatic in terms of when you see the delta between our domestic margins and our non-U.S. margins. Just for some context, about 85% of SEI's revenue comes out of the U.S., 15% is non-U.S. But you can see a significant difference, obviously in the margin profile.

We made a decision about 6 months ago to send one of our existing executives, Sanjay Sharma, who runs hiking business. He will continue to run that banking business. He's going to run our international business. And the idea there and the strategy there is to create a more unified strategy and growth profile for our non-U.S. businesses.

Today, we operate in Dublin. We operate in Luxembourg, we operate in Asia, Canada, we have a big footprint in the U.K. But there isn't a very unified cohesive strategy in terms of how do we go to market, how do we actually leverage our workforce, how are we thinking about margin appreciation? And how are we deploying capital in the areas that we believe will have the greatest return on investment. So do I expect the right-hand side of this slide for the black to get to the green? No, I don't. Do I expect a gradual continued improvement in those international margins? I absolutely do. And it's an area that actually will be very accretive to SEI's overall margin profile and our ability to expand our own earnings corporately.

This slide is probably the area where we spend the most time as a leadership team right now and probably the biggest difference from how we ran the company a few years ago. for right or wrong, I think that SEI historically would try to invest in each of its businesses to give each of them an equal opportunity to succeed. And I never really thought that made a tremendous amount of sense.

I think we needed to drive more data-driven decisions in terms of which markets had the biggest opportunity, what was the competitive landscape, where was the longevity of our ability to continue to win, so we made some strategic bets and pivots a few years ago in terms of allocation of R&D dollars, new talent, new investments and started to make more of a bet on specific segments and solutions that we really believe that we could win and repeatedly win. And you're seeing this bear itself out in results.

So if you start on the top left, we didn't have a professional services business 2.5 years ago. But when Sanjay took over banking, he had a clear mandate that he had to get those margins expanded from low single digits back into the historical range of kind of 25%, 30% margins over time. And we had a threefold strategy that we talked openly with The Street about.

Remember, Patrick around that and said, first things first, you have to stop losing clients. We needed a real significant strong focus on client retention. The second thing is we had to be really disciplined on what segments did we believe that we could sell our operational and technology capabilities in that would actually value those capabilities that we could accelerate growth and what additional services could we bring to bear.

So Sanjay has done a great job on the first 2, but it's really hit the ball out of the park with the third with the introduction of more professional services and to give some of that some kind of clarity we have an SEI data cloud offering. We take that data cloud offering out to a lot of our banking clients that allow them to ingest and harmonize more of the data that they have across multiple platforms, make business decisions, drive business intelligence off of that. That's a repeatable service that we think that we can not only sell to existing clients but prospective clients.

We've gotten more discipline around charging for the work we do around implementation and integration in cyber. So that professional services, you hear us talk about that on the calls. But it's something we're going to start to delineate a little bit more clearly around what is truly onetime revenue around implementation? And what do we think and can we prove that it's repeatable?

He also pivoted us really to the regional and community bank space. And it isn't as though that we departed our focus on the largest banks. But inside the U.S., there is a tremendous opportunity for regional and community banks who want to compete in wealth. And they don't want to build those capabilities themselves. They don't tend to have the capital to be able to compete on an ongoing basis with those types of investments in infrastructure and SEI is so well positioned to be able to deliver technology, investment processing and in some cases, asset management to the regional and community bank space. And that's an area that has really borne itself out in a lot of our sales results in the last 24 months.

And also the key for us there is they're clients that we know that we can sell and install in a reasonable amount of time and make sure that they are extremely referenceable and satisfied. So it just gets more referenceability in sales, the more effective and successful we are in that segment.

I mentioned earlier the move up to kind of more of the enterprise RIAs. So that $5 billion, $50 billion, $500 billion RIA. We have a great conversation to have with those organizations. The breadth of capabilities that we can bring to bear for those firms to really start to institutionalize their operating model, really think about how they grow scale, especially the consolidators and aggregators that need to be thinking about that as they're on the acquisition trail. That's definitely been an area that Michael Lane has been focused and you'll continue to see SEI invest and continue to win there.

And then probably our largest area of success the last few years and continue to be global alternative investment managers. I say this pretty much in every meeting but the appetite for large alternative investment managers to in-source operations and technology is lower than when we started this presentation. It dissipates at a very, very rapid rate right now. They want to deploy their capital on product creation, alpha generation, distribution, sales.

They want to be partnering though with proven credible, scalable organizations that will make sure that the fund operations, that the technology and the delivery of their services every day go off without a hitch. And this is complex stuff, right? We're not dealing with just traditional assets here. We are dealing with very complex global brands that have clients across the world in very, very different types of sophisticated fund structures.

SEI is extremely well positioned here. We continue to win more business from existing clients and as insourcers continue to look to outsourcing, we feel really strongly that we will be able to continue to win more of our share of that new business in that space. Brad and I talk about this slide a lot because it looks like your classic, this slide tells me nothing. And in some cases, you could be right, Bruce. It's not true. I know you wouldn't.

But really, one of the biggest changes we made as an organization in the last few years is thinking about how do we integrate our workforce and operating systems across SEI. For right or wrong, SEI was running as a collection of verticals a few years ago. And it served us well. And we can tell ourselves that it gave us speed and focus and clarity. And I think in some cases, it did but it negated the opportunity for us to really drive leverage across the organization and our operating model.

It also was mitigating our ability to tell the story we want it to tell to the market. The market was only really assessing SEI for the vertical with which they interacted and was not appreciating kind of the breadth of the capabilities or the size of the types of clients we were operating with in other segments. So this whole continuum here is around how are we continuing to change the organization and leverage more enterprise-wide capabilities both externally and internally. So when we think about automation, we think about AI, we have a single technology unit that runs across SEI now.

We are doing things more at the company level and then adjusting where needed at the unit level, given their specific needs and it has actually been one of the biggest drivers to the earnings expansion that you've seen from SEI, especially over the last 8 to 12 quarters. And as Brad and I talked about with [ Sean Denim ] and others in New York, we expect that margin expansion to continue and some of that is going to be driven by continued leverage in operating model and some of it will be -- continue to be driven by the right type of top line revenue growth.

And then you have capital allocation. And SEI is in a very fortunate position oftentimes with this conversation. The company has an extremely strong balance sheet, we generate a tremendous amount of cash flow every year. We think about how do we return that cash flow to shareholders. Our first and primary use of that capital is always to reinvest in the business and think about how do we use those R&D dollars to drive more growth for our existing footprint and think about new capabilities and solutions. And that's a beautiful thing as CEO of this organization that, that's just embedded in our DNA.

Like we're always thinking first about where can we invest how do we actually make sure we're not accruing technical debt? How do we stay modern, how are we expanding the suite of services and capabilities? It's already liberating. And then that's our primary use of capital. And then the secondary and tertiary uses of capital historically were really just share buybacks and the dividend.

And I would say over the last few years, we have really thought about maybe a little bit of a tier in between that primary and secondary around how are we investing in venture opportunities? How are we using some of that capital for M&A, at least we did with Stratos. So R&D doesn't always have to be just SCI homegrown solutions, how are we integrating more world-class capabilities. So one example you talked about is we did an investment in December with the firm called [ Avantos ] of [ Avantos ], is an AI-native onboarding workflow platform. We will incorporate some of those capabilities into our front office suite for our banking and adviser clients and leverage some of that workflow capability in [indiscernible].

But instead of us, I feel like a few years ago, we would have tried to build a lot of that ourselves. We're now we're also looking around and saying, "Hey, if there's a great opportunity out there, and we can own part of that company, and we can get access to their talent and we are thinking differently around how do we -- Actually integrate more of our workforce through externships, it's a big differentiator for us. So you can see there that for us, it's -- it's more just about where are we spending we're always thinking about how are we maximizing that total shareholder return, but setting SEI up for longevity to make sure that we're well positioned not just in 2 weeks, but in 2 years and 5 years. And then it's odd. We had 12 back-to-back meetings today, and nobody has brought up AI. So I'm hoping somebody would bring it up here.

And I just think this world has changed and it be ignorant for us not to proactively talk about it. And I can give you like our take on this is a little bit varied. So luckily for SEI, we had started a lot of this stuff about 24 months ago. We made an investment in a firm called [ Tiffin]. Which is an AI only business. So we saw some of these things coming and we knew that we needed to be able to get more access and we needed to be able to integrate more of those capabilities.

I already mentioned the [ Avanos ], we added more capabilities internally at SEI, but we certainly are constantly challenging ourselves to think about where are these going to be accelerants to SEI and where can they be disruptive? I think where we sit right now, based on the fact that the majority of our capabilities are technology, combined with services and people and solutions. We feel like our ability to incorporate and harness AI is much more of an opportunity in accelerant than it would be a deterrent to SEI. That doesn't mean we have our head in the sand. It doesn't mean we're not watching what could happen in certain areas. And it doesn't mean every one of our businesses is insulated from this.

But Brad and I were having this conversation on the plane and also today is that if the anthropic release had happened 2 weeks ago and you didn't have a ticker in front of you, I would have thought that as great news for the SEI of the world because I would see SEI and a lot of our peers as the firms that are capable of figuring out how to integrate some of those solutions and build more of that talent in-house to drive more scale and productivity. And the one thing we're probably doing differently over the last couple of weeks,

we had 3 streams going inside SEI at the end of last year. We had one AI initiative going on around automation, around scale, productivity and how do we drive more throughput. We had another initiative going on around how are we incorporating more AI-enabled solutions into our platforms. I don't like the phrase plug-ins but more of these extensions to our capability set.

And then we had started down the path of setting up a little unit to really think disruptively around what new businesses could we launch with where could we leverage AI to disrupt SEI. I think in the last few weeks, the only thing that has fundamentally changed in our thinking is how do we create that in a more cohesive easy-to-understand story, not just for the external community but for ourselves and the Board to say, these investments we're making around AI, automation, where do we see risks, where do we see opportunity.

But for right now, we remain very excited about our ability to actually drive continued growth. And what I would say is color commentary, our clients are looking to SEI to figure out how to leverage this as opposed to their thinking right now about how do they leverage it to displace us. We may not occupy that position forever, but that's where we are right now. And it's been good for us that we've been proactive at the end of 2025 with a lot of our clients talking about what we were doing in a lot of these spaces, which I think gives them comfort that we're constantly innovating.

We're constantly thinking about how are we leveraging and harnessing whether it's tokenization, AI, automation and other capabilities that are out there to bring better services or easier to use platforms available for our client base. So I kept that to 21 minutes exactly, but more than happy to answer questions. I mean that is a 30,000-foot flyby of SEI because we are a pretty diversified business. So it's not the easiest firm just to get down to a level of granularity in 21 minutes. I did the best I could.

It's a great overview. I appreciate it and surprised that AI came up. Maybe just to dig in there. You kind of talked about how you guys are combined technology and service and software provider? How do you see like that bundled solution that you're providing as maybe being differentiated unless at risk versus some other solutions that might be out there?

Yes. So I think, Patrick, when you look at -- let's take 2 of our businesses, let's take IMS as an example. So when we're doing all the fund accounting, we're doing the NAV, the waterfall calculations, everything for some of these large organizations. The precision required for that is extreme, right? The cost of failure is significant. So it's got to be right.

That doesn't mean that AI can't be an enabler to some of that. But there is -- you and I aren't going to be able to be code a platform that's going to displace that process overnight. So I think the combination of what we're doing with the people and the technology there is really hard just to replicate with technology alone. I think the flip side to that, and we're not seeing this, but if somebody believes that they could write their own code through AI for a principal and income accounting platform. And that would displace Trust 3000 and SWP.

They would still then need the back office, they would still need the trust company they would still need all the regulated infrastructure that we have. So I'm certainly not ignorant or suggesting that the speed at which this moving will accelerate. But also, I think sometimes people lose sight of the mine to the buyer. And what I mean by that is the size and scale of the organizations that we work with are extremely careful and protective of their brand and reputation.

So they are also not going to be just jumping in feet to things that aren't proven, aren't credible aren't scalable, which is why I was saying to you that the last couple of weeks, we've had more -- and I would say, very friendly positive inbounds from the heads of a lot of our clients in banking and IMS just saying, if you guys are available, can you guys come up and talk to us about what you're doing with AI, they want to be able to answer to their boards about what they're doing, which puts us in a really good spot as partners as long Patrick, as we stay aggressive and continue to execute and show progress, which I'm confident we will.

And you said you don't like the term plug-ins, but extensions.

It's kind of a is a great one.

Is there an opportunity for you to monetize those extensions?

Absolutely. I absolutely think we can because I think there's 2 areas we can do that. One is, I think, as we think about expanding our footprint inside of some of these organizations, the ease at which we can deliver -- like our platform sometimes in certain areas aren't the easiest to use. And I think the simplicity is going to win at the end of the day.

So some of those extensions are making that interface between the adviser and the end investor and the portfolio manager a lot easier. So some of that will get monetized through true new growth. And in some of these cases, they are absolutely willing, Patrick, to pay for a new product or a new platform that could actually stand alone if we're willing to incorporate that into our solution. So we can certainly see that as an upsell possibility.

Got it. Another current event, I think, is the private credit markets, and there's growing concern, hey, always starting to see cracks in part of that market. Yes. yet your investment managers business has continued to do really well. It sounds like your pipeline is in great shape. So what are you seeing right now in investment managers?

So I think the pipeline and investment managers is extremely strong. And I think that was back to what I was starting to unpack a little bit 10 minutes ago around the direction of travel and the speed of travel for firms that want to outsource Patrick is extremely high right now.

Specific to a product space, we have -- we are one of the largest private credit administrators across the globe, if not the largest, as you know, but the one thing I think that -- maybe there's 2 nuances that people need to understand about SEI. One is our revenue and business model is on committed capital, not mark-to-market.

So it doesn't insulate us from everything, but it's very different than, I think, some other organizations. I think the other thing is we are still predominantly and almost exclusively on the institutional side of private credit, -- we didn't have the TA capabilities and some of the other capabilities for some of the retail BDCs and private credit funds. We will have more of those capabilities in Q2.

So I'm not saying that completely insulates us from that I actually think if there was a significant unraveling private credit and some global catastrophic implosion that would manifest itself less in our day-to-day run rate in IMS. It would manifest itself way more in our new business sales in our pipeline and our ability to continue to drive kind of the sales growth that you've been seeing there. But we talked about this in a couple of meetings today.

We did about $150 million of sales last year. IMS was a significant portion of that. Private credit wasn't the majority of that in CITs are doing really well. infrastructure, real estate. So we're still pretty diversified across the suite.

Got it. And then maybe just talk a little bit about why you're winning in the IMS space? Like -- it seems like it's relatively crowded. We'll have SS&C here tomorrow. There's a lot of big brand names that compete but you seem to be winning more than your fair share of the market share.

Yes. I mean I think SS&C do a really nice job. I think [indiscernible] does a really nice job -- but in that alternative space, as I mentioned, the complexity. There's just -- and including those firms in this, the firms that are able to handle that level of complexity and scale is not a large number of firms. I think our continued investment, Patrick, as you know, in people, process and technology, and [ it sounds ] trite and I'm sure everybody sits up here and says it, but we do it. And we are constantly investing in that business and in people and in the service side. And the third thing I would tell you is right now, and there's hopefully some wood around, our clients are extremely referenceable.

And at the end of the day, these are large global brands, but they all know each other. They know each other pretty well. So the firms that are thinking about outsourcing are calling their peers that are SEI clients that have outsourced and they're hearing really good things and we need to protect that we need to continue. So I could say white glove service, but it is a big part of it. And I think we're in front of those clients having different conversations a lot of times, Patrick.

I mentioned this earlier, but the value proposition for IMS has really moved from ops for the fund to ops for the firm. we are getting asked to do much different things around data, technology and operational deliveries beyond just can you do our capital calls and make sure the NAVs are correct. And we're just well equipped for that. But I mean, it's something we are extremely aware of and sensitive to and not a position that we will yield.

Got it. Makes a lot of sense. Maybe time for one more question. So you mentioned on the slide at the end, you guys are starting to broaden the aperture in terms of uses of your capital, and Stratos was a relatively major use in recent quarters. What have you learned from that deal so far that validates your thesis in buying that company or investing in that company?

So I think a couple of things we've learned from that. So I mean, it was about our market cap or not -- we bet the bank, right? I think the diligence that we went through, Patrick, to make sure that what we were looking for in a partner lined up with what that partner was looking for as well. I think we did a really nice job of that because we have learned, I think, even in the first 90 days that the ability to let that team go continue to do what they're doing well but their openness to where SEI could help them really think about scaling the investment management side and scaling the investment processing side.

And I think there was a natural nervousness. I did a dinner early on with the top Stratos advisers. And I think there was a natural nervousness that we were going to come in and say, now here are all the things you have to do, and we were talking earlier, I think they're big [ LPL ] clients strategy. Great. Cool. We're totally fine with that.

And we've got a good relationship with [ LPL ]. So I think our ability to actually be deliberate and thoughtful but patient and say, what can we do incrementally and consistently to help [ Jeff ] and that team build a much, much more scalable consolidator. The receptivity of that is really high. And I think now that we're over the early anxiousness that we were going to come in and just tell them this is what we going to do -- and also, I think we had some anxiousness that they were going to say, no, we're just going to run this business.

Right now, it's on really strong footing. But they're very good, Patrick, at identifying, acquiring and integrating the right type of adviser into their ecosystem and they're disciplined about the operating model that they want those advisers to adopt if the adviser wants to go do his or her own thing, Jeff and the team are pretty convicted to say then you're probably not the right fit for us.

And as we bring more SEI capabilities into their centralized investment solution and as well as offer SWP as more of a platform, I think that will actually continue to actually show more in the bottom line in the financials.

All right. Perfect. Well, we will wrap it up there, but we'll have a breakout session downstairs. Thanks, everybody.

All right. Welcome back. Hello, everyone. I'm Alex Kramm, senior research analyst at UBS covering the exchanges and business services companies. Excited to have a new addition here this year on stage, Sean Denham, EVP and CFO and Operating Officer of SEIC. Thanks for joining us this year.

Thanks for having me.

Look, why don't we just jump in. Since I just mentioned it's the first time for you guys to present at this conference, for everybody's benefit, why don't you actually just start by giving us a quick overview about the company?

Yes. At the highest level, we like to refer to ourselves as the connective tissue, like that, of the financial services industry. So really, what we do, we provide world-class administration platforms, world-class asset management platforms. And with the acquisition of Stratos, a large RIA greatly expanded our footprint in advice. We think about the 3 drivers of revenue in financial services: administration, asset management, and advice. So the acquisition of Stratos really rounds out all 3 of those a's for us.

Okay. Well, I'm sure we're going to jump in all of those items. So look, why don't we start with the IMS business. I think a lot of people, and I've only covered the company for less than a week now, but a lot of people view the IMS business as a crown jewel within the company, very steady double-digit growth over the last few years. So can you talk a little bit about the medium-term outlook here and really what's driving the underlying strength in that business?

Yes. I will say, Alex, your first report on us was spot on. The executive team, the Board thought really, you really hit us really well. So I really appreciate that. So IMS, I'm glad Phil McCabe, who leads our IMS business isn't here. His head gets swan when we call it the crown jewel of SEI, but it really has been over the last number of years.

So we are really well positioned as a global fund administrator for the largest managers really in the world. Our client base really are the crown jewels, whether it's traditional or alternatives. We are a top 5 global fund admin. We're really well positioned. We have the best competitive position in our opinion, in the best part of the market, and that's really around alts.

If you go back 5 or 6 years ago, I won't have the numbers exactly right, about 70% of our business was more on the traditional side, 30% on alts. That's really done an inverse in the last year or so, where about 70% is in the alts space, 30% traditional. But we are seeing the convergence of private and public markets. So classic alternative managers have really started to move into traditional space and vice versa traditionals are looking into the alts space.

We think we've got a really good position with those managers. I think classically, we've been thought about operations for the fund, and we've really -- I think, position ourselves differently as a platform for the firm. We're seeing managers trying to do more with less.

No one is really looking to add vendors. They're looking to consolidate vendors. When there's a new fund launch, especially with the largest of the large, we are that first phone call. So again, really well positioned. And so really excited where we are.

We have an incredibly strong pipeline, as strong a pipeline as we've ever had in our 58-year history. Over the last couple of quarters, we've more than indicated some different moves in the market. You see a lot of now classic insourcers of fund administration or doing their own fund administration moving to an outsourced model. We're really excited. We haven't announced anything, no press releases, but we're excited in Q1 to really unpack some of those new potential wins that we have on the horizon.

Being well positioned has really not just positioned IMS, but the company for really the success we've driven over the last couple of years.

I just want to come back to the last point because, yes, on the last earnings call, you did talk about some of these outsourcing deals really in the near term. And I know you haven't announced anything, although this is a [ regular SDE ] event, so you can say whatever you want. But can you go a little bit deeper, like why the confidence all of a sudden, are these deals that you actually already have signed and you're just trying to define the exact scope with those funds? Or what gives you that confidence that you're really going to have something to say here soon?

Well, we've been talking to these managers. These deals don't happen overnight. A decision to move from an insourcer to an outsourcer, these managers don't take lightly. There's a heavy lift in doing those transitions. So we're -- I'm not here to announce anything today. We would love to, but probably not. I know we're under [ SDE ], but not the right form. I think at the next earnings release, we'll be in a better position. Phil will be on the call to really talk about what those -- what the impact to our financials would look like. This is not necessarily completely revolutionizing our business, but they're meaningful. These are going to be impactful for the business, impactful wins. We're really excited to be partnering with these new managers.

Yes. In line with that, you also talked about maybe some margin pressure in that business coming as you, I guess, get ready for those implementations. So can you size up that impact a little bit more? And then also, if these are basically investments ahead of implementation, how quickly do you kind of recoup that, make sure that you have a good return on those investments? Like how do you think about it?

Yes. Over the last few quarters, I have talked about near-term margin pressure, not -- it has not always come to fruition. In my role, I never want to get ahead of us. So I'd rather be conservative in nature than trying to get too far out over my skis or over our skis. So Q1, typically for us, there typically is some margin compression in Q1.

Usually, we have raises. We had some -- we did have a riff in Q4. We had some severance. So some of that severance cost or reduction in headcount should offset some of the raises that we typically give on January 1. So we will continue to hire when -- and not just in IMS, but really across the businesses, including Private Banking.

As we see new work coming online, we are a relatively large labor-intensive business. These new large mandates do require more manpower, although there are some interesting things that we're doing around automation. Maybe we can touch on that a little later. But some of the potential margin pressure, we do have certain investments that we're continuing to make.

We've made investments over the last couple of years, specifically in IMS in order to continue to -- as we scale our revenue, we needed to scale some of our platforms to support that work. We do need to -- and we have -- we've been hiring up to get in front of some of the work that I just alluded to with some of these new fund managers coming on board and some new fund launches. So there is some upfront capital.

In addition, we do have some technology investments, other investments we are making -- when I mentioned the technology platform, the upgrade that we had in the IMS business, some amortization will come online in Q1. So noncash but still some P&L expense for Q1.

So we expect to see a little bit of margin pressure, but we're not talking about going from, I don't know where we ended Q4 in IMS around 39%, 40%, somewhere around 40%. We're not talking about dropping 200 basis points, but I do like to -- when the Street sees progressive quarter-over-quarter margin growth, just like to sometimes pump the brakes a little bit, so not to expect that continual march forward.

So like I said, we are doing things in our IMS business, making investments around things like, for instance, NAV visualization, really, really important for our business. Fund administrators, if you're not aware, they will do shadow accounting. And so we'll strike NAVs. We'll do a lot of the administration work. Even though you're an outsourcer, there is a certain amount of work that's still done internally to compare NAVs, et cetera. Some of the technology that we're investing in may allow these managers to no longer have to do some of that shadowing. So really all good stuff, really to set us up for future success.

Sounds good. Thanks for unpacking that. Switching gears a little bit to the Private Banks business. It's been a decent performer over the last couple of years, actually improved a decent amount, right? So good to see that. But recently, one thing that stood out a little bit is that pickup in the nonrecurring professional sales events, I guess, you would call it. So can you talk a little bit more what's going on here? And are these, I guess, professional fees actually becoming a little bit more of a recurring thing because it seems to -- they seem to be getting bigger and more recurring to -- for lack of a better word. So -- and where do you really see this business being in the next couple of years? Like what kind of evolution are we going through here?

Yes. So that's something we're incredibly excited about. So -- and just to back up a couple of years. So when Sanjay Sharma, who is our Chief Technology Officer, when Ryan Hicke became our CEO, literally the first thing Ryan did was move Sanjay from being our CTO to taking over private banking. And he's really done a truly amazing job.

Looking back, our margins depending on the quarter were flat or not flat, but 0. So even in certain quarters, I think we had some negative margins. At that time, we gave a little bit of a runway to how to get margins back to historical margins. Part of that was looking at our total addressable market, understanding our client base, understanding what -- if we were to implement our asset management platform, SWP, that's what was being acquired. Typically, we were just selling the SWP platform with some operations services that would support that.

What we did was is take a look at all the other services that our clients were buying that supported that. That may be looking at their total tech stack, what is the right course to sunset certain technologies as SWP comes on board, even ahead of the RFP process, doing an assessment of their tech stack, which obviously puts us in a really good position if we're bidding on some of that work.

Tremendous amount of change management when these implementations happen and there's a change from one platform to another platform, there's tremendous change management professional services that they were buying from other third parties. So we took a look at that and said, well, we should be creating these services that surround our platform in some of these implementations. It's been really successful.

And by the way, those margins are much higher than our classic. I think our margins right now in PB sit around 18%-ish. Historical margins were probably around 25%. Some of these professional services margins are more in that 40% range, so definitely accretive. I've now used the word professional services probably 25 times.

We've been using -- but what we've been using the moniker, and we've been thoughtful about it over the last couple of years is we use this term nonrecurring services. That's not exactly true. We've historically used that, but we've received some feedback even as recently as the last quarter from some of the analysts and our investors to start unpacking what are some of those nonrecurring.

Are they truly nonrecurring? When you think about a company like Accenture or even where I came from -- I used to work at Grant Thornton. I was a partner there, about 1/3 of Grant Thornton's business was advisory services. Every year, Grant Thornton had to resell 60% of that. And by the way, revenue grew every year. So Grant Thornton was -- or Accenture does replace that work with other work. It might not be the same exact SOW, but clients still buy from their vendors and SEI does as well.

So I think going forward, you'll see us doing -- having a better terminology than nonrecurring, but those truly are professional services. Some of the questions that we get are in those nonrecurring sales, sales events, what's in there? So as I mentioned, there's other advisory services. Yes, there are some implementation fees. But in this past quarter, we had about $23 million in sales events related strictly to professional services. Less than half, probably about maybe 25%, 30% of that was implementation fees. And the rest was truly, truly these other advisory services that we really weren't serving and selling 2 years ago.

And I think the opportunity there is that we haven't done a lot of that work in IMS. We see an opportunity in our IMS business to take a page out of Sanjay's book, what are some of those things that managers are buying. It might be services around data. We spent some money around technology to make sure we're supporting those needs. And there's various other services we've identified.

And if you look at our total sales events for the past 12 months or for calendar year '25, fiscal '25, we had $150 million in sales events in '25. $50 million were these nonrecurring or professional services. Going back 2 or 3 years, the number was 0. So while the revenue portion compared to $2.3 billion, $2.4 billion in revenue is relatively small, the ramp-up of what portion we're selling compared to our total sales events is actually increasing, and those are really nice margins.

Okay. That's -- I guess we'll keep on watching that develop even further. I want to -- staying on the Private Banks business, I do want to come back to the truly recurring business because the sales in that business have been a little bit weaker or were a little bit weaker last year. So can you talk about the pipeline here? How confident are you in that sales picking up again in 2026? And anything we should be aware of on the retention side because, quite frankly, there's also been some cancellations.

Yes. Well, so we -- so sales events in PB were actually incredibly strong last year. But when we net them out, we had one loss, we did. So -- and there was facts and circumstances related to that one loss. So in Q3, part of our policy, we were informed that one of our clients that was on the platform had given us notification that they were potentially not renewing. There was a couple of caveats in there. And that was about, I think, $15 million or so, which net-net would pull it down. That was really -- that was the only loss we've had in Private Banking over the last couple of years, at least of any significance. Really, it broke Sanjay's heart, who was really disappointed about that as we all were.

But the -- just to unpack that a little bit, these conversions take years. These aren't, a, we're giving -- we're putting you on notice part of our contract, we have to give you notice by a certain date. The notice was given. These could take -- some of these conversions can take 3 years, 4 years, 5 years. And when you look at the margins, you look at a $15 million negative sales events as we net. The P&L impact could be $1 million, $2 million in totality 5 years from now. So we want to -- we tried to put that in perspective.

From a pipeline standpoint, our pipeline in PB IMS has literally in our history, has never been more robust and stronger. Again, we had a great win in Q4. That was not just -- that was not just professional services. That was another large mandate that we had won, and we will implement that over the next couple of years. But the pipeline in PB is as strong as it's ever been.

As a reminder, about 3 years ago, when Sanjay -- 4 years ago when Sanjay took over, we were primarily focused on the largest institutions. And we -- about -- I think the number is around 12 now or so. 12 of the largest 20 U.S. institutions are on our platform. That was a big focus, where we've seen margin improvement, increase in sales events, increase in revenue and profitability has really come from the regional and the community bank space. And we weren't really focused on the community bank space.

And why we're so excited about this. There's obviously many more banks, those decisions could be made more fluidly and quicker by the smaller banks compared to the behemoth. Those sometimes can take 3 or 4 years to make a decision if a conversion is going to take place. And it's been -- it served us incredibly well, including with professional services. So while, yes, we did have one announced loss, you have to put it into perspective of kind of in the magnitude of how successful that business has been.

No, fair enough. And you explained it well. I just -- we look at the numbers and the numbers don't sometimes tell the full story, right? So moving on then, though, to a business which I think you will agree with me, you still have some more work to do.

We do.

And that's asset management, which has been softish, in particular, when you take out the really favorable markets that we've had over the last few years. So new management in that business. So maybe just give us an update what they're doing there. And then maybe more importantly, any proof points you're seeing that some of the new initiatives are actually working?

Yes. So that is a business that Ryan and I and the rest of the executive team, I would argue, is really the most exciting and the hugest opportunity for us. So IMS is a machine. You used the word crown jewel. We hear that a lot. We agree with that statement. We believe IMS is going to continue to run and have a great trajectory.

Sanjay took over PB a couple of years -- 4 years ago, negative margins, as I mentioned, flat sales events, almost negative depending on the quarter. And I think that turnaround has been evident. The third of our verticals and when we say asset management, we use that as a catch-all for our investment advisers business and our Institutional business.

Not unlike some of our legacy businesses that needed some turnaround, that business definitely needed a turnaround. We brought in new leadership led by Michael Lane. Michael is former BlackRock. One of our key tenets on Investor Day back in September, 1 of the, I think, 5 was the reimagination of asset management. It can be a really catchy term to use, but it truly is we have reimagined asset management.

And there's been early successes. I think in Q1 or Q2, we announced like a $200 million positive inflows, which seems like nothing. But when you had $5 billion of negative flows the year before, it actually is somewhat significant. So we have seen momentum. There are a number of things that Michael has instituted. He's brought in new talent. He brought in Bob Hum, who essentially leads our -- is our Chief Product Officer, if you will, for asset management.

We've launched and are launching a number of new ETFs. I think the number is around 7 or 8 for '26. There's a lot of opportunity there. If you know our business, we do a lot around model portfolios. The majority of those -- the product inside those model portfolios are not SEI products. There's a little bit, but not much. I think there's an opportunity for -- especially for some of our ETF products to be infused into those model portfolios.

In '25 we won under Michael's leadership in kind of new direction before I give that little nugget. There was a tremendous amount of work that needed to be done. There had to be kind of reconfidence blown into the sales team, the leadership team of the Choate Hall that we refer to as asset management.

What Michael has done and one of the main thing he did is said, hey, we're -- the majority -- or some of our strategy was really retention in the smallest parts of the market, retaining some of our smaller advisers. We still serve them very well, but we also knew that we needed to move upmarket. Michael has done that very well.

A proof point of that is just in 2025, we won 2 of our biggest ever asset management engagements in the history of SEI. And to be honest, we never even would have pursued that in prior years. It wouldn't have even been on our radar. So that's really exciting. We had $1.4 billion in total ETF flows in 2025, far outweighing any other historical point for our ETF flows. So there are nuggets that we are seeing in little buds here and there, especially with some of the leadership changes that he's made there. We're going to continue to expand our ETF lineup. So yes, so that's kind of why we're pumped, and that's where we see some of the runway coming from.

Excellent. And since we were just talking about the asset management business, maybe a good time to also go back to the Stratos acquisition, which you mentioned at the first question. So look, you just closed it a couple of months ago. So the question really is any early learnings? Anything you're more excited about? And then, of course, maybe just lay out or remind us about the strategy here because it's a little bit of a departure from what the company was doing before.

It is. Yes. And I'll repeat, right, there's 3 -- in our opinion, there's 3 drivers. There's 3 a's in financial services: administration, asset management, and advice. There's -- if you look at administration and asset management, there are pricing pressures. Somehow, the advisers have done an amazing job of maintaining the advice lack of pricing pressure. So if in 10 years ago, advice was 80 to 100 basis points, advice today is 80 to 100 basis points, where you'll see mutual funds have had pressure. The cost of those have resulted in moving from active to passive, even ETFs have gone down, even fees around custody have been pressured down and in some cases, have gone away.

So we felt we needed to be closer to the advice space. And so we looked at a lot of different opportunities. And Stratos was and is an incredible RIA platform, incredible leadership. Jeff Concepcion is the President and CEO of Stratos. First time we met him fit really well into our culture, his vision, his acquisition strategy, the way he looks at deals, his reputation in the market, a lot of inbounds come into Stratos. And so it just really was a natural fit for us.

One of the questions on the day we announced, we got on the phone with some analysts and investors and people wanted to understand the rationale. To your point, it's not something we necessarily dove deep into. Although when Ryan took over 4 years ago, probably 2 to 3 years ago, in his M&A conversation, there was 2 areas that he had discussed.

One was doing something with the U.S. RIA, now known as Stratos. So we delivered on that. And then two was, do we need to do something around European fund administration? Do we need to buy something there in order to kind of scale quicker the EMEA admin area.

So getting back to Stratos, so it should never have been a surprise. We had been giving indications every single quarter that we think we need to be closer to the advice base. The question we received the day of the deal was, hey, help me understand what those -- classic question, where are the synergies coming from? We paused there a little bit. We didn't really want to dive too deeply into where we thought the synergies could come from.

As we sit here 60 days later, we're seeing early indications from advisers that they want to know more about SEI and the opportunities that we can provide, whether that's investment products, whether it's our custody platform, whatever it may be. We also talked about when the acquisition happened, we got a question whether we would force march any of their advisers onto our platform. The answer to that is no, it's still no. We want to be able to earn that business and not force any advisers into doing anything that they choose not to at any of their businesses.

So early days have been really successful. We've had an adviser conference down here actually in Marco Island, I think, in maybe December, somewhere around there. Really successful. The feedback was incredible. The advisers there were really excited about the transaction, learning more about us. And it's not just custody platform, it's really all of our products. So we're moving from a sales -- a relatively mild sales force, for instance, in our Institutional business around OCIO or co-CIO opportunities.

Now we have a sales force of RIA advisers across the country that have said, hey, I have certain connections in certain companies that look like your client base. Can we help with an introduction? And by the way, what does that look like for me? And so we've already had early conversations for even our Institutional business that we would not have had otherwise.

So I don't think the synergies are necessarily from a cost takeout. Actually, I know they're not. It's more about, right, just classic, what is 1 plus 1 equal 3 and how do we make that happen? So early days, Q4's numbers had 1 month of revenue as part of the deal in early January, there were some put calls part of the deal. And so we did consummate the rest of the anticipated transaction outside of NSC, which is the Mexico entity that has not been completed yet. So anyway, early days has been really, really positive. We'll have more to share after Q1.

Okay. Sounds great. And then let me maybe move on to some more company-wide questions. The first topic here, AI.

I haven't had that question yet.

This is day 2 of the conference, and I can tell you, AI has been a frequent topic. So look, your business in some areas seems fairly labor-intensive. So naturally, I would think AI can probably help there. So anything you're already doing? What's on the road map? And then on the same topic, what about the other side of the coin? I mean some of the companies in my coverage over the last month, over the last week. And again, today, are getting caught up in this AI narrative in terms of disruption. So again, maybe you can talk about this, maybe you've even been caught up in that as well. So what are -- where are you seeing risks? Are there risks? And why do you not -- how can you fight back, I guess, is the question?

Yes. So the value of software is not declining. The barrier to creating the software is that barrier is becoming less and less of a barrier. So yes, we do have, obviously, technology part of our platforms. But just to put it in context, so let's take SWP, for instance. We believe we built a relatively large moat.

From an overall revenue standpoint, we have 2. We wish we had more, but we have 2 SaaS clients that are really only using the platform where we sell our service in the majority of our revenue, specifically in Private Banking, for instance, is really a full suite of services. So it's not just software sales for software sales. We're providing front, middle and back-office services to our client base. That is a -- there is a labor component to that.

There is a tremendous amount of regulatory issues around, obviously, as you know, from the banking space, and we are as well. So I don't think the barrier -- I don't think the entry from software and technology, specifically in some of the things that we do are going to be really in the front of the line versus maybe the back of the line of where people may think about it.

From an overall revenue standpoint, it's -- we actually spend more on technology than we actually pay -- that we actually receive from a revenue standpoint just from a SaaS standpoint. So we actually see this as an opportunity for us. We spend a tremendous amount of third -- with third-party vendors from a technology standpoint. So we're actually hoping the use of AI with some of our current vendors and are there new entrants coming in.

Our technology spend is expensive. And every year, year-over-year, it's actually a very expensive proposition with increasing pricing. We see this as a really interesting opportunity in order from an expense and cost standpoint to actually help the business.

You asked the question, so what are we specifically doing? So over the last few years, we have a ventures group. Sneha Shah leads that. She's outstanding. The group is outstanding. We have been making investments in AI. Classic SEI, we try to -- we always historically try to build everything ourselves. This is not an area where you can build yourself, so you need to be partnering. We made an investment in TIFIN a number of years ago. That is not our solution. But getting closer in a front row seats to some of these AI platforms like TIFIN has really helped us tremendously.

We've made investments around Data Cloud. That is part of our professional services. There are AI components inside our Data Cloud offering in professional services to PB. We announced an investment in of Avantos, so part of our ventures group, which is an AI-native organization, which is helping in form and we're embedding that into some of our platforms. So there is a lot of things that we're doing.

Our legacy platform before SWP was actually built on COBOL in the '70s. And so no one has come by and tried to disrupt COBOL for the last 50 years. And so we believe the moat is there, but we're not also ignorant to the point that it can't happen. There are a lot of barriers to entry, specifically around regulatory environments. So we're keeping a close eye on it.

But there's a number of other things from an AI standpoint that we are doing. We haven't announced it publicly yet. So I'm not going to necessarily do it today. But we -- even yesterday at 9:00 a.m. in our offices, we signed an SOW, a couple of weeks ago around automation for the organization.

We are, as I mentioned, very labor-intensive. We have a tremendous amount of manual processes. So bringing in a well-known global third party to partner with us of thinking about how we can use automation and specifically AI on top of that automation, I think, is going to continue to help with margin improvement and really just kind of get our workforce leaner, so we can continue to make those other investments in things, not just AI, but all things investments, which would include AI. I know.

It's a lot.

It is a lot. It's a big question.

No, it's -- there's a lot going on, and it changes every day. Look, shifting gears again, one of the things I should have probably asked or talked about or asked about earlier is that SEIC over the last few years has been this company in transition, a lot of management coming in, including yourself. I want to talk about margins in a minute, but maybe before that, just -- can you just talk about how the company has changed? What this meant from a go-to-market strategy perspective, what it means financially, obviously? And to what degree do you think it's changed the perception of your company -- from clients?

Yes. When I joined 2 years ago, my anniversary is coming up here next month. And I guess when Ryan took over almost 4 years ago now, I think SEI had lost its mojo a bit. We were viewed more as a sleepy company. People weren't seeing us show up in the market like we are today, definitely like we were 10 years prior to a number of years ago. So I think under Ryan's leadership, bringing in kind of new ideas, new strategies, identifying all the broken windows, and we had a bunch of them. We had a lot of broken windows that we had to fix, including some of the ones we already spoke about.

But I think -- and very trendy to say, but moving from a product organization to an enterprise solution, which we can -- which we have demonstrated and we talked about in Private Banking. Companies, clients, firm want to do more with less. They're not looking to add vendors, they're looking to consolidate vendors.

And I think we've done a really, really good job of being that thought leader along with whether it's a large national bank, whether it is some of the largest fund managers in the world of moving from simply providing one administrative service to being a platform for the organization, we've been really successful. And it's honestly just the way we show up and think about the business differently.

The old SEI of making excuses of why we're losing as opposed to where the opportunities lie, that has really been under Ryan's leadership, and he's changed that mindset. So I do think infusing outside-in talent, that's not to pat myself on the back. We have a lot of great outside new leaders, including Michael Lane, has just helped us rethink.

If you've ever been to on-campus in Oaks, we have a beautiful campus in Oaks, Pennsylvania. It's huge. It's like a college campus. There is a [ PEP ] and everyone's step now. People are excited to be showing up where I think we -- maybe we lost that for a number of years. So it's really nothing more than how we're showing up, and I think the results are showing that.

Okay. Two more things to go through. Let's see if we can make it happen. I'm looking at the time. But I promise I will get to the margins. Nice level of improvement there, but it does seem like if I look at the number and where you were in the past, there's more to go. So maybe just quickly, what are you focused on in particular? How quickly do you think you can drive change? And then, of course, how do you balance that with investing as we talked about earlier?

Yes. So all right. So let's unpack this a little bit, and I know we have 3 minutes here. I mean I think last year, in '25, I think margins improved about 140 basis points, somewhere around there. So we're really proud of that. As you mentioned, we do have more room to go. And I made the comment at Investor Day that we're looking to improve year-over-year basis points by 25 to 50 basis points per year, which one of our analysts said that seems low. I'm not saying it's low or not, but I would say I try to be a little more conservative in some of the financials we give out. But we're doing a lot. And I mentioned the automation project.

We talk a lot at the executive committee and at the Board level. As we scale revenue, if we have to scale heads, we failed. And so the automation project, how we're leveraging and laying in AI over top of it all is a big portion of where we're going to drive margin appreciation. So -- and as I walk around SEI, I just feel there's $1 million here, there's $1 million under you turn over every chair. There's just tons of opportunities where we are very manual intensive and the opportunity to get automated more and be able to scale is something we really haven't spent a lot of time focused on.

So I think that's where it's going to be a portion where it comes from. And then just on -- and then anything from an asset management. If we can get investment product, asset management moving, some of those margins compared to our expenses, right, they can scale very, very quickly. So we are excited where the margins can move to.

Okay. Excellent. All right. With 1.5 minutes left, I obviously need to go into capital allocation. We did already talk about a few things there as well. But more recently, you've been active buyer of your stock, $600 million last year. You did the Stratos acquisition. So a, how do we think about buybacks going forward? And then, of course, where do you think the business could be complemented through M&A? And very quickly, how does leverage fit in? Because, quite frankly, you used a lot of cash for Stratos, but you had previously said you would also maybe tap the debt market. You didn't. I don't know why you didn't. So maybe talk about that for a second.

So we historically have been very conservative with our leverage. We historically have used that as a -- prior to me joining SEI. I think we use that as a badge of honor, and I think that the investor community would say maybe that's not the smartest strategy. So at Investor Day, we did talk about moving from a negative onetime to maybe getting to 0 to maybe 1 time in the future.

We're not going to be doing acquisitions for acquisition's sake. We did state and we stand by this. We're looking to return 90% to 100% of free cash flow back to our shareholders. We are not afraid of debt. We -- I think you can expect when we're making future investments, I don't think that's necessarily in the terms of M&A. There may be some tuck-ins with the Stratos to continue to support that, as Jeff and others, and we want to continue to bring on new advisers. So I think there's an opportunity that's where we're going to leverage some of the debt. But I wouldn't expect us to go from negative onetime to onetime overnight.

And any particular areas in terms of M&A that you're spending time on?

Yes. When we -- I think it's going to be in the short term, it's going to be more to support the Stratos acquisition as opposed to anything else.

Okay. Very good. All right. Why don't we stop here. Thank you very much for all the insights and hope to have you back here in a year.

Yes. I appreciate it. Thank you. Thanks.

Hello, and thank you for standing by. Welcome to SEI Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions]

I would now like to hand the call over to Brad Burke, Head of Investor Relations. You may begin.

Thank you, and welcome, everyone. We appreciate you joining us today for SEI's Fourth Quarter 2025 Earnings Call. On the call, we have Ryan Hicke, SEI's Chief Executive Officer; Sean Denham, Chief Financial Officer and Chief Operating Officer; and members of our executive management team, including Michael Lane, Phil McCabe, Mike Peterson, Sneha Shah, Sanjay Sharma and Amy Sliwinski.

Before we begin, I'd like to point out that our earnings press release and the presentation accompanying today's call can be found under the Investor Relations section of our website at seic.com. This call is being webcast live, and a replay will be available on the Events and Webcast page of our website.

With that, I'll now turn the call over to Ryan. Ryan?

Thank you, Brad, and good afternoon, everyone. I'm pleased to report that SEI ended the year with an exceptional quarter, capping off one of the strongest years in our 58-year history. Earnings per share totaled $1.38 for the quarter. After accounting for some of the noise items that Sean will walk through, Q4 represents our highest ever quarterly earnings performance.

What's most exciting is that these results were impressively broad-based, driven by revenue growth and margin expansion across almost all business segments. This was a total SEI effort, not driven by a single business or a one-off event. It's a testament to the power of our integrated approach and the relentless execution from teams across the globe.

We also sprinted to the finish line with our sales events posting a total of $44 million, one of our highest ever quarterly results and capping off our strongest year ever for sales events. Notably, Private Banking delivered a standout performance, posting $28 million in net sales events.

As we discussed on our last earnings call, we were confident in the strength of our private banking pipeline, and I'm pleased to report that we're doing exactly what we said we would, translating that pipeline into meaningful results. This quarter's success is the result of disciplined execution against the clear strategy. My expectation is that the sales momentum we generated in Q4 will carry into 2026. And it's not just banking. Asset management is building traction and IMS continues to benefit from structural demand for outsourcing, especially amongst large alternative managers.

We've been signaling for several quarters that we're working with some of the largest global alternative asset managers, including first-time outsourcers, and I expect we'll have some meaningful developments to announce by the April earnings call.

During the quarter, we also achieved a major milestone with the first close of our Stratos partnership. Stratos brings a proven adviser and client-centric model that's a strong cultural fit with SEI. It also gives us deeper insight into the needs of end clients, strengthening our appreciation of how advisers and intermediaries run their businesses. We're already seeing tangible benefits including greater awareness of SEI across the RIA and broker-dealer channels and renewed inbound interest in our capabilities.

Our focus now is on integrating our technology and investment management strengths with Stratos' platform and continuing to learn from their team as we scale together. This is a long-term strategic partnership, and we're focused on adding value in ways that support rather than disrupt their impressive organic growth.

Stepping back from the numbers, it's important to focus on what's driving SEI's success. These outcomes are rooted in deliberate choices and a deep understanding of where our strengths align with the most attractive opportunities in the industry. specifically the growing demand for outsourcing, especially from alternative managers and the continued convergence of public and private markets as well as the enduring demand for advice from end clients.

These themes are intensifying, and we have leaned into these secular tailwinds with intentional investments over the last several years, and these are translating into repeatable performance. For example, we commercialized our private banking professional services, data cloud and SaaS offering, strengthening client retention and unlocking new growth opportunities. We added new leadership and talent across the organization driving sharper execution, infusing fresh ideas and increasing accountability.

We laid the foundation for our global capability center, which we expect will help us scale operations more efficiently as we continue to grow. And through the Stratos partnership, we expanded our reach in the adviser channel, positioning SEI to capture new flows and deliver greater client value. As we look to 2026, we intend to double down on what's working. We're accelerating investment management product launches in ETFs, SMAs, models and select alternative products where we have an edge.

These launches build on our early traction, including more than $1 billion of net inflows into ETFs this year for SEI. We're continuing to evolve the operating model of our IMS business, transitioning from fund-by-fund operations to platform-level services, with shared tooling, workflow automation and data services, so we can onboard and expand with large investment managers more efficiently.

We are leveraging automation and AI to lower unit costs and expand access to our solutions, supporting entry into underserved segments while maintaining client experience at scale. For instance, in the fourth quarter, we made a strategic investment in Avantos, an AI-native operating system for client onboarding. It's a great example of SEI's commitment to creating a more connected scalable and intelligent experience across our platforms. And as always, we'll pursue these priorities with discipline, holding ourselves accountable for maximizing the enterprise value of SEI.

You've heard us be ultra-transparent for the last several quarters and at our Investor Day about our strategy and how we're running the company differently. The team is in place, our priorities are clear and 2026 is about focus and execution on the road map we've laid out together. Against that backdrop, our job in 2026 is actually simple: Go execute.

With that, Sean will take us through the quarterly results in more debt. Sean?

Thank you, Ryan. Starting with Slide 4. And to reiterate Ryan's commentary, SEI had an outstanding fourth quarter, both including and excluding unusual items impacting results, which collectively reduced EPS by approximately $0.08. Those items included $20 million of elevated corporate overhead expense related to severance and M&A fees incurred in the quarter. This was partially offset by a $3 million tax benefit from purchased energy credits and a $3 million revenue accrual true-up benefit captured within IMS.

We always have accrual adjustments based on actuals versus estimates, but in the fourth quarter, that adjustment was more pronounced than normal. We also had some items that, while not unusual, did go our way in the quarter. notably, LSV performance fees that were more than $3 million above the prior year at SEI share and the $4 million gain on VIEs attributable to the LSV hedge fund seed investment we discussed last quarter. Also, while Stratos formally closed in the fourth quarter, we only owned the business for a few weeks, and many of the planned adviser roll-ups were finalized in early January. Given this timing, Stratos' financial impact was not meaningful to fourth quarter results, we will provide a fuller and more substantive update next quarter.

On a GAAP basis, EPS increased 16% year-over-year and 6% sequentially. And excluding unusual items from the current and prior periods EPS would have been at an all-time record, exceeding the prior record achieved in Q4 of last year. Overall, 2025 represents an excellent year for SEI with double-digit earnings growth in more than a full percentage point of operating margin expansion.

Slide 5 summarizes performance by business segment. Like Ryan mentioned, strong Q4 performance was broad-based with positive contributions from each business segment, both revenue and operating profit when measured against both the prior year and prior quarter. Private banking revenue benefited from recent professional services wins, which convert into revenue more quickly than we've historically reported as recurring sales events.

Margins also increased due to cost leverage on revenue growth and the fact that these new professional services wins are overall margin accretive benefited from a $3 million revenue accrual true-up I mentioned earlier. Even excluding this benefit, revenue and margins increased meaningfully from both the prior year and prior quarter, driven by recent wins coming online and a modest contribution from market appreciation in our traditional business.

Our 2 asset management segments like sequential growth, which was driven by market appreciation and healthy flows in our Advisors business, which offset the impact of client losses in the institutional segment and the continued pressure on mutual fund outflows across the asset management industry. Our integrated cash program is reflected in both the prior year and prior quarter comparison. In the fourth quarter, this program contributed $21 million to revenue, matching the levels achieved in the prior quarter and prior year.

Slide 6 illustrates our consolidated margin, which, as we've discussed with this group before, is something we are increasingly focused on as a management team, more so than the individual margins achieved in a single business segment, certainly in any given quarter. Consolidated operating margins were weighed down by severance and M&A costs captured in corporate overhead. Excluding these costs, consolidated operating margin significantly increased on both a year-over-year and sequential basis.

Turning to sales events on Slide 7. Private Banking led the quarter with $28 million of net sales events. Results were driven by 2 significant new mandates. In the largest of these, SEI will provide SWP Software-as-a-Service implementation services and ongoing enterprise-wide professional services. This represents our second SWP SaaS client, demonstrating the underlying demand for our SaaS delivery model. This engagement began with advisory work on strategy and system design and the expanded award reflects the client's decision to have SEI execute the full program.

This underscores an emerging trend in private banking. We are increasingly partnering with clients in an advisory capacity, which may lead to larger and longer-duration professional services engagements. While we're very pleased with this momentum, we would also remind you that these large engagements can create variability in quarterly sales results, and the fourth quarter represents a strong outcome that should not be extrapolated as a run rate. IMS realized net sales events of $20 million, with just over 2/3 coming from U.S.-based alternative managers and with no single win accounting for a significant percentage of the total.

Our Advisors segment net events were flattish in Q4. A key highlight was positive flow into SEI managed ETFs from off-platform investors. We talked about the strategic opportunity to distribute SEI investment products through third-party models and the fourth quarter showed encouraging early progress on that initiative, offsetting the continued pressure from mutual fund outflows. Negative institutional segment sales events primarily reflect client losses in the U.K. During the quarter, we continued to streamline leadership and reset the cost structure to position this business for improved economics.

Turning to our asset performance on Slide 8. SEI achieved both AUM and AUA growth, both sequentially and year-over-year. A growth of 3% was supported by strong win momentum and to a lesser extent, market appreciation. AUM growth of 2% is attributable to market appreciation, which offset modest outflows in the quarter, primarily in the institutional business.

With that said, focusing only on AUM growth understates some meaningful progress, especially within advisers. Over the past year, we moved further up market, increasing the average size of advisers we're winning, and we're beginning to see early success selling the full SEI ecosystem, such as our tax management and overlay capabilities. which drove an additional $2 billion of net new assets on the platform.

As a result, Advisors delivered their best net inflow year in over a decade, signaling tangible momentum behind our upmarket strategy and broader ecosystem approach. LSV assets under management increased 3.5% versus Q3 due to strong underlying fund performance and market appreciation, which offset $3 billion of net outflows in the fourth quarter. Underlying LSV performance remains solid as evidenced by the $22 million of performance fees in Q4 or $8 million at SEI share.

Turning to capital allocation on Slide 9. During the fourth quarter, we repurchased $101 million of shares, bringing full share repurchases to $616 million, representing nearly 6% of total shares outstanding from the end of 2024. We also completed the largest component of Stratos acquisition entirely with balance sheet cash, ending the year with $400 million of cash and no debt. We remain committed to returning 90% and 100% of free cash flow to shareholders in the form of both dividends and share repurchases.

Before concluding, I want to spend a minute talking about our forward expectations. SEI has never provided an earnings guidance. and that is a practice we intend to continue. However, there are a handful of items to keep in mind, especially towards the beginning of 2026. Some of these items are normal seasonality. Our tax rate is typically the lowest in Q4. Performance fees from LSV are typically highest in Q4 and lowest in Q1. The first quarter has 2 fewer days than the fourth quarter. The gains on our LSV investment are unlikely to repeat at Q4 levels, and we implement annual compensation increases effective January 1. Most of this impact is below the line, not operating income.

Beyond these lumpier items, we are also advancing the accelerated investments Ryan discussed. We are hiring to support our strong pipeline and major wins across business lines. and we expect depreciation and amortization to step up next quarter due to placing certain large investments into service. We recognize that these investments must be balanced through thoughtful resource reallocation and ongoing cost efficiency efforts.

As part of this discipline, we implemented a targeted reduction in force in December, affecting approximately 3% of our global workforce. This action, which drove the severance charges I referenced earlier, reflects our commitment to ensuring that the cost of future-focused investments is supported by a more efficient and scalable operating model. These actions support what we communicated during our Investor Day regarding our goal of long-term double-digit earnings growth and consistent margin expansion.

Stepping back, the fourth quarter cat in an outstanding year for SEI, one marked by broad-based financial strength, record sales performance and meaningful strategic progress across the enterprise. As Ryan highlighted, we are excited about the opportunities ahead and believe SEI is exceptionally well positioned entering 2026. We look forward to building on this progress and continue to deliver long-term value for our clients employees and shareholders.

With that, operator, please open the line for questions.

[Operator Instructions] Our first question comes from the line of Crispin Love with Piper Sandler.

First, more than 2/3 of your sales men came from alts in the quarter. Can you just give a little more color there? Was that primarily from new wins or expanding relationships with current clients? And then you also made a comment, Ryan, I think early in your comments about momentum in sales and you expect positive announcements during April earnings or something like that. Does that relate to any specific activity in so far in 2026 or just good visibility?

So I'll answer the first one -- or your second one first, Crispin. Happy New Year, man. Yes, we like what we see on the sales momentum front, which is consistent with previous quarters, but we thought we would call out because there's been conversations that we talked about last year about some opportunities we have with just some -- with a couple of larger organizations that predominantly have in-sourced. We make good progress there. So we expect to have some more tangible update on the April earnings call about that. That's specifically in the IMS business. I'll kick the fill on your first question. I believe, Chris, in your question was specifically about 2/3 of the sales events in IMS?

Yes. Just where is that coming from? Is it new wins? Or is it expanding relationships within your current split?

Phil?

Sure. Crispin, this is Phil. I'll start by saying for the quarter. The quarter, it was about $20 million. It's normally a little bit seasonably low in Q4. Nothing was necessarily that notable to call out. It was a combination of new business and cross-sells around the globe. What I'd say is the pipeline is really strong. We're looking forward to a great 2026. And as far as the larger wins are concerned, we're going to cover that a lot more with the Q1 results.

And as Ryan said, we have a great track record with these large enterprise clients moving to outsourcing. And some of these deals are household names, and it's going to take a lot of work to get them in through the pipeline and execute it and into the run rate. So a lot of that depends on how much invested capital we get, and we're actively working on defining the magnitude and the scope.

Great. And then just also on sales events in the quarter, a fairly wide gap between the net recurring and nonrecurring. Can you discuss some of the drivers there? Is that due to the professional services aspect that you mentioned, Sean, or anything else to call out?

Absolutely, Crispin. I mean it's definitely driven by the continued growth of the professional services strategy that Sanjay has deployed. And I think as we try to call out here, some of these, we believe, have kind of a more repeatable or longer tail element to them, but we continue to characterize them under the onetime professional services kind of banner, if you will. A lot of those are with existing clients and also some new names. But Sanjay, you want to expand a little bit on that?

Yes, sure. So if you look at the professional services, you could look at it in 2 different buckets. And now services, which we are providing before even the clients that are engaging with us through SWP on our platforms. So we have started engaging with our prospects and clients very earlier in advisory capacity, and that it reflects our fourth quarter results as well.

And the second part is that since we are engaging at that early stages, we are able to influence the overall strategy we are able to define the note star for the clients in terms of okay, how their overall technology landscape is they do change how their operating model is going to change. And then we are participating in that journey, how that the transformation we can make happen. And that's the reflection of the overall professional services strategy, and that is reflected in our fourth quarter results.

And I think what's really important, Crispin, is from a value proposition perspective, we're really seeing a distinct transition in the market. When you look at Phil's market where we historically maybe have been characterized as ops for the fund we have really evolved more into a platform for the firm from our clients' perspective. And Sanjay's business, maybe additionally was investment processing and technology for the fiduciary business, they're now being seen more as a technology and platform partner in the C-suite of these organizations. We're really excited about the expansion, not just of our sales capabilities, but the expansion of SEI's footprint in the mind of the buyer and the clients in these organizations with these changes.

Our next question comes from the line of Alex Bond with KBW.

This is [ Natalie Knoll ] on for Alex Bond. On the Private Bank segment, the margin there stepped up sequentially on a stronger sales quarter, but thinking about the margin in the context of professional services offering. Can the margin for the segment maybe stay in the high teens range on the back of stronger professional services? Or is the step-up this quarter somewhat episodic, and we should anticipate a return closer to the mid-teens in near term with upside potential if professional services sales are strong?

Yes. So thanks for your question. I think if you look over the last probably 8 quarters or so, you've seen steady increase in the margins in PB. We would expect margins to be in that area. They've been choppy over the last couple of quarters. Sometimes they're a little lower, sometimes they go a little higher depending on the mix how much professional services in there. Professional services margins typically are higher than our platform, the SWP services in our operating revenue as well. So we don't really give too much guidance around future margins, but I think you can expect it to be within spitting distance of that range.

Okay. Perfect. And maybe if you could also provide any color on the larger 2 mandate wins called out for the Private Bank segment?

Yes, sure. I can talk about that. This Sanjay here. So as I mentioned that now we are engaging with our prospects as early as before even they are issuing RFPs sometimes. And in that process, we are helping them to define their overall transformation agenda, and then we are helping them how to achieve that. So with these 2 prospects, we started working almost 18-plus months ago. And in that process, we engaged with them in advisory capacity, create an overall blueprint for transformation. So this win is a good combination of our core platform, SEI enterprise capabilities and professional services.

And I think what's great as well, Alex, to add some color. One is a pretty meaningfully sized regional and community bank in the U.S. and the other I would consider to be a large kind of private wealth manager both were outsourcers on competitive platforms and really to see the overall value not just in SWP, but as shown in sub-mention around kind of the broader suite of capabilities for the long term for their strategic growth.

And then if I could add another point. Out of these 2, one of the large clients we have signed is our second software-as-a-service client. And that reflects our focus and attention to that strategy as well.

Our next question comes from the line of Jeff Schmitt with William Blair.

How much were the underlying expenses down from the workforce reductions. It sounds like those changes were made sort of late in the quarter. So just wondering how we should think about kind of the run rate impact by segment going forward?

Yes. This is Sean. I would say that you could think about the decrease in compensation related to the RIF at a relatively equal amount of compensation increases in rates for the year. So typically, we'll have -- you can go back and look kind of at the history, but consistent level of raises starting in January. You can kind of think about the reduction in the compensation to, for the most part, match those races.

Okay. Okay. So kind of flattish, okay. And then in the IMS business, it looks like the margin was around 40% if you adjust for that revenue accrual true-up. And I think you've been guiding to that even 39% or even less, you've been investing in that business. So I was curious, is that just from kind of a strong operating leverage in the quarter -- and is 40% sort of the right run rate to think about going forward there?

Okay. I'll take it, Jeff. We did have that revenue accrual true-up, which was a little bit over $3 million. We also had a couple of other one-times for conversion fees and professional services. And some other one-times, probably about $2 million. So that total was about $5 million or so. Without that $5 million, we'd be right in the 5% quarter-over-quarter growth rate. In addition, it was relatively strong just from converting new business.

Sean, is there anything you would add?

Yes. I would add, we've alluded to some Q1 opportunities for us that we'll talk about further in April. We are continuing to hire up in anticipation of those. So if you're thinking about run rate on margin, specifically in IMS. As we said in prior quarters, we are continuing to make investments inside IMS and our other business units and continuing to hire in anticipation, specifically in private banking and IMS. So whether margins continue at that rate? I would expect certain expenses to start hitting a little more in Q1.

Our next question comes from the line of Connell Schmitz with Morgan Stanley.

So on Stratos, how should we think about the run rate impact of the acquisition to the Investment Advisors segment once it gets fully consolidated at the moment, we can only see the NCI related to it for a little bit less than 1/3 of the quarter. And then on that topic, when would you expect to have an updated time line related to like the planned resegmentation that we heard about at Investor Day?

Yes. So thanks for the question. So we're not going to give guidance on the run rate into '26 around Stratos. I can give a little color on Q4. So we had about $5 million in revenue related, which would sit in the Advisors segment. We had just about under $1 million of operating income, which included nearly $2 million of amortization expense on the acquired intangibles. That's a 100% share since we consolidate, and there's about 300,000 of NCI or the 42.5% that we don't know.

And again, we'll have more information in Q1 as we have a full quarter under our belt.

Got it. And then just sticking with Stratos the go-forward strategy, like during the integration phase, is it still continuing to pursue acquisitions or those paused during the integration?

No. In fact, in early January, we had -- so part of the strategy was, as you know, acquiring additional entities providing capital to Stratos to roll them up. So nothing has changed from that plan that we spoke about previously. In early January, Stratos completed the acquiring additional interest in some of the entities that they had my large interest in. And there also in January, there will be some additional acquisitions that were planned as part of the kind of diligence process and expectation as we acquired that.

[Operator Instructions] Our next question comes from the line of Patrick O'Shaughnessy with Raymond James.

Coming back to the topic of those 2 big nonrecurring sales events and private banks in the quarter. From a modeling perspective, how do we think about the revenue recognition impact of those sales events over the coming quarters?

Just real quick, Patrick, the 2 wins we're talking about are recurring. So the 2 firms that Sanjay and I were referencing with some color, there are traditional recurring revenue SWP wins. The rest were professional services, some of those extensions from those existing firms and some of those existing clients and non-SWP clients. So I just want to make sure you were clear on that.

Got you. I appreciate the clarification.

Okay. And then your question is the professional services backlog?

Yes. So $23 million sales event quarter, do we think about that hitting in the next 2 quarters? Is it next 8? Like is there a general time frame you guys have in mind that, that is going to be realized?

See, that's what I like about professional services, that's something we can start realizing immediately. And some of these complex projects, they run over 12 months, 18 months, and that's how these associated professional services are spread as well. And many of them, they will continue after going live as well.

Helpful. And then in institutional investors, you mentioned that the negative sales event in the quarter was tied to some U.K. client losses. Just curious like how strategically important is the U.K. market to that business?

Michael, do you want to take that one, Michael? .

Yes. The institutional business in the U.K. is a fraction of the overall OCI and institutional business. It's important to us, and we're continuing to grow that with the addition of Sanjay taking on the role he has on the international side of the business. So we continue to grow that business, and it's an important part of our business. Some of the movement in that is also where we added additional assets into SEI products within some of those. But the way that we credit those, it doesn't actually show up in revenue. So there's transaction activity that took place in that end of the business in the institutional space within the U.K. as well.

But strategically, we do believe that the institutional business is a growth business for us, and we have made quite a few changes including with Sean's notes on the RIF in December, we've made quite a few changes in terms of the leadership of the institutional business. And we now have put that in the hands of Kevin Matthews, who has a long successful track record in that space. And so he, along with the rest of the team, we are working on an improved operating model and strategy that we will -- that we are starting to execute today.

Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to CEO, Ryan Hicke, for closing remarks.

Thank you, and thank you, everybody, for the great questions and your continued engagement with SEI. We're really excited about the path ahead. Look forward to speaking with you again next quarter.

And quickly a little sidebar Paul Klauder is in the room as many people will know, Paul is a longtime executive of SEI who will be retiring in February after 30 glorious years at the company. Paul, Phil McCabe and I actually all joined the Executive Committee about 10 years ago today at the same time. Paul has been a great friend, a great leader, but an ambassador to our clients and our employees for the brand of what SEI stands for. So you'll hear some clapping in the room here why we close the call and congratulate Paul.

Thank you. Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.

Good day, and welcome to the Q3 2025 SEI Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Brad Burke, Head of Investor Relations. Please go ahead.

Thank you, and welcome, everyone. We appreciate you joining us today for SEI's Third Quarter 2025 Earnings Call. On the call, we have Ryan Hicke, SEI's Chief Executive Officer; Sean Denham, Chief Financial Officer and Chief Operating Officer; and members of our executive management team, including J. Cipriano, Paul Klauder, Michael Lane, Bill McCabe, Mike Peterson, Sneha Shah and Sanjay Sharma.

Before we begin, I'd like to point out that our earnings press release and the presentation accompanying today's call can be found under the Investor Relations section of our website at seic.com. This call is being webcast live, and a replay will be available on the Events and Webcast page of our website. With that, I'll now turn the call over to Ryan. Ryan?

Thank you, Brad, and good afternoon, everyone. We appreciate your time today, especially since we recently spent nearly 3 hours together during our Investor Day just 5 weeks ago. First, let me express our gratitude for the overwhelmingly positive feedback we've received since Investor Day. Many of you highlighted the energy, enthusiasm and clarity of our long-term vision as standout themes, and that affirmation reinforces our strategic confidence. We are committed to disciplined execution transparent communication and creating long-term value for our clients and shareholders. Turning to the quarter's results. We delivered outstanding performance with EPS reaching $1.30. Excluding onetime items, that's an all-time high for SEI. Earnings growth was robust, both sequentially and year-over-year, driven by strong revenue growth and margin expansion. This is the kind of consistent performance we have been messaging over the past few years. Net sales events totaled $31 million with our Investment Managers business leading the way. IMS posted a record sales quarter reflecting surging demand for outsourcing and client expansions.

This is a testament to the strength of our sector, our competitive position in that sector and our continued investment in future capabilities. As we said at Investor Day, we believe the growth runway here is exceptional. Congratulations to Phil and his team. IMS sales activity was notable for its broad-based nature with no single client driving the performance. Approximately 2/3 of our sales events were tied to client expansions, increasing our wallet share. Additionally, 2/3 of the events came from alternative managers. This level of diversification and momentum across client types, both new and existing, reinforces our conviction in the durability of our growth strategy. We also continue to engage with large well-known alternative asset managers who are new to exploring outsourcing fund administration. We believe we are well positioned in these processes, given our best-in-class capabilities track record of execution and client referenceability. Due to the size and complexity of these opportunities, the contracting process tends to be longer, and we expect to be able to provide more clarity on the nature of these opportunities in our pipeline in early 2026.

Switching units. Sales activity in our asset management business was highlighted by the single largest mandate win in our institutional segment to date, a multibillion dollar fixed income assignment for a state government client. We believe this win reflects the early impact of Michael Lane and the entire teams of Bob's approach, introduced to this audience last month. We are delivering targeted solutions in areas where SEI has deep expertise, while complementing our established OCIO offering. It also reinforces our ability to compete successfully for specialized mandates and demonstrates our capacity to meet the growing demand for tailored investment strategies from large clients. Private Banking secured a $13 million win this quarter, partnering with a leading super regional U.S. bank on a comprehensive transformation initiative across all business lines. This engagement is strategically significant, encompassing technology, outsourced operations and a substantial professional services component.

Our multiyear engagement with this firm to help them define their targeted operating model and build the business case was instrumental in winning the business. This win is an enormous affirmation of the pivot we made a few years ago to be the market leader in the regional bank segment. We anticipate the projects will involve extensive work to retire the client's legacy systems execute complex data conversions and integrate new platforms. Importantly, SEI is uniquely positioned to support our clients throughout the transition with our professional services offering representing an incremental opportunity that is not reflected in Q3 sales results. Our strong wins this quarter were offset by a contract loss in private banking, which drove lower net sales for the segment. We've noted since 2022 that this client was at risk due to a strategic shift away from their bank trust model, and we received formal notice at the very end of September. This is our only notable loss year-to-date in private banking.

The financial impact should be modest as deconversions typically occur over multiple years. Importantly, we're confident that recent and future wins will more than offset this loss supported by a healthy diversified pipeline of opportunities nearing the finish line. Net sales would have approached $47 million for the quarter, excluding this single client loss. Even with the loss posting $31 million in net sales events is a strong result, especially as our new wins are well aligned with SEI's long-term strategic direction. Stepping back, SEI's net sales events have surpassed $100 million year-to-date, a record for SEI through the third quarter. And as we sit here today, we have more confidence in our sales pipelines when compared to Q3 last year. Building on this momentum, our confidence in the strata's partnership has only grown since the July announcement. Although we have not yet closed, we are already seeing tangible benefits. Awareness of SEI is increasing across both broker-dealer and RIA channels, and we are receiving renewed inbound interest in our capabilities as a result of the announcement. That enthusiasm was on display at the Stratos national meeting in mid-September where advisers consistently asked how they could do more with SEI. And earlier this month, Stratos leadership, including CEO, Jeff [indiscernible], joined us at our annual SEI Advisor Summit on Marco Island, which saw record client attendance.

Our SEI advisers responded very positively to the partnership and the expanded opportunities it creates. We are on track towards the initial closing, which is expected in late 2025 or early 2026. As we said in New York, we are allocating capital to the highest return opportunities and driving margin expansion through cost optimization and targeted investments in technology, automation and talent. We're in the early innings of AI and tokenization at SEI. Internally, adoption is encouraging, and we're implying AI to real workflows. Externally, we're advancing tokenization pilots with partners. We expect these initiatives to support efficiency and scalability over time. But near term, our focus is on use case validation and a disciplined rollout.

In summary, our year-to-date sales events record EPS and expanding pipeline reflects SEI's continued momentum, underpinned by disciplined execution and a clear enterprise strategy. Our integrated approach is breaking down silos and enabling us to scale across segments, capture wallet share and deliver consistent repeatable growth. We are laser-focused on value creation measured by operating margin, EPS growth and total shareholder return. Significant opportunity is ahead and our confidence in SEI's ability to execute and outperform is stronger than ever. And with that, I'll turn it over to Sean.

Thank you, Ryan. Turning to Slide 4. SEI delivered an excellent quarter. Let me start by calling out the unusual items that impacted our Q3 earnings. We recognized the benefit of approximately $0.03 from insurance proceeds related to a 2023 claim into other income, an additional $0.01 from an earn-out true-up in our advisers business. These gains were offset by $0.02 of M&A expense tied to our planned acquisition of Stratos and $0.02 of severance expense related to cost optimization initiatives. For context, unusual items benefited EPS by $0.58 last quarter and $0.08 in Q3 of last year. Excluding these items, EPS grew meaningfully up 8% sequentially and 17% year-over-year. It's worth repeating. Q3 represents an all-time record level of EPS for a quarter, excluding unusual items like the significant gain on sale realized last quarter.

Let's take a closer look at how each of the business units performed on Slide 5. Private Banking saw a 4% increase in revenue year-over-year, thanks in large part to healthy growth on our SWP platform. Our Investment Managers segment delivered another standout performance, posting double-digit revenue and operating profit growth. We continue to see robust growth in alternatives across both the U.S. and EMEA. Traditional revenue in IMS also grew at a healthy pace, benefiting in part from favorable market appreciation. Turning to Advisors. This business posted the highest year-over-year revenue growth among all of our segments. We're seeing growth driven by market appreciation, the contribution from our integrated cash program and improving momentum in the underlying business. Institutional revenue and operating profit were essentially flat for the quarter, reflecting lower equity exposure and less benefit from market appreciation compared to our advisers business. On a sequential basis, both revenue and operating profit increased across all business units with especially strong margin expansion in investment managers and advisers, as you'll see on Slide 6.

Margins were solid in Q3 with meaningful improvement both year-over-year and sequentially. The year-over-year decline in private banking margin was due to onetime items that benefited last year's results. If we exclude those, private banking margins would have increased by approximately 60 basis points. Institutional margins declined sequentially and mainly due to a handful of choppier items in both the current and prior periods. None of these were individually material, but the impact is more pronounced given the lower revenue base in this segment. For investment managers, margins came in ahead of what we communicated last quarter, supported by revenue growth that exceeded 25% annualized from Q2 to Q3. This growth was fueled by factors that are inherently difficult to forecast such as market appreciation in the traditional business and the timing of capital deployment in the alternatives business. Advisors margin growth reflected strong revenue growth and a $2 million earnout true-up, contributing about 120 basis points to Q3 margin. Margin improvement also benefited from our integrated cash program, which added $10 million to operating profit versus the prior year.

Finally, we incurred severance costs of nearly $4 million this quarter reflecting our commitment to supporting employees through transitions as we continue to evolve our business. The impact was spread across all business units and most notably, corporate overhead. Excluding severance and approximately $3 million of M&A costs related to Stratos, corporate overhead came in at $38.5 million for the quarter.

Turning to sales events on Slide 7. Ryan discussed the most notable items in the quarter, including strong wins in investment managers, our large regional bank win in private banking and a significant institutional win with a new government client. In Asset Management, this quarter's wins offset client departures, most notably in our institutional business. While losses were previously the only story in this segment, we are now seeing growth elsewhere that offset these headwinds, a promising sign for the trajectory of our asset management businesses.

Turning to Slide 8. SEI delivered strong asset growth, both sequentially and year-over-year. Growth in assets under administration was broad-based across CITs, alternatives and traditional funds. While CITs and traditional funds received some benefit from market appreciation, the majority of the AUA growth was driven by alternatives. Assets under management also increased with modestly positive net flows in advisers, driven by accelerating growth in ETFs and SMEs, which offset continued pressure on traditional mutual funds. Institutional flows were essentially flat, reflecting offsetting sales events. While overall net flows were modest, this trend marks a clear improvement over prior years and supports our evolving asset management strategy. LSV assets under management increased over 4% from Q2, driven by strong market performance and outstanding performance relative to benchmarks. Market appreciation was only partially offset by nearly $3 billion of net outflows, similar to the pace realized in the first half of this year. LSV performance against relative benchmarks is supporting continued strength in performance fees, which totaled $8 million or $3 million at SEI share in Q3.

Turning to capital allocation on Slide 9. We ended the quarter with $793 million of cash and no net debt. We are maintaining an excess cash balance in anticipation of funding the first Stratos close with the balance sheet cash. Share repurchases represented a primary use of capital. totaling $142 million in Q3 and $775 million for the trailing 12 months. That represents SEI repurchasing more than 7% of shares outstanding just over the last year. At the same time, we're deploying incremental capital to strategic investments that support long-term growth. This quarter, we made a $50 million anchor investment in LSV's market-neutral hedge fund. Our early commitment adds credibility to the new strategy and is expected to support future fundraising from institutional investors. Our investment had a strong start, contributing $1.5 million to Q3 results before taxes which has captured a net gain on variable interest entities.

In summary, SEI's third quarter results reflect continued progress across our core businesses. We are focused on driving growth optimizing margins and deploying capital to maximize shareholder value. With that, operator, please open the call for questions.

[Operator Instructions] And our first question will come from the line of Crispin Love with Piper Sandler.

Ryan, you mentioned that 2/3 of your sales events were from alternatives. I don't recall you ever making a comment quite like that as it pertains to sales events. First, are those 2/3 similar to recent quarters, give or take? And then second, when you look at those sales events, the recent ones on the vast majority from the largest alternative players out there, such as the ones that you called out on a slide at Investor Day being clients? Or are they smaller nonpublic alts as well that make up a good portion of those wins?

Crispin, it's a great question. I'll go kind of high level and then kick to Phil. So again, I think it's just an opportunity for us to offer continued transparency into sort of where we're seeing growth and as we touched on in the Investor Day, when you look at alternatives in that overall space and the surging demand for outsourcing that I mentioned, we're just kind of calling that out and trying to give a little bit more transparency and granularity. But when you go to Phil, if you want to chime in here, I think to Christa's question is, is it a lot of the same names that we highlighted that day or new names were a little bit of both.

Thanks, Crispin. This is Phil. Actually, it's a mixture of everything, large clients, small clients, but no single event was greater than 10% of the overall number. So it really is a mixture of things anywhere from private credit to insourcers moving to outsourcing to retail alts to pretty much across the board. We're seeing a lot of alternatives in CITs, but it really was a mix. We expect some other announcements probably early next year to talk a little bit more about some of the larger managers that are moving from insourcing to outsourcing.

Great. I appreciate that and definitely good news there. Second question, can you just give any color on the known contract loss in private banking was a longtime client? Any details on the loss is a merger or competitor takeaways? Just any color would be great.

Sanjay?

Yes, I can answer that question. So first of all, this want to highlight, this is a one-off loss in the last 3-plus years since I took over the responsibility -- and this is something, as Ian mentioned, we knew about it since 2022. This was a major operating model change for this client. And so we should not read this like trend. This is one-off scenario. We have worked with the client. And as you could see, these kind of convergence, they take long time. The onboarding takes time, the deconversion also takes longer time. But as Ryan has mentioned and Sean has got out to be on safer side, we took the hit and announced it in one go. Ryan, do you want to add anything?

I do. I think, Crispin, it's really important to note, and we try to call this out specifically in the script we got the notice literally at the very end of September. And it's a firm that we have known a long time. We have been actively engaged in trying to help them think through their future operating model. But as Sanjay just highlighted there, -- we got the notice. We took the entire loss. I don't think we have full transparency into the entire deconversion schedule and exactly what will go in. So we're definitely erring on the side of conservative here. And I think it's really important to emphasize Sanjay's point, that this is a one-off event. This is absolutely not a trend and it can't be ignored the win that we also have in this quarter as well. But certainly not one, we don't like losses. We worked really hard with this firm. We will support the firm actively as a great partner through their transition to a new operating model. And as you know, I always live in a world of optimism. I think there's always going to be more opportunity for us when we treat the client right on the way out, they will probably find a way back to SEI in other ways.

One moment for our next question. And that will come from the line of Jeff Schmitt with William Blair.

For the Integrated CAF program, you're running close to the Fed funds rate on that cash with a little spread. Is Internet getting a fixed rate? Or are you considering allocating some of that to fixed rates now that the Fed is easing again? Or how should we think about that?

This is Paul, Jeff. So on that, we're earning about 370 basis points presently, and we're giving the investor about 55 basis points yield which is pretty attractive versus our competitors. So we'll continue to look at that investor yield as rates come down. Typically, when a rate comes down 25 basis points, we usually impact the investor by 15, and then we would impact ourselves some point, we'll get to a floor, but that's kind of the current program and the current affairs on the integrated cash.

I think one thing to note when it comes to the integrated cash is to also note that we have 20x the amount in integrated cash and fixed income portfolios. And so when you see a decline in rates, you typically are going to see over time an increase in price. And so some of that, if you look at it in isolation, it will have an impact. But overall, it will be muted by the amount of fixed income we have in our portfolio.

And then in private banks, just looking at the expense growth there, it's running a little bit higher over the last quarter than we had seen in the previous really a year, is that mainly investments in talent that you've been calling out recently? Or what's driving that? And then how should we think about the offshoring with the new service center, would that bring growth down over time?

Jeff, I don't think there's anything unusual to call out here with banking as Sanjay wants to provide color. Some of it is just, as Sean mentioned, investments we make to kind of onboard the backlog make sure that we're kind of set up to really successfully create the experience that we want with these clients. But I don't think there's anything you should read into that. Sanjay?

I would act the same. I think for us, the #1 most important thing is backlog delivery. The signing a new client is a great thing. Yes, we all celebrate but successfully delivering and onboarding those clients is equally important. And that's why you would see sometimes that yes, and that could be for professional services delivery or it would be converting new clients.

And that will come from the line of Alex pond with KBW.

Just wanted to start with the IMS business. Obviously, a strong quarter there. And I know you mentioned the growth there was in part driven by market appreciation and the deployment timing. But just trying to size up if the 3Q margin level is the right way to think about the margin for this business on a forward basis considering adults deployment? And then also just how the margin here might be impacted sequentially by the ongoing investments you're making? And just trying to see if there will be any impact there from a timing perspective, just in terms of a higher expected investment level in 1 quarter or the other.

Sure. So this is Sean. So as I indicated last quarter, we were actually kind of given some light guidance to -- the Street that the margin improvement, we were anticipating good margins going forward, but we do know we need to make certain investments whether it's anticipation of new clients coming on board and us hiring ahead of those clients. Again, as I mentioned in my remarks, the Q3 improvement in margins did take us a little bit by surprise. Some of that, as Phil mentioned, was due to market appreciation. I mentioned that in my comments. That margin or market appreciation, obviously is not tied to cost -- so when -- with the market appreciation, you're going to have higher margins than expected. On your -- the second part of your question on what we expect in the future, we're still expecting strong margins when I give -- like guidance, I would call it, light guidance on what we may expect or what you can expect from margins going forward, I'm really giving more guidance over a period of time as opposed to quarter-over-quarter. So we do have for Q4 going into Q1 into next year, we will continue to be making investments into the platform. There are certain things that in Phil's business, we need to invest in front of, whether that's hiring talent in order to support future growth, whether that is certain parts of our technology base. So in a broad brush, we would expect margins to be relatively flat, if not a downtick, especially as we move into 2026.

I think the other thing is I think it's important to add to that, though, that though and I think we try to continue to emphasize this message. When we think about how we run the company, we're not trying to run the company on a unit-by-unit basis and get too focused on the individual margins in the unit. So if we saw -- and I'm not forecasting or foreshadowing anything. I'm just saying what we see, as Phil talked about in New York, what we see with that pipeline and what we see with that client base right now, we are going to maximize that opportunity. And if that required us to take the margins down a little bit in IMS, we would be more focused on SEI's margins and what we would do in other units to make sure SEI's margins continue to grow and expand, as Sean talked about in New York, but I mean, Phil, I think, is really consistent as he was in New York and here, we are really, really enthusiastic about what we see right now with our existing client base and pipeline in and where we're positioned competitively, we will not let that window pass a bit.

Got it. Understood. No, that's helpful. And then maybe just 1 more. Just wondering if you could speak to the sales mix between U.S. and international this quarter and also maybe how that's tracking year-to-date relative to last year. I know it's still early days on the revamp for that area of the business. But maybe additionally, if you could just walk us through maybe what we should be looking for over the coming months and quarters as it relates to just tracking the progress you're making on the international front.

Yes. This is Sanjay here. So on the international front, as I said on the Investor Day, we are in the early phases of defining our go-to-market strategy, and as I said at that time, we are going to focus on maximizing our presence in the jurisdiction since we already have presence. So for example, U.K., Taplin or Luxembourg at those jurisdictions how we continue to expand our presence there. And we are in the process of defining our strategy. And the other part, you're looking at, okay, how we maximize our opportunities through existing clients. The clients we already had in U.S. market, and they have processed in those jurisdictions. So that's what our focus would be. Ryan, Sean, do you want to add anything?

Yes. I'll just -- this is Sean. I'll just echo what Sanjay said. Coming off the heels of Investor Day just a few weeks ago, kind of letting everyone there know that we are looking at the difference between domestic and international. I would actual what Sanjay said, a little bit early days. So I don't think, as we sit here today, we're ready to start giving color around revenue mix between international, that will come more as we realign our segments as we start disclosing our segments and with anticipation that at that time, we'll give more breakdown between international growth versus domestic growth.

One moment for our next question. And that will come from the line of Ryan Kenny with Morgan Stanley.

Can you unpack a little bit more how you're thinking about the pace of buyback you did 1.6 million shares in the quarter. Is that the right pace going forward? Or should we expect a slowdown as the Stratos acquisition moves forward?

The way I would answer that is very similar to the way I answered at Investor Day. So we are expecting that free cash flow on a forward-looking 12-month run rate would be we would be returning that 90% to 100% through dividends or buyback. So that's the way I'm looking at it. So the cash build, as I mentioned, is anticipation of drawing that cash down through the Stratos -- consummation of the Stratos deal. And then going forward, I think you can expect whatever our free cash flow that we generate, we're going to be returning that somewhere between 90% and 100% back to the shareholders either through dividends, but primarily through buybacks.

That's helpful. And then separately, we've seen some modest credit fears in the market with a few bankruptcies and you're a big private credit servicer. So are you seeing any impact at all in your private credit servicing pipeline? It sounds like no, all good, but would be helpful to clarify.

Sure, Ryan. This is Bill McCabe. I would start by saying that IMS business is really, really diversified by product, by jurisdiction, by type of client. So -- but we have spoken to a lot of our private credit managers. They literally are the best of the best in the industry, and they really know how to manage credit risk. They tell us that they're not concerned at all. They're still launching products aggressively. And collectively, they do say that there could be a new manager that entered the space on the smaller side, and there could be some struggles in the future. But that's in a part of the market that we really don't play in. We're on the higher end of the market. They're doing really well. The one interesting fact on top of all of that is that we really get paid for the most part with private credit based on invested capital. So we're not subject to mark-to-market or NAV. So we don't really -- as of right now, we don't see any real risk for the business.

[Operator Instructions] And our next question will come from the line of Patrick O'Shaughnessy with Raymond James.

So I understand, I heard you when you said that we should not read today's chunky client loss that you spoke about in private banks as a trend going forward. But to what extent are there other high-risk relationships in your existing private bank client portfolio that you're keeping an eye on at this point?

Patrick, that's a great question. As of today, -- we are not aware of any such large client or any such losses 1 example. Early this month, we hosted all of our clients here in Oak campus. The engagement was the best engagement over the last 3 years. So I don't see that as a trend or a big risk. Brian, Sean?

I completely agree with you. I mean there's -- we are always got to be vigilant in front of our clients, engage with our clients. But relative to where we are here a few years ago, we feel extremely confident that we are in the right place with our clients in the banking business.

Sorry to interrupt. So -- and then for my follow-up question, -- with the divestiture of the Archway family offices business from the investment in new businesses segment, can you just remind us what's left in that investment in new business segment and the strategic importance of that for SEI?

So included in ventures, there's really 2 main revenue streams, although albeit they're not large. One is our sphere business and other the other pieces are private Wealth Management business. And those, as I mentioned on Investor Day, if and when we resegment the organization, that segment from a revenue standpoint or even from a segment standpoint, will cease to exist that revenue will then follow the client and the related other segment that it pertains to.

And we do have a follow-up question, and I believe that will come from the line of Ryan Kenny with Morgan Stanley.

Can you quantify how much margin suppression there's been from accelerated investment, any numbers or quantification we can think about?

Yes, Ryan, this is Sean. I don't think I could quantify that. That's actually not really the way we think about the business. It's a great question, but I could not sit here and quantify that for you.

Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. Ryan Hicke for any closing remarks.

Thank you all for your questions and for joining us today. As we close the quarter, I want to emphasize that SEI is executing on a strategy that positions us for long-term success. But I think it's important as we close the call, we reflect a little bit on the results this quarter. We delivered record earnings per share. The IMS unit had a record sales quarter. We had an important strategic win in the banking business and I know we didn't touch on this in much of the Q&A, but there are some really good leading indicators and lagging indicators when we start to unpack what's going on in the asset management businesses at -- and for those reasons, we're confident in our ability to capitalize on opportunities ahead, deliver for our clients and create value for our shareholders. But thanks again, everybody, for your time and interest in SEI, and we look forward to updating you next quarter.

This concludes today's program. Thank you all for participating. You may now disconnect.