Yahoo Finance AlTi Global Inc (ALTI) Q1 2024 Earnings Call Transcript Highlights: Strategic Acquisitions and ...
Revenue: $51 million in Q1 2024, a 12% decrease year-over-year.
Net Income: $22 million in Q1 2024, compared to a net loss of $90 million in Q1 2023.
Adjusted EBITDA: $7 million in Q1 2024, with a margin of 13%.
Assets Under Management (AUM): Grew by 10% over the past 12 months to $71 billion.
Wealth Management Revenue: Increased 17% to $37 million in Q1 2024, with 99% being recurring.
Strategic Alternatives Segment Revenue: $14 million in Q1 2024, a decrease from the previous year.
Acquisitions: Recent acquisitions include East End Advisors and Envoi, enhancing AUM and wealth management capabilities.
Operating Expenses: Normalized expenses were $45 million, down $8 million year-over-year.
Release Date: May 10, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
AlTi Global Inc (NASDAQ:ALTI) reported a 10% growth in consolidated assets under management and advisement over the past 12 months, reaching $71 billion.
96% of AlTi Global Inc (NASDAQ:ALTI)'s Q1 revenues were from recurring fees, highlighting a stable revenue base.
The company announced strategic acquisitions such as East End Advisors and Envoi, which are expected to enhance AlTi Global Inc (NASDAQ:ALTI)'s wealth management platform and expand operations into key U.S. regions.
AlTi Global Inc (NASDAQ:ALTI) has established significant strategic partnerships with entities like Allianz X and Constellation Wealth Capital, which are set to provide substantial growth capital and support.
The company successfully streamlined operations by divesting non-core assets and focusing on core recurring revenue businesses, which is expected to improve operational efficiency and profitability.
Negative Points
AlTi Global Inc (NASDAQ:ALTI) experienced a 12% decrease in total revenues in Q1 2024 compared to the same period in 2023, primarily due to the sale of LXi and other asset repositioning.
Despite overall revenue growth in wealth management, the strategic alternatives segment saw a significant revenue decrease of $13 million compared to Q1 2023.
The company reported a decrease in adjusted EBITDA from $11 million in Q1 2023 to $7 million in Q1 2024, indicating potential challenges in maintaining profitability.
AlTi Global Inc (NASDAQ:ALTI) faces ongoing regulatory processes for the completion of the Allianz X transaction, which could impact the timing and benefits of the partnership.
The company's strategic repositioning and divestitures, while streamlining the business, may lead to short-term disruptions and integration challenges as new acquisitions are assimilated.
Q & A Highlights
Q: Could you please give us an update on the investment by Allianz and CWC? Specifically could talk about the timeline for the approvals process and the potential timing for you to bring in the capital. Thank you. A: Michael Tiedemann, CEO of AlTi Global, explained that the CWC investment did not require regulatory approval, and $115 million has already been drawn, partially used for the East End acquisition. An additional $35 million is expected this quarter. Allianz's investment is undergoing regulatory approvals, expected to close in the second half of the year, ideally in the third quarter.
Q: Could you talk a little bit about the trajectory of expenses is around $60 million ex-notables in professional fees, a good run rate. And could you discuss the outlook for professional fees giving upcoming investments in inorganic growth? A: CFO Stephen Yarad noted a reduction in professional fees and non-compensation operating expenses, with a continued focus on reducing these costs. While M&A activities might increase gross professional fees, normalized expenses are expected to trend downward.
Q: Can you discuss the rationale for exiting the LXi REIT advisory business? A: CEO Michael Tiedemann explained that the decision was driven by the LXi Board, believing that merging with LondonMetric would create a stronger, more scalable business. The company negotiated what they considered fair value for exiting the contract.
Q: Maybe just talk a little bit about the pipeline. It seems like it's been pretty active, but just I realized you've got a lot of capital to invest. So maybe just talk about what you're seeing out there? A: Tiedemann highlighted the focus on organic growth and talent acquisition across various regions. The inorganic pipeline is viewed holistically, ensuring strategic and cultural fits for seamless integration. The company is also looking at opportunities across other geographies and the strategic alternatives side.
Q: Thank you. And could you talk a little bit about the trajectory of expenses is around $60 million ex-notables in professional fees, a good run rate. And could you discuss the outlook for professional fees giving upcoming investments in inorganic growth? Sorry, that was hard to say. A: CFO Stephen Yarad acknowledged the focus on reducing professional fee spend and expects this trend to continue. He noted that while M&A activities might temporarily increase professional fees on a gross basis, normalized expenses should continue to decrease.
Q: Thank you. So the $60 million, I think that was ex-notables and professional fees, that's pretty good for now. I think you guys talked a little bit more about the professional fee part. And then I think you guys have talked about $16 million of run rate cost saves that should come in later this year. So maybe just talk about that piece as well. Thank you. A: Yarad confirmed the company is on track to achieve $16 million in cost savings by the end of the second quarter of 2024, as part of an ongoing initiative to streamline operations and reduce expenses.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
