10-Q: SEI Investments Reports Q1 2026 Results, Revenue Up 13%

SEI Investments Company announced its first quarter 2026 financial results, reporting a 13% increase in total revenues to $622.2 million and a 15% rise in net income attributable to SEI Investments Company to $174.5 million.

Summary

• SEI Investments Company reported first quarter 2026 revenues of $622.2 million, a 13% increase compared to $551.3 million in the first quarter of 2025.
• Net income attributable to SEI Investments Company rose by 15% to $174.5 million, or $1.40 per diluted share, compared to $151.5 million, or $1.17 per diluted share, in the prior year period.
• Total assets under management, administration, advisement, and platform reached $1.93 trillion as of March 31, 2026, an increase of 20% from $1.61 trillion as of December 31, 2025.
• The company completed the first stage of its strategic investment in Stratos Wealth Holdings in December 2025 and made further purchases of entities within the Stratos network in Q1 2026.
• Operating expenses increased by 10% to $432.7 million, driven by higher personnel, consulting, and outsourced vendor costs.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report, with strong revenue and net income growth, significant increases in assets under management, and successful integration of acquisitions, though rising expenses and tax rate impacts warrant attention.

Positives

• Total revenues increased by 13% to $622.2 million for the three months ended March 31, 2026.
• Net income attributable to SEI Investments Company increased by 15% to $174.5 million for the three months ended March 31, 2026.
• Diluted earnings per common share increased to $1.40 from $1.17 in the prior year period.
• Total assets under management, administration, advisement, and platform grew by 20% to $1.93 trillion.
• The Investment Managers segment saw a 15% revenue increase and maintained a 39% operating margin.
• The Private Banks segment experienced an 11% revenue increase and improved its operating margin to 21% from 17%.
• The Investment Advisors segment reported a 24% revenue increase, partly due to the Stratos acquisition.
• The company repurchased 2.55 million shares of common stock for $208.3 million during the quarter.

Negatives

• Operating expenses increased by 10% to $432.7 million, primarily due to higher personnel, consulting, and outsourced vendor costs.
• The Investments in New Businesses segment reported a revenue decrease of 52% to $8.0 million, largely due to the divestiture of the SEI Family Office Services business.
• Client assets under advisement decreased by 26% for the total company.
• Amortization expense increased by 71% to $18.4 million, largely due to intangible assets from the Stratos acquisition.
• The effective tax rate increased to 23.4% from 22.8%, primarily due to non-deductible executive compensation.

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.
• Business model innovation and expansion risks, including entry into new markets or channels.
• Market consolidation and competitive disruption from traditional competitors, fintechs, and large technology firms.
• Key personnel and broader human capital risks, including retention, workforce reductions, and talent availability.
• M&A execution and integration risks, including the Stratos acquisition and other strategic transactions.
• Dependence on third-party service providers, vendors, market infrastructure, sub-advisers, and pricing services.
• Process errors in fund accounting, investment operations, pricing, and other judgment-based or manual activities.
• Operational resilience risks, including business continuity and disaster recovery failures.
• Rapid growth and capacity constraints impacting cost structure, compliance, controls, cybersecurity, and scalability.
• Cybersecurity threats, including cyberattacks, data breaches, system failures, and third-party technology risks.
• Risks related to artificial intelligence, machine learning, and automation.
• Tokenization risks, including regulatory uncertainty, cybersecurity, custody, valuation, liquidity, and smart contract risks.
• Open-source software risks, including security vulnerabilities and license compliance.
• Data privacy and protection risks related to handling sensitive personal and client data.
• Intellectual property risks involving protection of proprietary technology and infringement claims.
• System outages and downtime affecting platform availability, processing, and data integrity.
• Technology disruption, software defects, and development or implementation delays.
• Earnings volatility and cash flow exposure, including reliance on LSV Asset Management and strategic investments.
• Interest rate, currency, and tax law change risks affecting revenues, margins, and asset values.
• Covenant compliance risks under revolving credit facilities.
• Holding company structure risks, including restrictions on subsidiary cash distributions.
• Liquidity risk, particularly during market stress and in alternative investments.
• Investment performance risk and continued fee pressure across investment products.
• Insourcing of investment functions and increased operational complexity.
• Proprietary capital deployment risks and conflicts of interest.
• Fiduciary risk related to retirement plans, OCIO services, and competitive pressures.
• Regulatory changes and evolving compliance obligations across U.S. and global jurisdictions.
• Financial crime, sanctions, AML, and anti-corruption compliance risks.
• Privacy and data protection regulatory risk.
• Conflicts of interest involving clients, affiliates, directors, executives, and acquisitions.
• Litigation, regulatory examinations, and investigations.
• Shareholder activism and ESG-related scrutiny.
• Geopolitical instability, including wars, global tensions, and state-sponsored cyber activity.
• Unforeseen or catastrophic events, including pandemics, extreme weather, and natural disasters.
• Climate change and ESG-related risks, including regulatory, reputational, and transition risks.

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. The company expects to recognize approximately $49.2 million in stock-based compensation expense during the remainder of 2026.

Management Comments

• Revenue from Assets under management, administration, and distribution fees increased in the first three months of 2026 primarily from higher assets under administration due to cross sales to existing alternative investment clients of the Investment Managers segment as well as new sales within the segment.
• Revenue growth was also partially offset by client losses in the Institutional Investors segment.
• The increase in personnel costs was primarily due to business growth, primarily in the Investment Managers segment.
• The increase in amortization expense was primarily due to intangible assets related to the Stratos acquisition.
• The increase in the effective tax rate for the three months ended March 31, 2026 was primarily due to non-deductible executive compensation.
• SEI repurchased 2.6 million shares of its common stock for $208.3 million in the first three months of 2026.

Industry Context

StockSavvy.ai notes that SEI Investments Company's performance in Q1 2026 reflects continued growth in asset and administration fees, driven by market appreciation and strategic acquisitions like Stratos. However, rising operating expenses and the impact of non-deductible compensation on the effective tax rate are areas to monitor.

Comparison to Industry Standards

• The revenue growth of 13% for SEI Investments Company in Q1 2026 is generally in line with or slightly above the average growth rates seen in the broader financial technology and asset management sectors, which have been experiencing moderate expansion.
• The increase in assets under management, administration, advisement, and platform to $1.93 trillion demonstrates SEI's significant scale, positioning it among the larger players in the global financial services infrastructure market.
• The company's operating margin of 39% for the Investment Managers segment is robust and competitive within the asset management industry, where margins can vary significantly based on service offerings and scale.
• The increase in amortization expense due to acquisitions is a common trend among financial services firms pursuing growth through M&A, aiming to integrate new capabilities and client bases.
• The effective tax rate increase due to non-deductible executive compensation is a specific company issue, but overall effective tax rates for financial services companies can be influenced by a variety of factors including geographic mix of earnings and tax law changes.

Legal Proceedings

• Rubicon Wealth Management: Lawsuits filed against SPTC in its capacity as custodian for Rubicon client accounts remain pending.
• LSV Asset Management: SEI and SEI Funds, Inc. are defendants in Qu v. LSV Asset Management, alleging aiding and abetting breach of fiduciary duty.
• SEI Capital Accumulation Plan: Class action complaint filed against the Company and affiliated entities alleging breach of fiduciary duties under ERISA.
• United Kingdom Financial Conduct Authority Supervisory Review of SEI Investments (Europe) Limited: SIEL is addressing concerns raised by the FCA and undergoing a two-stage review.
• Equilus Capital: Washington Department of Financial Institutions filed a lawsuit seeking injunctive relief and appointment of a receiver against Equilus Group and related entities; SPTC is named as a financial institution defendant for freezing accounts.

Stakeholder Impact

• Shareholders: Increased earnings per share and continued stock repurchases may positively impact shareholder value.
• Employees: Increased personnel costs suggest investment in workforce, potentially due to business growth.
• Clients: Continued growth in assets under management and administration indicates client retention and acquisition. However, client losses in Institutional Investors segment are noted.
• Regulators: The company is actively engaged with various regulatory bodies globally, including the FCA in the UK, and is subject to ongoing examinations and investigations.

Next Steps

• The company anticipates finalizing its accounting for the Stratos Acquisition and the EMI Entities acquisition during the fourth quarter of 2026.
• The company will continue to monitor and address concerns raised by the Financial Conduct Authority of the United Kingdom regarding SEI Investments (Europe) Limited.
• The company will continue to defend itself vigorously in ongoing legal proceedings, including the Rubicon Actions and the Qu Litigation.
• The company will continue to manage its business in a complex and changing regulatory environment.

Key Dates

Recommendation

The company demonstrates solid revenue and earnings growth, driven by strong asset growth and strategic acquisitions. However, rising operating expenses, increased amortization from acquisitions, and a higher effective tax rate due to non-deductible compensation present headwinds. While the outlook is positive, these factors warrant a 'hold' recommendation pending clearer visibility on expense management and the full integration of recent acquisitions.

Keywords

SEI Investments, Form 10-Q, Quarterly Report, Financial Technology, Asset Management, Investment Operations, Investment Processing, Stratos Acquisition, LSV Asset Management, Financial Services, Revenue Growth, Earnings Per Share