SEI Investments Company (SEIC) Earnings & Analysis

Latest quarter

SEI reported Q3 revenue of $662.0 million, above the $659.7 million consensus. Adjusted earnings per share were $1.64, compared with the $1.59 consensus. On a diluted basis, earnings per share were $1.38, up from $1.30 a year earlier.

Revenue increased from $578.5 million a year earlier. CFO Sean Denham said the investment managers business grew as past sales converted into revenue and clients deployed capital. He attributed private banking growth to professional services, platform expansion and international asset management. Institutional revenue declined as client losses offset some gains from market appreciation and other clients, according to SEI’s filing.

SEI’s operating margin rose to 29.9% from 27.7% a year earlier. Denham said an increased incentive compensation accrual reduced quarterly operating profit by $6 million. He also said a $32.5 million expense related to the termination of a planned acquisition reduced GAAP net income. Free cash flow was $202.2 million, compared with $223.4 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Ryan Hicke said demand from large alternative asset managers and interest in retail-focused services were supporting activity in investment managers. CFO Sean Denham said the business generated $32 million of net sales events in Q3, approximately one-third from new clients and the remainder from existing-client expansions. He said nearly 90% of those events came from alternative asset managers.

Hicke said private banking discussions increasingly involve enterprise transformation, including modernizing operating models and using data, rather than only replacing platforms. He said AI was accelerating client interest in partnering with SEI. Executive Vice President Sneha Shah added that clients wanted fewer, deeper partners and that SEI was creating services in response to their demands.

Asked about ETFs, Hicke said SEI was expanding its lineup across fee schedules, including active strategies and funds covering fixed income and equities. He said he could not give a growth figure, although he hoped the business had the potential to double again next year. Executive Vice President Michael Lane said an unnamed competitor’s decision to require some customers to leave could create opportunities for SEI’s platform business.

On profitability, Denham said the higher incentive compensation accrual reduced adjusted operating margins in Q3. He said SEI continued to invest in technology, product development and senior staff, including in data, AI and professional services. Hicke said the company was also investing in distribution, products, partnerships and talent in asset management.

Looking ahead, Denham said institutional pipelines were improving, but the timing of their contribution to financial results was difficult to predict. He expected fourth-quarter share repurchases to be similar to the third-quarter level.

Guidance

SEI expects approximately $1.5 million of additional incentive compensation expense in Q4 FY2026. Denham expects fourth-quarter share repurchases to be similar to the third-quarter level. He also expects combined transfer agency and fund administration revenue from the retail initiative to exceed $10 million on a run-rate basis by the end of 2027.