10-Q: SEI Investments Reports Q2 2026 Financial Results

SEI Investments Company announced its financial results for the second quarter and first six months of 2026, showing revenue growth driven by increased assets under administration and management.

Summary

• SEI Investments Company reported total revenues of $641.6 million for the three months ended June 30, 2026, a 15% increase compared to $559.6 million in the same period of 2025.
• For the six months ended June 30, 2026, total revenues were $1.26 billion, up 14% from $1.11 billion in the prior year period.
• Net income attributable to SEI Investments Company decreased by 14% to $195.7 million for the second quarter of 2026, compared to $227.1 million in the second quarter of 2025.
• For the first six months of 2026, net income attributable to SEI Investments Company decreased by 2% to $370.1 million, compared to $378.6 million in the first six months of 2025.
• Diluted earnings per common share were $1.59 for the second quarter of 2026, down from $1.78 in the prior year period.
• The company's acquisition of Stratos Wealth Holdings, completed in stages through December 2025, contributed $40.1 million to revenue in the first six months of 2026.
• Assets under management, administration, and advisement totaled $2.06 trillion as of June 30, 2026, an increase of 21% from $1.69 trillion as of June 30, 2025.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this filing as having a negative sentiment due to the reported decrease in net income and diluted EPS, despite revenue growth. The increase in operating expenses and segment-specific losses contribute to this assessment.

Positives

• Total revenues increased by 15% to $641.6 million for the three months ended June 30, 2026, and by 14% to $1.26 billion for the six months ended June 30, 2026.
• Assets under management, administration, and advisement grew to $2.06 trillion as of June 30, 2026, a 21% increase year-over-year.
• The Investment Managers segment saw a 17% revenue increase in Q2 2026, driven by increased administration fees and positive cash flows.
• The Private Banks segment's revenue grew by 11% in Q2 2026, supported by new client conversions and market appreciation.
• The Investment Advisors segment experienced a significant 30% revenue increase in Q2 2026, largely due to the Stratos acquisition and growth in separately managed accounts.
• LSV Asset Management's earnings increased by 14% to $70.4 million in the first six months of 2026, driven by market appreciation and increased performance fees.
• The company repurchased 1.3 million shares of common stock for $112.4 million in the second quarter of 2026.

Negatives

• Net income attributable to SEI Investments Company decreased by 14% to $195.7 million for the second quarter of 2026.
• Net income attributable to SEI Investments Company decreased by 2% to $370.1 million for the first six months of 2026.
• Diluted earnings per common share decreased to $1.59 in Q2 2026 from $1.78 in Q2 2025.
• The Investments in New Businesses segment experienced a 43% revenue decrease in Q2 2026.
• Operating expenses increased by 8% to $444.6 million in Q2 2026, primarily due to higher compensation and acquisition-related costs.
• The company reported a net loss of $579,000 in the Investments in New Businesses segment for Q2 2026.

Risks

• Market-driven risks related to capital market conditions, asset values, interest rates, market volatility, and investor sentiment.
• Client attrition, unfavorable contract renewals, and loss of large clients.
• Fee compression and competitive pricing pressure across investment management and technology services.
• Product development and innovation risks, including delays, cost overruns, system issues, and failure of new offerings to gain market acceptance.
• Cybersecurity threats, including cyberattacks, data breaches, system failures, and third-party technology risks.
• Regulatory changes and evolving compliance obligations across U.S. and global jurisdictions.
• Litigation, regulatory examinations, and investigations.
• Geopolitical instability, including wars, global tensions, and state-sponsored cyber activity.

Future Outlook

The company anticipates that its available funds and cash flow from operations will be sufficient to meet its operational cash needs, expected M&A activity, and fund its stock repurchase program for at least the next 12 months and for the foreseeable future. Management expects to recognize approximately $32.4 million in stock-based compensation expense during the remainder of 2026.

Management Comments

• The company's core capabilities unify technology, operations, and asset management to power client transformation across advice, asset management, and administration.
• The company is experiencing a complex and changing regulatory environment across its markets, with increased regulatory oversight and a greater propensity for regulators to pursue enforcement actions.
• Management believes that the company's operating cash flow, available borrowing capacity, and existing cash and cash equivalents will provide adequate funds for its obligations and ongoing operations.
• Management believes that adjusting for certain non-GAAP measures, such as acquisition-related costs and amortization of acquired intangible assets, helps the reader's ability to understand core operating results and increases comparability.

Industry Context

StockSavvy.ai notes that SEI's performance reflects broader industry trends in financial technology and asset management, including the impact of strategic acquisitions like Stratos and the ongoing integration of new platforms. The company's revenue growth is tied to increasing assets under management and administration, a key indicator in the asset management sector. However, the company also faces industry-wide challenges such as fee compression, regulatory scrutiny, and the need for continuous technological innovation.

Comparison to Industry Standards

• The revenue growth of 14-15% for the first six months of 2026 is generally in line with or slightly above the average growth rates seen in the broader financial services and fintech sectors, which have been experiencing moderate expansion.
• The increase in assets under management and administration to $2.06 trillion demonstrates SEI's significant market share, comparable to other large global asset managers and custodians.
• The reported operating margins for segments like Investment Managers (40%) and Investment Advisors (42%) are strong and competitive within the asset management and wealth advisory industries, often exceeding industry averages for firms of similar scale.
• The decline in net income and EPS, while a concern, is not entirely out of line with companies facing increased operating expenses due to strategic investments and acquisitions, a common theme in the competitive fintech landscape.

Legal Proceedings

• The Rubicon Actions lawsuits against SPTC remain pending in the Court of Common Pleas of Montgomery County, Pennsylvania, in the discovery phase.
• A class action complaint (Hall Complaint) was filed against the Company and affiliated entities regarding alleged breach of fiduciary duties under ERISA concerning the SEI Capital Accumulation Plan's investment options.
• The Washington Department of Financial Institutions (DFI) filed a lawsuit against Equilus Group, Inc. and related entities, naming SPTC as a financial institution defendant; SPTC is cooperating with the appointed Receiver.
• The Company is party to various other examinations, investigations, actions, and claims arising in the normal course of business that are not believed to be material.

Stakeholder Impact

• Shareholders may be impacted by the decrease in net income and diluted EPS, despite revenue growth and strategic acquisitions.
• Clients may benefit from the company's continued investment in technology and platform enhancements, such as the SEI Wealth Platform.
• Employees may be affected by increased personnel costs related to business growth and potential restructuring or integration following acquisitions.

Next Steps

• The company anticipates finalizing its accounting for the Stratos Acquisition and EMI Entities acquisition during the fourth quarter of 2026.
• SEI Investments (Europe) Limited is working with the FCA to address concerns and potentially lift the VREQ.
• The company will continue to monitor and comply with evolving regulatory requirements across its global operations.

Key Dates

Recommendation

While revenue and assets under management show positive growth, the decrease in net income and EPS, coupled with increased operating expenses and ongoing legal/regulatory matters, suggests a cautious approach. The company's strategic investments and acquisitions are promising for long-term growth, but near-term profitability is impacted. Therefore, a 'hold' recommendation is appropriate pending clearer signs of sustained profit recovery and resolution of legal/regulatory issues.

Keywords

Financial Technology, Asset Management, Investment Operations, Wealth Management, Software Servicing, Stratos Acquisition, SEI Wealth Platform, LSV Asset Management