SEI Investments (SEIC) Q3 Earnings Top Estimates, AUM Down

SEI Investments Co.’s (SEIC Free Report) third-quarter 2022 adjusted earnings of 77 cents per share outpaced the Zacks Consensus Estimate of 69 cents. The bottom line, however, reflects a decline of 21% from the prior-year quarter.

Higher revenues aided SEIC’s quarterly results. However, a rise in expenses and a fall in assets under management (AUM) balance were headwinds.

The company CEO, Ryan Hicke, noted, “All of our markets are facing a changing landscape, and while this change is challenging, we believe it reinforces growth opportunity for SEI.”

The results in the reported quarter excluded one-time costs of the voluntary separation program. After considering this, net income was $61.7 million, down 55% from the year-ago quarter.

Revenues & AUM Down, Expenses Rise

Total revenues were $471.3 million, down 3% year over year. The fall was due to lower asset management, administration and distribution fees, partly offset by an increase in information processing and software servicing fees. The top line, however, beat the Zacks Consensus Estimate of $459.4 million.

Total expenses were $420.3 million, which jumped 22%. The rise was mainly due to an increase in compensation, benefits and other personnel costs, data processing and computer-related expenses, consulting, outsourcing and professional fees and facilities, supplies and other costs.

Operating income plunged 64% year over year to $51 million.

As of Sep 30, 2022, AUM was $378.2 billion, reflecting a decline of 3% from the prior-year quarter. Client assets under administration (AUA) were $785.4 billion, down 9%. Client AUA did not include $12.5 billion related to Funds of Funds assets reported on Sep 30, 2022.

Share Repurchase Update

In the reported quarter, SEI Investments bought back 0.89 million shares for $49.4 million.

Conclusion

Persistently rising expenses are expected to hurt the company’s bottom line to an extent in the near term. SEIC’s increased exposure to fee-based revenues remains another major concern. However, its robust AUM balance, global presence and diverse range of product offerings are expected to continue to drive growth.
 

Currently, SEI Investments carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Asset Managers

BlackRock, Inc.’s (BLK Free Report) third-quarter 2022 adjusted earnings of $9.55 per share surpassed the Zacks Consensus Estimate of $7.93. The figure reflects a decrease of 15.8% from the year-ago quarter.

Results benefited from a decline in expenses. However, lower revenues and assets under management (AUM) balance were the major headwinds for BLK.

Invesco’s (IVZ Free Report) third-quarter 2022 adjusted earnings of 34 cents per share missed the Zacks Consensus Estimate of 43 cents by a significant margin. The bottom line plunged 55.8% from the prior-year quarter. Our estimate for earnings was 49 cents.

Results were adversely impacted by lower AUM balance and long-term outflows, which hurt revenues. However, a decline in operating expenses was a tailwind for Invesco.

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