AssetMark Financial Holdings, Inc.

Good afternoon, everyone, and welcome to AssetMark's second quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will be given at that time. Today's call is being recorded. Now, I'd like to turn the call over to Taylor Hamilton, Head of Investor Relations. Please go ahead, Mr. Hamilton.

Thank you. Good afternoon, everyone, and welcome to AssetMark's second quarter 2022 earnings conference call. Joining me are AssetMark's chief executive officer, Natalie Wolfson, and chief financial officer, Gary Zyla. They will discuss the results for the second quarter and provide an update to AssetMark's business outlook for 2022. Following our introductory remarks, we'll open up the call for questions. We also have an earnings presentation that Natalie and Gary will reference during their prepared remarks. It can be accessed on our IR website at ir.assetmark.com. Before we get started, I'd like to note that certain statements made during this conference call are forward-looking statements. These forward-looking statements represent our outlook only as the date of this call and actual results could differ materially. Additionally, during today's conference call, we'll be discussing net revenue, adjusted EBITDA, adjusted EBITDA margin, and adjusted net income, all of which are non-GAAP financial metrics. Please refer to our earnings press release and SEC filings for more information on forward-looking statements, risk factors associated with our business, and required disclosures related to non-GAAP financial information. With that, I'll go ahead and turn the call over to my colleagues. Natalie, take it away.

Thanks, Taylor. Hello to everyone on the call, and welcome to our second quarter earnings call. I hope everyone's having a great summer. My prepared remarks today will focus on Asimark's evolution of becoming more than a TAMP and how we continue to evolve by executing on the five key components of our growth strategy. After I'm finished, I'll turn the call over to Gary to discuss our financial and operating results for the second quarter and to discuss the impact of market volatility and rising rates on our financials. So starting on slide three, we realized record results among many key financial metrics in the second quarter. On the top line, we realized record revenue of $151.2 million, up 18% year over year. On the bottom line, we realized record adjusted EBITDA of $49.6 million, while also realizing adjusted EBITDA margin of 32.8%, our highest as a public company. Reported net income for the quarter was $25.3 million, almost as much as we reported for the full year of 2021. Our ability to be more than a TAMP for our more than 8,600 advisors and 220,000 households is the driving factor in our ability to achieve these record results. Now let's turn to slide four. Over the last year, we've diversified our revenue with the acquisition of Voyant and have realized greater revenue contribution from spread as interest rates continue to rise. We continue to add more advisor capabilities, have enhanced flexibility in how we serve advisors, and have positioned the company to serve more channels, including the growing RIA channel. This will only be accelerated through the announced acquisition of Adhesion Wealth, which will also lay the groundwork to provide advisors a more modular, unbundled outsourcing option. I'm extremely pleased with what we've accomplished and the direction the company is going. Continued execution on the five components of our growth strategy will further our evolution of being more than a TAMP in the years to come. As we do every quarter, let me provide an update on our growth strategy. The first component on slide five is to meet advisors where they are, catering to varying affiliations and new growth-oriented or mature advisors. In June, we announced the acquisition of Adhesion Wealth, a leading provider of wealth management technology solutions to RIAs, RIA enterprises, and asset managers. Adhesion's platform enables over 2,800 fee-based advisors across 180 RIAs to deliver better investor outcomes while successfully growing their practices by providing outsourced overlay trading services, client engagement technologies, and managed accounts programs. We believe this is a transformational acquisition for Asimark. Let me explain why. First, the addition of adhesion will further strengthen our ability to serve the rapidly expanding RIA market with an ecosystem of flexible, purpose-built solutions that drive growth, efficiency, and scale. As we've discussed in previous earnings calls, more and more advisors are moving to the RIA channel. Second, the acquisition will enable us to provide a broader range of investment and technology solutions through a flexible and modular approach. including to those advisors that prefer to assemble solutions for their practice themselves versus fully outsourcing and delegating. This lays the groundwork for providing a more unbundled offering at AssetMark through adhesion. Third, this will greatly expand our total addressable market as historically through AssetMark institutional, we've been focused on outsourced oriented RIAs with practice sizes between 25 and 250 million. Adhesion's platform provides a more flexible, modular offering valued by larger RAs. Simply put, we'll have expanded our advisor total addressable market by three times through the acquisition of Adhesion. Lastly, the acquisition will benefit AssetMark's existing advisors by delivering value-added services and solutions, including direct indexing, tax transition, portfolio administration, practice analytics, and client reporting. We expect Adhesion to close in the second half of the year and to be accretive to Asimark's earnings in its first full year. Turning to slide six, the second component of our growth strategy is to deliver a holistic, differentiated experience to advisors and their clients. It's been one year since we've closed the acquisition of Voyant, which has greatly accelerated our financial wellness vision. Over the last year, Voyant has realized meaningful growth in both the number of enterprise and small and mid-sized business, or SMB, licenses. Enterprise, advisor, and consumer licenses, which make up approximately 43% of buoyance subscription revenue, are up 6% and 17% respectively. SMB licenses, which make up the remaining 57% of buoyance subscription revenue, are also up year over year. Feedback from our advisors continues to be positive, and we are pleased with buoyance growth over the last year. In the second quarter, Voyant signed a new enterprise client in Canada, and we expect to see an acceleration in the number of enterprise relationships as key geographies open back up. The third component of our growth strategy is to enable advisors to serve more investors across the wealth spectrum, varying life stages and generation. Let's turn to slide seven. This quarter, I'd like to highlight two of our recent platform additions, as well as provide an update on how we are supporting our advisors during this year's market volatility. Last September, we launched a curated selection of professionally managed SMAs, which cover a wide breadth of asset classes, investment styles, and asset managers. These have been actively used by our advisors and their clients, with over 13,000 submitted proposals totaling $650 million since inception. Most recently, we launched our values-driven investment program. which launched four new ESG strategies in addition to a robust suite of ESG resources and educational materials. We're already seeing early adoption from our advisors with over 400 proposals submitted. We continue to focus on timely education for our advisors. Their clients are confronting strong and persistent market volatility for the first time in two years. This type of environment is when financial advisors are needed most and have the greatest opportunity to prove their value. We help our advisors connect with their clients to provide context, resources, and guidance to navigate recent volatility in an effective and consistent manner. In the second quarter, we launched a market volatility toolkit, which includes curated and timely resources that guide and educate advisors so they can stay informed, feel confident, and provide their clients comfort in volatile times. Being there for our clients so they can be there for their clients is why advisors continue to choose AskMark and why we continue to win new advisors. The fourth component of our growth strategy, as seen on slide eight, is to help advisors grow and scale their businesses by offering turnkey advisor solutions and programs. I would also like to provide an update this quarter on a couple of the offerings we've launched over the last 12 months. In January of this year, we launched a digital prospecting capability for advisors, a tool designed to streamline prospecting for financial advisors and provide them with insights to drive lead conversion. While still in the early innings, our advisors are actively using this tool with over 500 high-quality leads generated since launch. In February, we launched our Marketing Advantage program, an all-in-one marketing platform that helps financial advisors build relationships, and grow their business with a robust suite of ready-to-use tools. While still early, hundreds of our advisors are leveraging this platform, and feedback has been extremely positive as advisors cite both time and cost savings. Helping our advisors grow and scale is a key component of our growth strategy, and we continue to dedicate resources here. In fact, over the last year, we have expanded our business consulting team by over 30%. Now turning to slide five, the final component of our growth strategy is to pursue strategic transactions by adding capabilities and assets that improve advisors' ability to serve investors and expand their businesses. As I've mentioned on previous earnings calls, we remain very focused on M&A and are a disciplined buyer looking only to buy capabilities that we feel would be a strong fit for our platform. Now I'll turn the call over to Gary, who will take us through a deeper dive into our second quarter results and then an updated outlook for 2022.