SEIC Q3 Deep Dive: Alternative Asset Momentum and Strategic Wins Offset Isolated Client Loss

Financial technology provider SEI Investments (NASDAQ:SEIC) missed Wall Street’s revenue expectations in Q3 CY2025, but sales rose 7.7% year on year to $578.5 million. Its GAAP profit of $1.30 per share was 4.2% above analysts’ consensus estimates.

Is now the time to buy SEIC? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

SEI Investments’ third quarter results saw steady growth, with management highlighting strong contributions from its investment managers segment and a record sales quarter in alternatives. CEO Ryan Hicke described the broad-based sales momentum, particularly within alternatives and client expansions, as a testament to SEI’s competitive position and sector strength. While a contract loss in private banking tempered net sales, Hicke and Sanjay Sharma, Head of Private Banking, repeatedly characterized this as a one-off event tied to a client’s strategic shift rather than a broader trend. Management also pointed to ongoing investments in technology and talent as critical for sustaining business momentum.

Looking ahead, SEI Investments is focusing on capitalizing on new outsourcing demand, expanding partnerships such as the Stratos deal, and advancing internal initiatives in artificial intelligence and tokenization. Management believes that these efforts will drive both efficiency and scalability over time. CFO Sean Denham emphasized planned investments in technology and talent, noting that while these may impact segment margins in the short term, the company remains committed to long-term margin expansion at the enterprise level. Hicke added, “We are really enthusiastic about what we see right now with our existing client base and pipeline in IMS.”

Key Insights from Management’s Remarks

Management attributed the latest quarter’s performance to robust alternative asset demand, diversified client wins, and a strategic focus on technology and operational efficiency.

• Alternatives drive sales momentum: The investment managers segment delivered a record sales quarter, with approximately two-thirds of new business coming from alternative asset managers. Management noted this demand was not concentrated among a few clients but broadly distributed across large and smaller alternative firms.
• Institutional mandate win: SEI’s asset management business secured its largest ever institutional mandate—a multibillion-dollar fixed income assignment for a state government client. This reflects the company’s evolving approach to delivering targeted solutions and its ability to meet increasing demand for specialized strategies.
• Private banking’s mixed results: While the segment posted a meaningful new contract with a major U.S. regional bank, it also experienced a loss due to a client’s strategic shift away from the bank trust model. Management stressed this was an isolated event, not indicative of wider attrition.
• Integrated cash program growth: The advisers business benefited from both market appreciation and growth in the integrated cash program. Management highlighted the competitive yield offered to investors and indicated the program’s resilience even as interest rates fluctuate.
• Margin dynamics and cost optimization: Margins were supported by revenue growth, particularly in investment managers and advisers. However, one-time items and ongoing investments in talent and technology were noted as factors impacting certain segments. Management continues to prioritize cost optimization and targeted investments to support future scalability.

Drivers of Future Performance

Management expects future performance to be shaped by alternative asset demand, ongoing technology investments, and execution on major client wins.

• Alternative outsourcing pipeline: SEI is seeing sustained interest from both new and existing alternative asset managers in outsourcing fund administration, with several large, complex opportunities in the pipeline. Management expects contracting cycles to be lengthy, but anticipates more clarity on these prospects in the coming year.
• Technology and talent investment: Planned investments in technology platforms and talent are designed to support onboarding of new clients and deliver on complex mandates. Management cautioned that these investments could lead to relatively flat or slightly lower margins in some segments, but expects long-term benefits at the company level.
• International expansion focus: SEI remains in the early stages of defining its international go-to-market strategy, aiming to deepen its presence in jurisdictions like the UK, Dublin, and Luxembourg. Management sees maximizing opportunities with existing global clients as a key near-term priority.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) the conversion of alternative asset pipeline opportunities into signed contracts, (2) progress on the Stratos partnership and its impact on advisor channel activity, and (3) the effect of ongoing technology and talent investments on segment and enterprise margins. We will also be attentive to updates on SEI’s international expansion and adoption of AI and tokenization workflows.

SEI Investments currently trades at $81.20, in line with $81.44 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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