SEI Investments signals expanding alternative asset manager pipeline and record sales momentum while advancing Stratos partnership

Earnings Call Insights: SEI Investments Company (SEIC) Q3 2025

MANAGEMENT VIEW

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Ryan Hicke, CEO, reflected on the "overwhelmingly positive feedback" from Investor Day and emphasized, "We are committed to disciplined execution, transparent communication and creating long-term value for our clients and shareholders." He highlighted "outstanding performance with EPS reaching $1.30"—an all-time high for SEI, excluding one-time items. Hicke detailed, "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." The CEO called attention to the "single largest mandate win in our institutional segment to date, a multibillion dollar fixed income assignment for a state government client," and a $13 million win in Private Banking with a leading super regional U.S. bank.

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Hicke addressed a contract loss in private banking, stating, "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... The financial impact should be modest as deconversions typically occur over multiple years."

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Hicke also described progress with the Stratos partnership, noting, "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."

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Sean Denham, CFO & COO, stated, "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 Advisors 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." Denham emphasized, "Q3 represents an all-time record level of EPS for a quarter, excluding unusual items like the significant gain on sale realized last quarter."

OUTLOOK

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Management indicated, "Due to the size and complexity of these [alternative asset manager] 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."

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Hicke reiterated confidence in the growth runway for IMS and the broader sales pipeline, stating, "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."

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The company expects to close the initial phase of the Stratos partnership in late 2025 or early 2026.

FINANCIAL RESULTS

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SEI reported EPS of $1.30 for Q3 2025, with unusual items benefiting EPS by $0.03 (insurance proceeds), $0.01 (earn-out true-up), and offset by $0.02 (M&A expense) and $0.02 (severance expense). Excluding these, EPS grew 8% sequentially and 17% year-over-year.

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Private Banking revenue increased 4% year-over-year, driven by growth on the SWP platform. The Investment Managers segment delivered double-digit revenue and operating profit growth. Advisors achieved the highest year-over-year revenue growth among all segments.

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LSV assets under management increased over 4% from Q2, with performance fees totaling $8 million or $3 million at SEI share in Q3.

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The company ended the quarter with $793 million in cash and no net debt. Share repurchases totaled $142 million in Q3 and $775 million over the trailing 12 months, representing more than 7% of shares outstanding repurchased in the past year.

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SEI made a $50 million anchor investment in LSV's market-neutral hedge fund, which contributed $1.5 million to Q3 results before taxes.

Q&A

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Crispin Love, Piper Sandler: Asked about the composition and size of alternative sales events. Phil McCabe, EVP & Head of IMS, responded, "Actually, it's a mixture of everything, large clients, small clients, but no single event was greater than 10% of the overall number... 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."

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Love inquired about the private banking contract loss. Sanjay Sharma, EVP, explained, "this is a one-off loss in the last 3-plus years... This was a major operating model change for this client... We have worked with the client."

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Jeffrey Schmitt, William Blair: Asked about the integrated cash program and expense growth in private banking. Paul Klauder, SVP & MD of Institutional Group, said, "we're earning about 370 basis points presently, and we're giving the investor about 55 basis points yield." Denham noted, "we have 20x the amount in integrated cash and fixed income portfolios."

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Alexander Bond, KBW: Inquired about IMS margins and future expectations. Denham replied, "the Q3 improvement in margins did take us a little bit by surprise... we're still expecting strong margins... we will continue to be making investments into the platform."

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Ryan Kenny, Morgan Stanley: Asked about buybacks amid the Stratos acquisition. Denham said, "we would be returning that 90% to 100% [of free cash flow] through dividends or buyback."

SENTIMENT ANALYSIS

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Analysts' tone was generally constructive, with a focus on granular details of sales composition, margin sustainability, and risk in private banking. Concerns centered on one-off losses and expense trends, but there was recognition of broad-based growth.

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Management maintained a confident tone throughout, especially when discussing record EPS, sales momentum, and the strategic pipeline, as in Hicke’s statement, "our confidence in SEI's ability to execute and outperform is stronger than ever."

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Compared to the previous quarter, management's tone remained confident but was more assertive about record performance and future opportunities. Analyst sentiment was neutral to slightly positive, with probing questions but no pronounced skepticism.

QUARTER-OVER-QUARTER COMPARISON

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Guidance language shifted from cautious optimism in Q2 to stronger conviction about sales pipelines and growth opportunities in Q3.

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The strategic focus on alternative asset management and outsourcing intensified, with greater detail on pipeline and diversification.

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Key metrics improved, with Q3 EPS reaching $1.30 (excluding one-time items), up from $1.20 in Q2 (excluding significant gains).

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Management’s tone evolved from strategic progress and transformation to emphasizing record achievements and expanding opportunity.

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Analyst questions remained focused on sales events, margin sustainability, and risks, but the overall atmosphere was more positive, with less focus on private banking delays.

RISKS AND CONCERNS

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The only notable contract loss in private banking was identified as a "one-off" event linked to a client’s strategic shift, with management asserting that "the financial impact should be modest."

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Management stressed vigilance in monitoring client relationships but reported no other high-risk exposures in the private banking portfolio.

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Analyst concerns included the potential for margin pressure due to investments, but management indicated these were planned and would support long-term growth.

FINAL TAKEAWAY

SEI Investments Company closed Q3 2025 with record EPS and robust sales momentum across its core business units, driven by exceptional performance in Investment Managers and strategic wins in asset management and private banking. The company emphasized the durability of its growth strategy, expanding sales pipelines, and the deepening of key partnerships such as Stratos. Management underscored that recent setbacks were isolated, while ongoing investments in technology, automation, and talent position SEI for continued value creation and long-term shareholder returns.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/seic/earnings/transcripts]

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* SEI Investments Company (SEIC) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4832112-sei-investments-company-seic-q3-2025-earnings-call-transcript]
* SEI Investments Company 2025 Q3 - Results - Earnings Call Presentation [https://seekingalpha.com/article/4832131-sei-investments-company-2025-q3-results-earnings-call-presentation]
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