10-Q: SEI Investments Reports Strong Q3 2026 Revenue Growth

SEI Investments Company announced a 14% increase in total revenues for the nine months ended September 30, 2026, driven by strong performance across its key segments and strategic acquisitions.

Summary

• SEI Investments Company reported a 14% increase in total revenues for the nine months ended September 30, 2026, reaching $1.93 billion, compared to $1.69 billion in the same period of 2025.
• Income from operations saw a significant increase of 26% to $584.5 million for the nine-month period.
• Net income attributable to SEI Investments Company slightly decreased by 1% to $538.4 million for the nine months, while diluted earnings per share rose by 3% to $4.37.
• The company completed the acquisition of Stratos Wealth Holdings, which contributed $126.7 million to revenue in the first nine months of 2026.
• Total assets under management grew by 12% to $606.4 billion, and client assets under administration increased by 16% to $1.41 trillion.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this filing as moderately positive, reflecting solid revenue growth and improved operational efficiency, though tempered by acquisition-related expenses and ongoing market uncertainties.

Positives

• Total revenues increased by 14% to $1.93 billion for the nine months ended September 30, 2026.
• Income from operations increased by 26% to $584.5 million for the nine-month period, indicating improved operational efficiency.
• The Investment Managers segment saw a 15% revenue increase for the nine months, driven by higher administration fees and positive cash flows.
• The Private Banks segment experienced an 11% revenue increase for the nine months, attributed to new client conversions and market appreciation.
• The Investment Advisors segment showed a strong 27% revenue increase for the nine months, boosted by separately managed account programs and the Stratos acquisition.
• Total assets under management grew by 12% to $606.4 billion.
• Client assets under administration increased by 16% to $1.41 trillion.
• The company's credit facility remains largely undrawn, with $495.4 million available as of October 20, 2026.

Negatives

• Net income attributable to SEI Investments Company decreased by 1% to $538.4 million for the nine months ended September 30, 2026.
• The Investments in New Businesses segment experienced a 34% revenue decrease for the nine months, largely due to the divestiture of the SEI Family Office Services business.
• A one-time charge of $32.5 million was recognized in the third quarter of 2026 related to a termination agreement with Stratos.
• Amortization expense increased significantly by 73% to $57.2 million for the nine months, primarily due to acquired intangible assets from the Stratos acquisition.
• Interest and dividend income decreased by 34% for the nine-month period due to lower invested cash balances and declining interest rates.

Risks

• Market-driven risks related to capital market conditions, asset values, interest rates, market volatility, and investor sentiment.
• Client and relationship risks, including 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 its operating cash flow, available borrowing capacity, and existing cash reserves will be sufficient to meet operational needs, expected M&A activity, and fund its stock repurchase program for at least the next 12 months and the foreseeable future. Forward-looking statements are subject to risks and uncertainties, including market conditions, client attrition, fee compression, product innovation, cybersecurity threats, regulatory changes, and geopolitical instability.

Management Comments

• The increase in revenues from Assets under management, administration, and distribution fees was primarily driven by higher assets under administration due to cross-sales to existing alternative investment clients and new sales within the Investment Managers segment, as well as market appreciation and positive cash flows into separately managed account programs of the Investment Advisors segment.
• Operating expenses increased primarily from compensation, benefits and other personnel costs and higher direct costs reflected in subadvisory, distribution and other asset management costs, largely attributable to business growth.
• The Stratos acquisition contributed $126.7 million to revenue and $10.5 million to operating profit during the first nine months of 2026.
• The decrease in the effective tax rate was primarily due to higher excess tax benefits recognized on employee stock option exercises and the favorable impact of purchased energy tax credits.

Industry Context

StockSavvy.ai notes that SEI's performance aligns with broader trends in the financial services industry, showing resilience and growth in asset and administration services despite market volatility. The company's strategic acquisitions, like Stratos, indicate a focus on consolidating market share and expanding service offerings in a competitive landscape.

Comparison to Industry Standards

• The 14% year-over-year revenue growth for the nine-month period is robust compared to many peers in the asset management and financial technology sectors, which have seen more moderate growth.
• The 26% increase in operating income suggests strong operational leverage, potentially outperforming industry benchmarks that may be facing margin pressures.
• The company's significant increase in assets under administration (16%) and management (12%) indicates successful client retention and acquisition strategies, often a key differentiator in the industry.
• The substantial increase in amortization expense related to acquired intangible assets highlights the company's aggressive M&A strategy, which is common among larger players seeking to expand capabilities and market reach, though it can impact short-term profitability.
• The decline in interest and dividend income reflects a broader industry trend of lower yields on cash reserves due to prevailing interest rate environments.

Legal Proceedings

• Rubicon Wealth Management LLC litigation: Lawsuits filed against SPTC as custodian for Rubicon accounts remain pending; SPTC is vigorously defending.
• SEI Capital Accumulation Plan class action (Hall Complaint): A settlement agreement has been reached, with preliminary approval pending.
• Various other examinations, investigations, actions, and claims arising in the normal course of business that are not believed to be material.

Stakeholder Impact

• Shareholders: Potential for increased value through revenue growth, operational efficiencies, and stock repurchases, offset by acquisition-related expenses and market risks.
• Employees: Continued investment in personnel costs reflects growth, but also potential for increased workload and integration challenges.
• Clients: Continued growth in assets under management and administration suggests client confidence, but ongoing regulatory changes and competitive pressures may impact service offerings.
• Creditors: The company maintains a strong liquidity position with an undrawn credit facility, indicating low immediate risk to creditors.

Next Steps

• Continue to integrate the Stratos acquisition and realize synergies.
• Focus on growth in key segments: Investment Managers, Private Banks, and Investment Advisors.
• Monitor and manage market-driven risks and competitive pressures.
• Continue to invest in technology platforms like SEI Wealth Platform and SEI Scope.
• Manage ongoing regulatory scrutiny and compliance obligations.
• Execute on the expanded stock repurchase program.

Key Dates

Recommendation

The filing shows solid revenue growth and operational improvements, driven by strategic acquisitions and strong performance in key segments. However, the slight decrease in net income, increased amortization expenses due to acquisitions, and ongoing market and regulatory risks warrant a cautious 'hold' stance. Investors should monitor the successful integration of Stratos and the impact of market volatility.

Keywords

financial technology, asset management, investment processing, Stratos Wealth Holdings, SEI Wealth Platform, LSV Asset Management, corporate governance, financial services