Lower Asset-Based Fees Weigh on SEI Investments' Margins

SEI Investments finished 2022 with a mixed quarter. With about three-quarters of its revenue tied to asset levels, revenue declined 9% to $457 million, which was roughly in line with the FactSet consensus estimate of $456 million. As only a fraction of SEI’s costs are asset-based, the decline in revenue resulted in operating margins declining to 20.6% from 28.6% in the year-ago period. Operating margins declined in each of SEI’s four main segments. Overall, there was little that would alter our long-term view of the firm and we will maintain our narrow moat rating and $67 fair value estimate for the firm’s shares.