Q3 2022 SEI Investments Co Earnings Call
Yes.
Okay.
[music].
Okay.
Ladies and gentlemen, thank you for standing by and welcome to the C. I third quarter 2022 earnings call. At this time all lines are in a listen only mode. Later, we will have a question and answer session. You can queue up at any time during today's call by pressing one zero.
As a reminder, today's conference is being recorded I'd now like to turn the conference over to the head of Investor Relations Lindsay up. So please go ahead.
Okay.
Welcome everyone. Thank you for joining us on today's third quarter 2022 earnings call. Joining me on today's call are Brian Haney, Saic's, Chief Executive Officer, Dennis Mcgonigle, Chief Financial Officer, and our leaders of each of our business segments.
Phil Mccabe foundry Sharma, and Wayne Withrow, Kathy Heilig Sei's controller is also with US as a reminder, we switched up the format of our call. Brian will first provide a business and strategy update and Dennis will provide an overview of the company's quarterly results, including those for each of our business segments. After our prepared.
Remarks, we'll open up the call to questions.
Before we begin I'd like to point out that our earnings press release can be found under the Investor Relations section of our website at FDIC Dot Com. This call is being webcast live and a replay will be available on the events and webcast page of our website.
We would like to remind you that during today's presentation and in our responses to your questions. We have and we will make certain forward looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. Please refer to our notices regarding forward looking statements that appear in today's earnings release and in our filings with the Securities and Exchange Commission.
We do not undertake to update any of our forward looking statements.
I'll now turn the call over to CEO , Ryan Hickey Brian .
Thanks, Lindsay Hello, everyone and thank you for joining us today.
Over the quarter I continue to spend time with our employees clients and many of you on the call the engagement and insight has been invaluable.
Clients and prospects clearly enjoy working with Spi and the interaction has helped me focus our energy on delivering more of what the market values to accelerate growth.
After the quarter closed before the call, we announced the strategic alignment of our asset management businesses and related units under the leadership of Wayne Withrow.
Later in my remarks, I will dive deeper into how the evolution and this organizational structure is a critical step to driving <unk> next chapter of growth.
Third quarter revenues declined 3% from a year ago.
Our third quarter earnings were down 55% from a year ago third quarter of EPS of <unk> 45 decreased 54% from the 97 reported in the third quarter of 2021.
As noted in our second quarter call, we executed on our voluntary separation program from which the majority of the financial impact would be recorded in the third quarter 2022.
The final impact with approximately $57 million or <unk> 32 per share for the quarter as.
As I've stated before this program was designed to create an opportunity for tenured Sci employees to have an option to explore their lifetime ambition and concurrently create space for internal mobility fresh perspectives diversity and external experience.
We are committed to an environment, where our employees bring their best self to Sci everyday.
In the quarter, we repurchased 890000 shares of MSCI stock at a price of $55 55 per share.
This translates into $49 $4 million of stock repurchases.
Stock repurchases were down mainly because we were not in the market. While we work through the recent changes in senior executives.
Net sales events totaled approximately $36 million.
$30 million, which is net recurring Dennis.
Dennis will go into further details on our financial results later, but this was a really solid sales quarter for STI and I applaud all of our teams.
We need to continue to build off that positive momentum moving forward as.
As inflation volatility and other economic factors continue to place pressure on markets. We will remain vigilant, but we're going to act with conviction about how we deploy capital and make the changes necessary to grow our business.
Since I stepped into the role of CEO in June we have been strategically reviewing opportunities across our business and markets.
Trends across the entire wealth management market present enormous opportunity for STI to exploit competitive advantages and accelerate our growth both organically and inorganically.
During the quarter, we announced the alignment of our asset management businesses under Wayne Withrow.
<unk> advisor business institutional business investment management unit asset management distribution business and private wealth management business will all report delay.
By implementing an organizational structure that aligns our business strategy across all of our asset management businesses, we bring together the breadth of our capabilities and the depth of our asset management expertise globally.
This ultimately provides the complete and personalized experience that is critical to investors financial success.
I am confident that we can more rapidly expand our footprint across both intermediary and institutional channels.
While we have a new structure that creates more streamlined decision, making the distinct market segments will continue to be run by Wayne, Paul and Sanjay and we will report the results of these segments accordingly.
Jean Paul and Sanjay are here today and available for questions later in the call.
Last quarter, we also took steps to meet market demand for more advanced data integration.
As clients increasingly need real time access to power analytics application development consumption of large amounts of data and advanced reporting.
To meet this growing need we entered into a strategic partnership with Snowflake and launched the Sci data cloud.
We currently have two Sci wealth platform clients deploying Sci data cloud and we continue to engage with multiple clients across all sci businesses, including our investment managers business to adopt this solution.
Turning to our lines of business the investment managers segment had another record sales quarter, combining both new name sales events and increasing new business with existing clients.
And the alternative market, we took on a large venture capital manager that was previously operating with a major competitor.
And then the traditional market, we added a significant client who will utilize sci for middle office services.
Globally, we continued the expansion of both our fund administration and regulatory service offerings and added a new private equity clients.
We are engaging more strategically with our client base as they seek to expand their access to high net worth in the mass affluent market, especially through professional advisors.
We feel that <unk> is uniquely positioned to capitalize on this growing market dynamic.
And it begun to assemble more talent focused on this initiative.
We are seeing equivalent demand from our intermediary and institutional clients for more access to alternative investment products.
Turning to the investment advisory business, we had another solid inactive quarter, while we don't believe our results currently reflect our potential we are encouraged that they reflected our strategy, including the launch of a team solely focused on the RA market and the unbundling of our platform and investment offerings are showing great signs of early success.
Yes.
In the quarter, we completed the launch of the first version of Sci connect our digital client and prospect engagement portal and we are on track to have it in production for all clients by the end of this year. This is an entirely cloud native application built on the platform architecture, we acquired last year.
The institutional investors segment experienced new client wins, as well predominantly with foundations and endowments.
During the quarter, we continued to focus on advancing or CIO opportunities and using Sci novus for more sophisticated <unk> deals and leading the CIO proposition.
We are also excited about the integration of Sci private wealth management into the institutional business we.
We believe this will position us to leverage existing relationships on both sides.
We are aware of the headwinds will persist for the institutional business given general market conditions and the impact of increased interest rates on the defined benefit market and we will remain disciplined in how we manage through this.
And the private bank business, we had an active quarter with new sales and implementations.
Most notably we converted at initial book of business from U S Bank from Trust 3000 to the Sci wealth platform.
This conversion is significant it represents the first client to go live using our software as a service solution.
We greatly appreciate U S bank's long standing partnership and its confidence in Sci to deliver a solution that will carry their business into the future.
We also signed two new named clients, both of which were using competitor platforms.
We will continue to right size expenses in this segment and look to accelerate sales activity.
As I stated last quarter to do so we are working to improve our operating efficiency and consolidating teams across our business operations and technology platforms as well as surgically assessing our investment spend in the segment to ensure that appropriate return on investment.
Additionally, we are actively engaging clients to create more cross sell opportunities across the enterprise.
I'd also like to take a moment to highlight some positive traction in growth areas and our investments in new business segment.
We continue to have strong conviction around Sci sphere, our cyber security platform, making strategic investments to accelerate growth and evaluating new market opportunities.
We have sold this solution to clients that are new to Sci as well as successfully sold the service to existing clients.
We've also had early success cross selling additional services within SDI sphere, especially in the cloud migration space.
And our private wealth management business, we added four new clients during the quarter and continue to build upon our pipeline for prospects.
Our goal based approach has resulted in our clients remaining fully invested in weathering the volatile markets with confidence in their portfolio design and performance.
And finally, our partnership with LSP remains strong Dennis who will report on our financial results later on the call.
As I mentioned in last quarters call, we are committed to embracing internal mobility and investing in programs and initiatives focused on talent future skills rotation of employees idea sharing and professional development to that.
And during the quarter, we also announced that Sandy viewing has transitioned from our trust 3000 business to lead Sci family Office and regulatory services, where she is working closely with Sdi's business segment leaders to advance opportunities and execute growth strategies for these offerings in existing and new markets.
As a 27 year veteran of Sci Im confident in Sandy's leadership and experience to drive these efforts.
Lastly, and of equal importance I'd like to touch on initiatives that are enriching our culture.
We believe culture creates the foundation for why we do what we do every day and we're going to make Sci culture, an even bigger competitive advantage in the future.
We know it is critical to foster a workplace, where our employees feel welcomed and valued and respected everyday regardless of their identity.
To that end I'm excited to share that we launched a multi year initiative to continue our efforts for diversity equity and inclusion.
Im also joined more than 2200, Ceos, and presidents and signing the CEO action for diversity and inclusion.
Pledging to act on supporting a more inclusive workplace for our employees communities and society at large.
As we closed out the year and look ahead, we continue to execute on making changes that are designed to help us capitalize on our opportunities.
We will remain focused on maintaining and accelerating growth in existing businesses identifying and developing new organic growth engine.
Looking for acquisitions that align and accelerate our strategy.
And enhancing our culture and talent strategies across the entire company.
This concludes my prepared remarks, I will now turn it over to Dennis to discuss our financial results for the quarter Dennis.
Thanks, Brian I will cover information related to the quarter for the company and our units.
As Ryan mentioned EPS for the quarter was 45.
This compares to 97 during third quarter 2021, and 81 for the second quarter of 2022.
Third quarter results reflect a onetime charge related to our voluntary separation program or VSP of approximately $57 million, which equates to approximately 32 per share.
In addition, we incurred $5 2 million in severance cost during the quarter or <unk> <unk> per share unrelated to the VSP.
Excluding these onetime expense items EPS for the quarter would be 80.
Revenue for the quarter was $471 million compared to $485 million in 2021 and $482 million in the second quarter.
Total expenses for the quarter were $420 million, which compares to $344 million last year and $366 million in second quarter.
Excluding the expenses related to the VSP and severance expenses for the quarter or approximately $358 million a decrease from second quarter of 2022 of approximately $8 million.
Revenues from asset management, and administration were impacted by lower capital markets during the quarter.
Processing revenues remained relatively flat from second quarter, there were no unusual revenue items during the quarter.
The main drivers of expense growth year over year continue to be inflation and the talent to support our growing business lines.
Also costs related to the infrastructure necessary to meet increasing regulatory requirements across the jurisdictions in which we operate.
We do not see these inflationary and compliance pressures abating.
As Ryan mentioned right sizing, our expenses to business growth opportunities and allocating spending to areas of accelerated growth our priority.
While we have stated that the VSP is not centered on reducing our run rate expenses going forward. We believe it will have a positive impact in doing so.
On the sales front and our processing businesses of private banking and IMS net sales events totaled $333 9 million and are expected to generate $26 7 million and recurring revenue.
In our asset management related businesses net sales excluding.
Excluding the deconversion of retirement planners of America, which we announced in an 8-K filing last year and discussed last quarter were approximately $2 5 million.
The impact of <unk> is approximately $5 6 million annualized or $1 4 million a quarter based on second quarter 2022 revenue.
Private banking net processing sales were $10 2 million of which $4 7 million is recurring.
This reflects one new sw's sale to stable Trust and.
In a trust resales of sale to Computershare.
We re contracted one clients during the quarter.
The current backlog of sold but expect it to be installed revenue in the next 18 months was $44 9 million.
As discussed last quarter. This backlog does not reflect any potential revenue from wells Fargo.
Wells continues to assess its own strategy, which has led to some business divestment on their part.
The signing of Computershare this quarter and the previously announced sale to the principal financial group in 2021 were opportunities created by this divestment from wells.
As a result of their downsizing of their business. We are in discussion with wells on their trust 3000 contract and adjusting it to reflect their smaller book of business.
The discussions are ongoing however, they likely will result in a reduction of recurring revenues on the current relationship going forward of approximately one three to $1 $7 million a quarter.
Also we may take a one time reduction in booked revenue in the fourth quarter of approximately $5 million to $7 million.
None of this is certain as discussions continue.
Wells is a great client partner with additional <unk> additional opportunity and we are supportive of their strategic direction and business success.
Last quarter I mentioned, we have two clients that are involved in M&A activity stage III by F&B and Union Bank of California by U S Bank a client.
We have been notified by state Street that they plan to <unk> in late first quarter of 2023 and that <unk> is expected to <unk> late second quarter 2023.
The total net revenue impact represented by State Street, and you Bob is approximately $12 $4 million per year.
Profits in private banking reflect the impact of capital markets on its AUM related revenues.
While net revenue from sales of asset management was a positive $1 4 billion lower capital markets resulted in reduced revenues from the second quarter.
Expenses in the quarter were down from the second quarter of 2022. This was partly due to direct costs associated with asset management and reduced amortization expense we.
We will continue to focus on spending under <unk> leadership.
On the IMS front that.
Net sales for the quarter were $23 7 million $22 million of which is recurring.
The quarter sales activity remained robust, reflecting an active market and reinforces our belief that the trend of outsourcing is continuing to increase.
In addition, we re contracted clients in Q3 totaling $21 $8 million in annual recurring revenue with an average length of over three plus years.
Revenue for the quarter was flat to second quarter, reflecting the impact of capital markets and a client fee conversion offset by client installs.
We continue to see growth with many of our top clients.
Expenses were also essentially flat despite continued inflation pressures, reflecting overall expense management.
Our backlog of sold but expected to install in the next 18 months recurring revenue is $35 3 million.
Moving to investment advisors restaurant advisors generated net cash flow onto the platform of approximately $800 million.
This number reflects increase momentum and strategic initiatives, we have launched over the past two years, including our dedicated.
<unk>, producing $269 million and net positive cash flow.
And cash flows into our portfolio is built on our new direct indexing strategies and our tax managed etfs growing by $240 million.
Revenues for the quarter were down from second quarter as a direct result of capital market pressures and the impact of the <unk> conversion.
Expenses were down as well for the same period, helping margins hold in the mid Forty's.
We recruited 57, new advisors during the quarter and Reengage 13 existing advisory firms.
Visor activity remains strong, but we continue to see a slowdown in market activity on the part of both advisers and their clients.
And the institutional investors segment, OCI or net sales events for the third quarter were a positive $220 million.
Gross sales were $660 million and client losses totaled $440 million.
Third quarter, New sales were principally in the U S Endowment and foundation segment.
Net sales for the quarter equate to $1 4 million in new recurring revenue when implemented.
The current unfunded client backlog gross sales at quarter end was $2 8 billion.
Revenues for the quarter were down from second quarter due to capital market activity offset by net positive client flows.
Expenses were also down reflecting reduced direct cost as well as general expense management.
And the investments in new business segment revenues were flat to second quarter.
Expenses in this segment were down due to the reduction in investment spend related to our <unk> work and a one time item of $900000. We had in the second quarter.
We expect expenses in this segment, while shifting to do initiatives to remain relatively flat to current levels.
Now as the produced $26 $7 million in profit during the quarter.
This compares to $29 8 million during the second quarter.
Revenues for <unk> were $91 6 million compared to $99 8 million in the second quarter.
<unk> record of performance fees of $1 $6 million during the quarter, reflecting positive relative performance.
The reduction in revenues as a result of capital markets declining net client flows.
And lower performance fees, when compared to second quarter.
Net sales were essentially flat, while net flows from existing clients due to derisking and reallocation were negative $1 3 billion.
Market depreciation was approximately $7 billion.
Now, let's be continues to have active sales activity.
And note that the gross sales of one 4 billion during the quarter was the highest since first quarter of 2019.
Many companies are dealing with foreign exchange volatility this quarter.
While we do have revenues and expenses in U S dollars, the British pound and the euro the net impact to company profits when compared to second quarter of 2022 was immaterial.
Our tax rate for the quarter was 23% consistent with second quarter.
That concludes my remarks as a reminder, all of our unit heads are on the call. We will now take any questions. Thank you.
Ladies and gentlemen, if you would like to ask a question. Please press one zero at this time.
Our first question will come from the line of Owen Lau with Oppenheimer. Please go ahead.
Thank you for taking my question.
Let's start off with the new asset management structure how.
Should investors think about the incremental restaurant deal an expense opportunity here and also to give any expectation about the timing of kind.
Implementing these new structure and an idea so thank you.
Sure Hey, Alan how are you doing.
Thanks for the call are thanks for the question I'll give a quick overview answer of that.
And then I'll turn to Wayne to provide some commentary as well.
So you should really be thinking about it as a strategy around alignment when you look at the way that the market is evolving we really believe that putting these units together under one leader and not necessarily changing the structure of each of the unit really puts us in a position to more effectively allocate our capital for growth across.
These segments, we see a real big opportunity in some of the intermediary space and kind of getting away from traditional segmentation and definition as to whether that a broker dealer affiliated advisor we have a lot of enthusiasm and optimism about the RIAA space the advisors and intermediaries that we support in the act.
Management distribution business and then most importantly, I think really aligning our investment management unit expertise really with the market units. So we have a more cohesive go to market strategy, that's really aligned with our engineering talent.
But really for us it's about positioning ourselves in the best way possible to really accelerate growth and we thought that this alignment really able to accelerate that.
Wayne and I don't know if you have any comments or pause in the room as well.
Yes, Thanks, Mark I guess, what I would say.
This is all about growth.
RPI has.
We've always done a great job in leveraging all of our operations remain a company where our company is built upon the concept of leverage by combining these or do you think this gives us a better opportunity to leverage our investment solutions across institutional intermediary U S. Non U S to really create some level of innovation that maybe we haven't even fully.
Before.
So.
In addition to how can we further leveraged spacing.
Facing technology in those markets.
We see this as untapped opportunity for us on the client growth side.
Yes, I would just add this is Paul the integration of private wealth management and institutional is a wonderful integration in the sense of leveraging to direct channels. One two wealthy individuals in single family offices, and one institutions is without doubt that the institutional.
Esther Committee members are up well, many times and being able to mine those opportunities as natural lead flows will literally be accretive diverse side. Many of those are well for also sitting on those committee members, so being able to get that cross leverage we are already in flight doing that we've had a number of meetings over the last two weeks so I'm very.
Cited about that integration on where it stands and what the opportunity holds.
Got it that is super helpful.
And then Dennis you talked about the Wells Fargo, our relationship refi done correctly.
It may have a one three to $1 $7 million revenue impact per quarter, and then is there any one time reduction in the fourth quarter about $5 million to $7 million. So from a modeling perspective should we include that like five 5% to $7 million in the fourth quarter and the one three to one.
$7 million.
The first quarter of 2023 going forward.
I think you mentioned that the negotiation of discussion is ongoing but I just wanted to see how we should model that out and also is there any offset from the expense side. Thank you.
Yes.
I've mentioned is correct.
Really suggest.
That you do included in your thinking about Sci going forward.
And the reason why we thought it was important to get on the table now is because if we do get an agreement signed and it's in this kind of range.
Potential impact we wouldn't have to follow up with any independent disclosure so.
So when I would.
Within our models, let's put it that way.
Even though we're not really done the conversations with wells.
Got it that's very close.
To your question about cost take out I'd say that's more.
To the extent, we've got cost benefit from processing less business on the part of wells.
We're already capturing that through.
By the fact that principal group went live.
Already with US on trust 3000 and now.
We're actively working on the Computershare implementation, so we might get some benefit.
When they go live as well.
Sanjay.
Anything to add.
So principal financial group they are already live as part of the quarter one implement decent early this year and computers shared we are actively working with them.
Okay.
Fantastic.
One final question on expands I think many companies are talking about very tight expense control I know the asset management restructuring.
You may have some ideas in that but other than that.
Given the market condition is there any other potential areas that you can manage the expense base further.
Yeah.
We never know, but if the market conditions further deteriorated. Thank you.
So I think.
I think simply put we're always going to be judicious about managing the expenses of the company and we will have discipline around that I think we've got a pretty long term track record of that that being said I think the message that we send in July and hopefully reiterate today is we're also going to be aggressive around allocating capital and investments in areas, where we believe that we can accelerate our provision.
And we want to try to take advantage of some of these difficult times as well to maybe extend we're really trying to accelerate areas, where we believe that we have a market advantage, but I think overall nothing will change in terms of our discipline in terms of how Sci manages expenses corporately.
Got it thank you very much.
Thank you.
As a reminder, if you do wish to ask a question. Please press one then zero at this time.
Our next question comes from the line of Brian Kenney with Morgan Stanley . Please go ahead.
Hi, good afternoon, Thanks for taking my question.
Brian .
Just a follow up from the last question can you give us some more color on how much of the expense base is fixed versus variable and if youre reallocating across the segment.
The takeaway for the overall company margin.
Ryan is looking at me to answer this one Ryan so.
It's funny how that works.
When we look at our expense makeup we do have some variable costs.
Tied to assets so on the sub advisor fees, so that adjust pretty quickly we have some variable costs.
Two trading activity.
So that would adjust the trading activity.
Down trading volumes are down.
We're predominantly I would say predominantly higher majority of fixed cost because of our employee base and one of the things that allows us to drive the margins we drive as a company.
It's because of that fixed cost base, how we manage that fixed cost base and the scalability of that fixed cost base or to leverage as we grow that being said, we do have variable costs tied to predominantly the invest the technology space, where we do work with outside firms and health.
Supplementing our complementing our own technology staff and resources that for sure is variable, but I would also say that there's probably different categories have really built variability there. Some of that cost is tied to commitments. We've made on behalf of clients, so unless something changes on the client side that variability.
Not necessarily going to be.
Sure.
Available to us to adjust although we certainly would work with our.
Third party partners to adjust where we can.
And then there are things that are.
Committed projects of ours that we think are critical to our future.
Variable spend tied to those I would suggest to.
If you go back to the last tough period, we had <unk> nine we actually increase the spending in those areas to put us in a position to take advantage of market opportunities coming out of those tough times.
There is a third category of.
Nice to do we are doing what do we really need to do it in a moment.
Scenario, where we would have some decision optionality if you will to decide whether it has slowed things down.
Take things out.
We always try to keep an eye on expenses trim around the edges.
The best way to avoid.
Significant cuts frankly is the run pretty lean in good times.
Not to over overspend when times are good because that really set you up for a problem when times aren't as good.
Again, I point back to <unk>, and we we didn't do a lot of cost cutting and <unk> nine.
In a tough market, but one of the reasons. We did this because we didn't have a lot of fat to cut out because we try not to run the company with in that way.
The other thing in tough market is this something maybe Phil can comment on Sanjay.
And even Wayne as our clients are in the same business and sometimes their business model doesn't respond as well to tougher markets as Arizona and it opens up opportunity for us and maybe Phil you want to talk about your experience before.
Things improved and before you can do that so I think the other thing Brian to your question around how we kind of looking at investments. We don't look at it as we've said before is fixed.
Fixed pool of money, but we're going to be acting I think a little bit more decisively, where we see good momentum and we see opportunity.
Be reallocating and I think that is a good segue filled because you've.
We've had we've had two great quarters.
But we also see a lot of opportunity to accelerate some.
Our investments and maybe deliver better services for our existing and future clients sure. Thanks, Bryan any any offer anytime that our clients are having challenges, whether it's with turnover or expense challenges, it's actually an opportunity for IMF on the outsourcing side.
We can come in there and help them do things better faster and cheaper. So I think it is actually our ability to help our clients scale as they are launching new products, but at the same time as their management fees are getting squeezed more and more over time has really been a big driver of our success over the last few quarters or so so I think it's.
IMS is in a great spot and any of these challenges that we're seeing across any company are actually opportunities for us in the future.
Thank you.
To wrap up Brian we do have very variable comp.
I should mention that soon.
Chunk of our compensation costs are variable in nature. So certainly that's a lever that.
We have.
The work to work with and certainly.
Certainly we pay attention to that.
But even in the toughest markets.
We were very attentive to our workforce, even on that element of their compensation package.
Because we felt talent.
Today talents at a premium.
We will want to take care of our.
Our talent because they are the ones, that's what's going to help us take advantage of the opportunities coming out of it.
The one thing about this cycle that I think is different than the last cycle, though is that there is more visibility.
Lease it seems in the market too tough times coming.
Whereas the last cycle was pretty abrupt.
We've got.
Everybody.
Okay.
<unk> I'm not that some people didn't see it come of most peoples did this one most people see it come in I think it is an opportunity for us now to be talking to clients and prospects about how we can help them be in a better position when the tough times do come.
And then moving to US now as a <unk>.
Our answer.
Thank you.
And our final question in queue comes from the line of Ryan Bailey with Goldman Sachs. Please go ahead.
Hi, everyone. Thank you for taking the question.
So I just wanted to walk through some of the stuff within private banks I think some of the commentary was the M&A dynamics would lead to a $12 $4 million annual reduction in revenues wells at the midpoint I think it would be a $6 million reduction in revenue.
At $18 4 million in turtle for a headwind to revenues for the segment.
<unk> $400 million per quarter in terms of revenue headwinds relative to the $6 million of operating profit the segment put up this quarter.
Long winded way of sort of weeding through can you help us think through what are the changes you're making to the <unk>.
Pivot bank segment to support better sales and faster implementation of the $44 $9 million backlog.
Right So Greg.
On the Sanjay quickly here, but I'm glad you brought up.
The one big answer is up $44 million backlog because thats the.
The replacement if you will plus of the revenue.
For the most part is out of our control.
So thats the good news and I'll, let Sanjay maybe talk about the implementation cycle and how things are going on that front sure. Thank.
Thank you Devin.
So if you look at the signed backlog Dennis talked about 44 million plus a signed backlog.
Those are the implementation in flight and we are actively working with those clients.
We are tracking those milestones very closely.
We have four frankly steering committee meetings with the senior executive and it's in a mutually beneficial for both organizations.
So that we can stay on track with respect to those implementations.
With 60, plus it implement decent so far on S. WP itself I think we have significant experience how to manage and monitor those changes on weekly basis.
We feel fairly confident that we will be able to deliver the backlog at the same time, our client they are super engaged with us.
Dennis and I, we are actively engaging with all of our clients to stay on track at the same time. The one aspect I would call out where we are making significant changes in terms of how we are improving ongoing business for them from <unk>. If you look at any implement different teams management organized <unk> management is a key function.
And Thats why we are actively working with our clients ensuring that we are handholding them through this change <unk>, providing them necessary training so that they can adopt the new.
<unk>.
But I would say we've talked about this in the previous quarter, but Sanjay in his team and a lot of other people have been out really effectively engaging the executives of our clients and prospects and I think that activity in the market gives us a lot of confidence about the receptivity of our value proposition.
<unk> at this point I think we're seeing an increasing demand for firms that are looking at their operating model and where outsourcing could play a role, but I think the just increased level of urgency and activity engaging with our clients is important and that's something we're very focused on while we manage the expenses in the unit.
Okay. Thank you for that color Ryan very helpful. Sorry, Brian I think.
So I think maybe you want to talk about sales too because Brian I think your other question was about sales.
Organizations are we doing on the sales growth on.
The sales front as well.
One in the UK market actively re establishing also.
Created the sales feet on the ground, we have established fulfill support function data as well so.
People on the ground is in the process of forming the <unk> sales pipeline. There. Similarly hit on the U S market, we are consolidating the <unk> sales structure, and providing and creating a more of a uniform process there as well.
We are focusing on two things one is around the cross sell with our.
Our existing client base, we are pretty solid client base. So we are spending time of a bid again.
Repeating what Ryan said and using with our existing clients are extremely important for us. So that we can avoid any any leakage.
And the second part in terms of how we improve on our sales cycle, creating a uniform process. That's extremely important for us. So those are the some of the key focus areas through which we are going to expedite our sales cycle for U S and UK market.
Understood. Okay. Thank you and then maybe shifting gears a little bit.
Was wondering if you could expand on the deconversion within investor.
And investment managers it looked like there was a big decrease in assets.
Syed.
So if you could help us think through.
What type of assets that was more traditional or alternatives.
Reason behind the deconversion as well yes.
Yeah sure Brian This is Phil Mccabe, yes, the asset alternative balances were down quarter over quarter that was due a little bit to market impact, but also to us parting ways with a very low fee off strategy client.
We.
Just didn't really fit into our wheelhouse. So that was also offset by millions of dollars in new client funding. So.
So it happened, but you can rest assured that it was a onetime event.
Got it alright, thank you very much.
And speakers, we have no further questions in queue. So I'll turn it over to CEO , Ryan Hickey for any final comments.
Thank you this is a pivotal period for SDI.
We benefit from our unmatched position at the intersection of asset management and technology.
We are increasing our investments and focus on sales and marketing were <unk>.
Setting the direction of patient growth and I remain extremely enthusiastic about <unk> future.
I look forward to future meetings and calls with this community to discuss our strategic approach the opportunity to represent and the progress we're making as a reminder, we will be hosting an investor day on November 14th and 15th we look forward to welcoming you all back on campus to notice for those who cannot attend in person additional details will be provided closer to.
The conference about how you can listen in virtually thank.
Thank you for attending our call.
And ladies and gentlemen that does conclude today's conference I'd like to thank you for your participation.
May now disconnect.