AlTi (ALTI) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - AlTi generated revenues of $49 million in Q2 2024, reflecting a 4% decrease compared to Q2 2023, but on a like-for-like basis, revenues would have increased by 4% year-on-year [20][21] - The company reported a net loss of$ 9 million in Q2 2024, compared to a net income of $28 million in the same period last year, largely due to a decline in other income [23] - Adjusted EBITDA for Q2 was$ 5.5 million, with an adjusted EBITDA margin of 11%, down from 13% in the previous quarter [25] Business Line Data and Key Metrics Changes - Wealth management revenues increased by 20% to $41 million in Q2 2024, with assets under management (AUM) growing by 15% to$ 56 billion [21][9] - The strategic alternative segment generated $9 million in revenue, down from$ 17 million in Q2 2023, primarily due to lower management fees and reduced transactional fees [22] Market Data and Key Metrics Changes - Assets under management and advisement grew 4% to $72 billion over the trailing 12 months, with a notable 15% growth in the wealth management business [8] - The domestic business saw an 11% increase on an organic basis over the past year, while the international platform secured significant wins across multiple jurisdictions [12] Company Strategy and Development Direction - The company aims to become a leading global independent ultra-high net worth wealth management firm, focusing on strategic acquisitions and optimizing its cost structure [5][7] - Recent investments from Allianz X and Constellation Wealth are expected to enhance AlTi's global footprint and facilitate accretive acquisitions [6][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential in the ultra-high net worth market, particularly in light of the estimated$ 80 trillion generational wealth transfer over the next 20 years [28] - The company is positioned to capitalize on trends among European and Middle Eastern families seeking holistic wealth management solutions [13][14] Other Important Information - The company completed the sale of its European-based trust and private office services businesses for approximately $20 million, allowing it to focus on core recurring revenue businesses [12] - AlTi's normalized operating expenses decreased by 15% compared to the same period in 2023, reflecting ongoing cost-saving initiatives [16] Q&A Session Summary Question: Can you discuss the EBITDA margin improvement in wealth management? - Management expects margin improvement driven by the integration of East End and Envoi, along with future M&A activity [30][31] Question: Is the decline in alternative AUM due to repositioning in the real estate business? - Yes, the decline is primarily due to repositioning efforts, including the sale of LXi and the impact of deconsolidating certain funds [32][33] Question: How much capital is left to deploy from the Allianz investment? - The company has not yet deployed any of the Allianz capital and has a pipeline for inorganic growth opportunities [36][38] Question: What is the outlook for operating expenses? - Operating expenses have seen significant reductions, but additional costs may arise from M&A activities [40][42] Question: Can you clarify the revenue guidance for wealth management? - Most of the revenue increase was driven by acquisitions, with seasonal outflows expected in Q2 due to tax payments [44][46]