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Operator
Greetings and welcome to InvestNet's second quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, Brian Shipman, Head of Investor Relations.
Brian Shipman
Please proceed.
spk05
Good evening, everyone. Thank you for joining us on today's second quarter 2022 earnings call. Before we begin, I'd like to point out that the earnings press release, supplemental presentation, and associated form 10-Q can be found under the Investor Relations section of our website at investnet.com. This call is being webcast live and a replay will be available for one month on our website. During the call, we will be discussing certain forward-looking information. This information is based on our current expectations and is not a guarantee of future performance. I encourage you to review the cautionary statement on slides two and three for potential risks, uncertainties, and other factors that could cause actual results to differ from those expressed by the forward-looking statements. Further information can also be found in our regular SEC filings. During this call, we will be referring to certain non-GAAP financial measures. Please refer to the appendix in our presentation for a reconciliation of those non-GAAP financial measures to the most directly comparable GAAP measures. The presentation is also posted to the InvestNet Investor Relations website. Joining me on today's call are Bill Krager, the company's Chief Executive Officer, and Pete Dorigo, the company's chief financial officer. Bill and Pete will provide a company update as well as an overview of the company's second quarter 2022 results. After our prepared remarks, we will open the call to questions. During the Q&A, please limit yourself to one question plus one follow-up. You may get back into the queue if you have additional questions. With that, I'll now turn the call over to Bill.
Bill Krager
Thank you, Brian. Good evening, everyone, and thank you for joining us today. The first half of 2022 has been an incredibly challenging environment for investors and for consumers. A CNN poll conducted last month summarizes the current mood that's out there. 82% of Americans rated economic conditions as poor. You all know the economic and market headlines. But I wanted to start with some things that InvestNet knows about the quarter. These are insights that we share with our clients, giving us the ability to support them in real time as a market like the one we've experienced unfolds. During the quarter, advisors increased cash positions 23% quarter over quarter and 46% year over year. That's a huge shift. Advisors moved to more conservative positions, such as fixed income. flows up 19% quarter over quarter in this category. Investors increasingly sat on the sidelines and grew their cash positions. Contributions to investment accounts were down 20% quarter over quarter, and do-it-yourself investors were even more wary, reducing contributions to their accounts by more than 30% versus 1Q. This insight presented an opportunity for our advisors. Consumers are absolutely feeling it as well. Bank balances are down 6% year over year, aligning with increased consumer costs due to inflation, while consumer staple spending is down 5% year over year. Environments like this are a testament to the essential value of what investment provides to our clients. When the operating climate is challenging, we go deeper with clients. We scale ahead and support surging client demand, and as we do, We strengthen our foundation for revenue growth and operating leverage as markets normalize. This is what has happened here at InvestNet so far this year. We began the second quarter with $5.5 trillion of asset serves. We ended the quarter with just under $5 trillion, the market contraction taking roughly 12% of total assets. According to the ICI in the second quarter, the asset management industry recorded annualized net flows of negative 3%. Given the size of assets we serve, you might conclude that we'd be in line with industry flows. However, we posted $6 billion of positive net flows during the quarter. We continue to see very positive makeshift from AUA to AUM. Our 7% annualized organic asset growth rate in the first half of 2022 was well above of our industry peer group. We're driving flows, albeit at a slower pace than we anticipated, but investment is growing faster than the market, and we are expanding our market share as we do this. We also executed 30% more trades in the first half of 22 compared to last year. We did so with lower error rates, and higher client service scores. Our clients depend on us as an essential partner. We are the partner, supporting thousands of the leading financial advisors in the industry, providing the most powerful, comprehensive set of capabilities, operating with extraordinary scale, especially in times of market stress that we've experienced so far this year. Going deeper. We are scaling when needed. We are expanding share. We are strengthening our financial position. Put very simply, InvestNet is executing, and this year we are proving once again we are more than up to the task. Let's talk briefly about the second quarter results. Adjusted revenue for the quarter grew 10% year over year to $319 million. This is slightly below forecast given the significance of the market contraction and the actual flows versus anticipated flows for the quarter. Just at EBITDA was $57 million. This was ahead of guidance. Adjusted earnings per share was $0.49, higher than our guidance for the quarter. The number of accounts on the platform have grown impressively despite the conditions, up to 17.9 million accounts, which is an increase of more than 300,000 net new accounts in the first half of the year. Lastly, InvestNet has seen positive net asset flows every month so far in 2022, which is a powerful proof point to what we do. We're able to demonstrate progress during these periods, and we come out of times like these in a stronger position because we have a highly recurring revenue base and provide a highly essential service to our clients. We are the market leader, and this allows us to deliver at scale, and that's differentiated from any other provider in our space. The essential capabilities that we offer our clients grow market share in both good markets and challenging markets. And we leverage powerful secular trends that drive us to meet our long-term financial targets. These secular trends are important to our outlook and growth trajectory. I want to spend a minute on them. People are more worried about money than anything else in their lives, and their concern is growing. According to a recent lending tree study, 32% of people cite money as the top source of stress in their lives. And perhaps from a more promising perspective, our own research tells us that Americans that have a financial advisor feel significantly more, in fact, three times more secure in their financial situation than those that don't. Financial confidence and advice is a challenge for many, but it's clear that financial advice is essential, and we are making it more accessible for more people. This is a huge social wellness trend, and we are best positioned to address it. Another trend. Planning-based advice has become the industry core solution offering. Investnet is the leading provider of financial planning software, and we believe there continues to be a significant upside as our recent study revealed that 42% of the general population do not formally plan their long-term finances, but they want to. Demand for financial planning is growing, and it will continue to grow. We are the market leader. People want more connected advice, and this is another secular trend. In an EY study this year, 60% of North American investors say they want to consolidate their wealth in one place. Investet offers the most comprehensive, integrated platform for advisors to offer holistic and connected advice to their clients, period. Fee-based advice has been a resilient trend for the wealth advisory industry, with managed assets growing to 51% of assets served. This is core to what we do. We're growing faster than the market, and we are expanding our share. Data is the last secular trend we will touch on. Demand for data services is surging and will become the core power source for companies across the economy, with a projected 17% revenue CAGR between now and 2030. InvestNet is the leading provider for data in the wealth space, and this quarter we'll begin to introduce our comprehensive wealth data platform to our clients, which we are exceptionally well positioned to do. Our industry-leading essential solutions and services and these very important trends are why we are so resilient during periods like this and why we are so confident in the opportunity ahead. It is why our clients are leaning more and more on us. And this is why our investment program will yield accelerated results. Our results demonstrate evidence of this. Investment is bringing our organization and our powerful capabilities together to create a more scaled, more intelligent, and more valuable solution set for our clients. By doing these things, we will drive sustained revenue growth and increasing margin for investors. In February of 2021, we announced the accelerated investment plan. Those investments are now fully within our expense base, bolstering our product and engineering teams, as well as our client engagement activities. We remain confident that we are on track to hit our 2025 targets of $2 billion in revenue and 25% adjusted EBITDA margins. Let me spotlight the progress the business is making. First, the data and analytics business. Despite the market climate and the negative impact consumer activity has had on our verification business and the even stiffer headwind facing our asset manager research panels, our data and analytics business continues to fortify its foundation, an example being the increased flow through our open banking connections with usage up over 75% quarter over quarter. We are creating more connected data platforms to solve our clients' challenges. 2022 is the year these solutions make their way to market, beginning with our wealth data platform, or as we call it, the WDP. This brings together our data connectivity, open banking, aggregation, enrichment, and AI into a modern digital analytics-rich experience. This platform makes it easier and possible for firms and advisors to manage and create value from their own expansive data set. We are projecting around $35 million in annual revenue for this offering by 2025. Inside the WDP is the InvestNet Insights Engine. The Insights Engine supports the growth of advisor-client activity across all of our offerings. some data to share on our progress. At the end of 2Q, we were publishing more than 17 million insights a day. That's up from 11 million at year end. We have seen a 37% increase in advisor adoption, 1Q to 2Q. And for those that have adopted the insights, we see 70% increase in usage of those insights. This is so important. because it's a fundamental driver of deeper customer engagement for our clients. InvestNet now offers the leading insight-to-sale solution in the industry. There's a slide in the supplemental deck that we've included that depicts the workflow, and I think it's important for investors to note this one, as it drives increasing subscription and asset management revenue in support of our growth strategy. I'll touch briefly on our wealth tech offerings. InvestNet's MoneyGuide has been a leader in financial planning for 17 years. Since MoneyGuide was acquired, we've increased market share by over 9 percentage points. We expect this to continue to grow given the expansion of the capabilities in our financial planning as well as continued strong demand for planning solutions. We also have made considerable progress expanding our managed account technology to fully support RIAs. delivering a fully integrated experience via our Tamarack platform. Despite markets, assets have grown fourfold year over year with a very robust pipeline. This effort has opened a significant market opportunity for us. It starts with managed account growth. It will be followed by additional fiduciary solutions, which we project will drive approximately $50 million in annual revenue by 2025. As I've mentioned in previous quarters, we recently launched our market-changing client portal with a number of clients. This is a powerful rendering of the work we are doing and the impact we can have for advisors and their clients. And you likely made note of our acquisition of Ready2 Technologies. They are an innovator in cloud-based delivery of revenue management and billing software. Ready2 opens a deeper revenue opportunity across our advisory clients, as well as opens a new revenue opportunity with our numerous asset manager partners. The transaction will also create greater operating leverage as we integrate Ready2 into our infrastructure. Lastly, our solutions business continues to grow impressively despite the market conditions. When it comes to managed accounts, Investnet has been growing our share of market today Our share is at 3.5 percent and growing faster than industry peers. We expect this growth to continue. And for some context on why this matters, an increase of 1 percent in share results in incremental $100 million in net revenue for investment based on 2Q depressed ending market values. Our tax and impact overlay assets grew 12 percent over the year. And even more importantly, accounts are up 46% demonstrating strong demand in a challenging market. The number of accounts using InvestNet's direct indexing solutions has grown by 40% year over year. To put this in some perspective, Taruli expects direct indexing assets to have a 12% CAGR over the next few years. We believe we are outpacing industry growth. Given the on-platform position of our offering, Coupled with our ability to use our insight engine, these solutions contribute to managed account market share expansion and represent strong gross net revenue contribution for us. And the last is an important update. Our high net worth solutions have experienced impressive growth in this market. They're outpacing even 2021 flows. This is a valuable offering for us. We've worked hard to establish distribution. We see accelerating adoption And these solutions and services generate the highest revenue per asset we have at the company. A brief note on our operating model. As we modernize our offerings to our clients, we're also automating our operations, giving us the ability to scale without significantly increasing our operating costs. When this work is fully delivered, we believe it will contribute over 200 basis points in EBITDA margin by 2025. with incremental progress towards this goal beginning to be demonstrated in the fourth quarter of this year. These efforts range across the business, from our data services, portfolio accounting, trading and billing, as well as in our service organization. Looking forward to 2023 and beyond, the opportunity we have continues to grow, and we believe there is no firm better positioned than InvestNet. Challenging environments have always been a time for InvestNet to differentiate ourselves. We're encouraged by the feedback we are hearing, by the progress we are making, and the opportunity it is creating for us. Let me turn the call over to Pete for his review of our second quarter results.
Brian
Thank you, Bill. With the backdrop of the Q2 economic environment and capital markets, we continue to demonstrate our resilience and positioning as a critical component of our clients' activities. Adjusted revenue for the second quarter was $319 million, which is 10% growth over last year. As we saw in the first quarter, the wealth segment was modestly softer than we originally expected, due mainly to the volatility and drop in asset values in the capital markets impacting our monthly and average daily balance accounts. Flows continue to be positive, but lower than what we had forecast. As Bill mentioned, industry data for the second quarter showed negative net flows, while we had positive net flows in the quarter. We also continue to see mixed shift from AUA to AUM, supporting our effective fee rate expectations going forward. The data and analytics business also experienced the pressures of challenging macro trends in the economy and marketplace. The research business, which mainly serves asset management firms, faced ongoing challenges in Q2. Adjusted EBITDA was $57.1 million, and adjusted earnings per share was 49 cents. Both EBITDA and EPS were slightly ahead of our guidance for the quarter. While Q1 and Q2 showed the largest impact this year compared to prior year in terms of operating expenses related to our investment initiatives, we are rigorously managing expenses in the aggregate, demonstrated by exceeding these near-term profit goals despite market-driven challenges to revenue. Before I go through the detail about our outlook for the remainder of 2022, I'd like to add some context. We have laid out a strategy and are focused on execution. We are not wavering from the goals we have established and fully expect to attain the revenue and profitability targets. Throughout our history, we have always consistently and methodically invested in our business with a long-term commitment to driving growth of revenue and EBITDA. We believe this best serves our customers, shareholders, and employees. We are now essentially 18 months into our plan to accelerate investment and further these objectives. Those accelerated investments are now in our cost structure and will be managed as part of our overall company expense structure. That said, we are not standing still on the cost side. In the near term, we are fighting inflationary pressure with disciplined cost containment in order to protect EBITDA during this period of market volatility. We will continue to closely control all manageable expense items in an effort to avoid any further decline in the adjusted EBITDA margin. Longer term, the technology and operational modernization effort we have referenced previously provides additional cost containment opportunities to achieve this goal of hitting 25% adjusted EBITDA margins by 2025. Now turning to our outlook for the third quarter and the rest of 2022, we're updating our guidance as follows. For the third quarter, we expect adjusted revenues to be between $301.5 and $303.5 million, adjusted EBITDA to be between $51 and $53 million, and adjusted EPS to be between 40 and 42 cents per share. For the full year, we expect adjusted revenues to be between $1.255 billion and $1.26 billion, adjusted EBITDA to be between $223 million and $227 million, and adjusted EPS to be between $1.84 and $1.89. Our guidance, as always, does not assume any changes in the capital markets from prior quarter end and is based on market levels as of June 30th. Turning to the balance sheet, we ended June with $338 million in cash and debt of $863 million, making our net leverage ratio approximately 2.2 times EBITDA. Thank you for joining the call today and your support of InvestNet. Now I will turn it back to Bill for his closing remarks.
Bill Krager
Thank you, Pete. InvestNet continues to execute its strategy, and we are making important progress despite the difficult operating climate. We delivered growth during a quarter that was historically difficult. The underlying numbers of new accounts and platform activity evidence the essential nature of what we do for our clients and how we are serving them more and more deeply. Financial advice is essential. Our research has amplified this loud and clear. As I said earlier, In a recent InvestNet study, Americans that have a financial advisor were nearly three times more likely to feel financially secure than those that do not have an advisor. We believe this statement holds true across the spectrum of affluence. I believe our results also tell an important story about our clients. We enable our clients to react, respond, engage, and help navigate people through these times. Our insights, our solutions and services, have fundamentally changed how our industry reacts in times like these. When all is said and done, the value that has been created by our network of advisors in a time of historic financial contraction is extraordinary and meaningful in how families achieve their financial goals. This changes people's lives. It also ups the competitive ante going forward. Investnet is an essential partner, and increasingly so, as people's expectations for more digital engagement, more connected, integrated experience of their money, and more intelligent, personalized solutions grows. We are delivering today, and we are leading the way to tomorrow, going deeper and expanding our market share as we do, strengthening our competitive position, and leaning into the areas that secular trends will benefit us for years ahead. We are creating scale. We are creating operating leverage to drive greater profitability for our business, and I'm extremely encouraged with the progress that we're making. Thank you very much. We will now be happy to answer your questions.
Brian Shipman
Thank you. At this time, we will be conducting a question and answer session.
Operator
If you would like to ask a question, please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you would like to remove yourself from the question queue. For participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star keys.
Brian Shipman
One moment please while we poll for questions. The first question comes from Devon Ryan from JMP Securities.
Operator
Please proceed with your question, Devin.
Devin
Thank you. Good evening, Bill, Pete, and Brian. How are you guys?
Bill Krager
Good, Devin. How are you?
Devin
Doing great. Thanks. So I want to start on the new slide you provided, I think slide 10, where you show the ramp in revenues with RIA clients. I thought that was interesting. Obviously, you know, you have the meaningful ramp in managed accounts. You talked a little bit about that. But maybe if you can, just give us a little more context on, you talked about a robust pipeline, what that looks like. Talk about the differentiation of that platform, the visibility you have on that kind of meaningful ramp over the next couple of years, and just what type of penetration that implies or assumes for the platforms.
Bill Krager
Yeah, thanks, Devin. And we've been, you know, we've got a very strong position in the RAA market today. We do that in a couple of different ways, one with our Tamarack platform, one with MoneyGuide, and one with our managed account offering at InvestNet. And what we've done is really worked really hard over the last quarters to bring a lot of those pieces together, to bring the full weight and full capacity of InvestNet to our clients' desktops. And so that work is being done. And as it does, we open up lots of opportunities. And the door we cracked first was really around managed accounts. And we're seeing a pretty exceptional uptick in the flow and usage of our managed account platform with our Tamarack clients. So that is about, you know, we really began to focus here within the last year and have just begun. So our penetration, the growth year over year of assets is very early stage. But our pipeline is deep as we, you know, engage a number of Tamarack firms and introduce them to what we can do from a managed account and investment strategy standpoint. What's most attractive, I think, to the REA market are value-added services and things that we've focused on in the past, Devin, including things like our direct index solution, things like our tax services and tax overlays, our impact platforms, and also we'll begin as part of this campaign to introduce a further array of fiduciary solutions. What are those? Our alternatives platform that we announced in conjunction with UBS and iCapital is something that RIAs are very interested in, our insurance platform from an integrated fee-based offering. And so we opened the door. The pipeline, I'd say, is substantial. We'll get pretty quick uptick, and it'll be a revenue driver and accelerant to our AUM and drive good gross revenue, net revenue, but in many cases both gross and net as they utilize our more value-added services.
Devin
Thanks so much, Bill, for the comprehensive answer there. A follow-up for Pete just on expenses, you know, a lot of moving parts appreciate on the macro backdrop and that's affecting kind of revenues and markets. are clearly moving in big ranges right now. Can you maybe just talk a little bit about the cost constraints that you alluded to in the new implied expense guide? What I'm just trying to think about is what you're specifically doing on expenses that you're helping containing expenses, what are the areas of leverage And then also just how much is timing, meaning you can kind of pull back a bit for now, but if revenues recover, that effectively all the expenses just come right back in. So you're trying to think about how much is temporary versus what actually might be real expense savings that you're able to pull out just in taking a little bit of a tighter belt here.
Brian
Yeah, so there, I would say most of what the manageable component of what we're doing is I don't want to necessarily say it's temporary, but it's part of an ongoing evaluation or assessment of how the business is performing and where we can invest or need to invest to, or I shouldn't say invest, to allocate resources to ensure that we're making the progress that we need to in certain areas. We've, you know, as you well know, with the investments have kind of front-loaded a couple of years or so of hiring. So we were able to kind of tap the brakes a little bit or manage increases in headcount, which gives us some availability, our ongoing travel as we're kind of a dispersed organization throughout the country. As we're coming together in places, we're relying a little more heavily on Zoom for the back half of the year. Again, I think that was one of the areas we've talked about in the past that would start coming back that went away in 2020. You know, we're managing how quickly that can come back, and that will continue to be assessed on an ongoing basis. So those are a couple examples, but it's things like that.
Bill Krager
And, Devin, I would just add to Pete's answer is one, All the investment dollars that we kind of announced early in 2021 are fully loaded into the cost base now. And what we're seeing is we're transitioning from this new talent that creates the ability to unify and integrate all our technology create all the intelligence and insights that we're generating on a daily basis from a data standpoint. And those are in the house, and those expenses are on the books. And we'll manage now on those areas where we don't have to depend as much, and we can transition to a higher degree of automation, from an infrastructure standpoint, and that will continue to kind of drive the leverage going forward. And that's exactly the point that we're at as we reach this quarter.
Devin
Got it. Okay. Well, really helpful contact, so I'll leave it there. Thanks very much.
Bill Krager
All right. Thank you, Devin.
Operator
Thank you. And ladies and gentlemen, just another reminder, if you'd like to ask a question, please press star, then 1. If you'd like to ask a question, please press star, then 1. The next question comes from Alex Kim from UBS. Please proceed with your question, Alex. Hey, Alex.
Bill Krager
How are you? Yeah, good to see you. Good.
Alex
Thanks very much. I think I asked a similar question last quarter already, if I remember correctly. But it's really about the pick-up or take-up in your personalized solutions. So if I look at the data, and thanks for giving us a little bit more data. I think you also gave us accounts in personalized solutions. That's very helpful. that also speaks to kind of the question I have. If I look at the last, you know, 18 months or so, you saw a really nice pickup in the percentage of personalized solution as the percentage of AUM. And then at the beginning of this year, it's been falling off so far this year. So meaning it seems like you're making some really good progress as part of your overall book, and it's coming down. And if you look at the personalized solutions accounts, which you disclosed today in the slide deck on slide 11, Those have grown, I think, 13%, but your AUM total accounts have grown 23%. So it seems like while you're growing, you're not growing as fast as maybe other AUM offerings. So I'm just wondering, are you losing share? Is it a pricing issue that maybe other AUM solutions are selling better, or is it just a market situation? I know it's a long-winded question, but... I would hope that your products on your platform are doing better than competitors.
Bill Krager
Yeah. My sense is, very strong sense, is that we're outperforming. And so, like I mentioned on the call, our tax overlay assets are up 12% year over year, but our accounts are up 46%. Our direct index is up accounts, number of accounts are up 40%. I think that the asset levels where we've seen some attrition, and it's not surprising, is in the sustainability platform from a performance standpoint. Green is underperformed, while energy has outperformed, and so the disparity in performance in that particular category has been pretty significant, but we continue to add accounts. I look at it this way, Alex, is that, and you've probably heard me talk about it this way before. Year to date, we've added 300,000 net new accounts. We've added a significant number of accounts in these value-added programs. They're all coming to us at very depressed asset levels, market values, right? And then as the market releases or as the market normalizes, there'll be a coiled spring which will accelerate the growth of assets in these categories and accelerate by a multiple the revenue we're generating because these are typically gross net type of solutions. And so I am very encouraged by the progress and the continued addition of accounts and advisors we've activated who are using this solution who are bringing accounts to the platform. And I look at it as that coiled spring dynamic. Accounts load onto the platform in a very depressed, very difficult market environment. As the market normalizes, that expands, and that expands at a faster rate, given the gross net nature of these particular solutions. So I look at these things positively. I'd just add that overall, when we look at 2Q21 over 2Q22, We're going deeper with advisors. So advisors have 30%. The advisor on our platform has 30% more accounts with InvestNet in 2Q22 than they had in 2Q21. In these AUM and AUA categories, that's up over 15% quarter over quarter. I mean, year over year. Revenue per account in AUM&A is up 20% year over year, despite the market contraction. So we are going deeper. We're activating more advisors with these services, and they're opening accounts. Those accounts are coming in depressed market values. That's why you're seeing the asset levels kind of steady out. And then I believe that, you know, as the market normalizes, you're going to see an accelerated growth from here.
Alex
Yes, thanks for that, and thanks for the last part there. I actually noted that, too, the accounts per advisor is definitely going up, but that actually gets me to a second part of my question, which is the number of advisors on the platform, I think, year-to-date, I think the last two quarters were down. I don't think I've actually seen that in your history, which, again, is this a penetration situation at this point because you've become so big? Is it because you're really more focused on penetrating deeper versus new advisors, or is it because of other, you know, advisors, or are you losing advisors for other reasons?
Bill Krager
No, you know, this is primarily acquisition activity that our clients have undertaken, and one of those acquisitions was a existing client of investment. So we're doing some cleanup on active advisors. And so the last two quarters has really been that cleanup, Alex, to get the number to active advisors. So in the case that during that transition or that transaction, some of those were duplicated. So we've cleaned that up. And that's the actual advisor count. You know, when I look at new ads, we continue to have a pretty sturdy pipeline of enterprises, continue to convert clients, even in markets like these, continue to sign new Tamarack clients year-to-date, doing very well from new contract standpoint. So we're adding relationships here. during this period, and that decrease in advisors is really, you know, 95% related to that cleanup that we had to do with an acquired client of ours by another client of ours.
Alex
So, in short, you're still pretty confident that you have plenty of room to continue to add advisors to the platform. You're far from being penetrated on that side of the growth curve.
Bill Krager
Yeah, I believe so. I mean, I think what we're seeing is in the RAA market, we've done a very good job of penetrating the higher end, the top RAAs in the country, but I think you'll see us begin to go a little deeper in the market to lower asset and manage asset RAAs, and so we're focused on continuing to sell through that RIA market to all tiers of the RIA market with our packaged money guide, Tamarack, our wealth data platform, and managed account solution.
Alex
All right. Very good. Thanks.
Bill Krager
Great. Thank you, Alex.
Brian Shipman
Thank you.
Operator
Ladies and gentlemen, just one final reminder. If you'd like to ask a question, please press star, then 1. If you'd like to ask a question, please press star, then 1.
Brian Shipman
We will pause to see if there are any further questions before we conclude. The next question comes from Surinder Singh from Jefferies.
Operator
Please proceed with your question, Surinder.
Surinder
Thank you. Hi, guys. I'd like to start a question on the data and analytics business. Can you talk a little bit about the subscription revenue there? I noticed Yoli's been down quarter over quarter for two consecutive quarters. Just any color there? Is there some sort of a volume component to the subscription that we should be aware of? Or maybe some color on the sub-segments just to help us understand what's going on there.
Bill Krager
Absolutely, Turner. So the business year-to-date has added 125 new logos. We've added a couple hundred thousand new users. Our yield per user is down. That's really, it's related very much to consumer activity. And so, you know, that part of our business, verification, that sort of part of our business is very economically related. And in difficult economic climates like this, you're going to see less activity, and that has been a headwind for for the business. The second component and probably the primary component that is seen, a stiff headwind, I'd call it, would be our research panels with asset managers. And that, you know, very market related. As you know, it's been a historically difficult first half of the year. And so you know, that we had projected growth in that segment, and I would say that renewals are pushing out to later in the year, and that is definitely having an effect on our revenue growth in the subs in that business. You know, those are the two primary drivers, Surinder, that I'd spotlight.
Surinder
Got it. That's helpful. And then just a clarification question on slide 10. It's a helpful slide. I mean, it's specifically labeled illustration, but when I think about just the way the slide is presented and I think about the revenue from the RIA managed accounts, is that meant to be somewhat illustrative of the fact that maybe you can get to like 25% of the overall RIA client revenues there?
Bill Krager
Or how should I interpret the- Yeah, I talked about our managed account objective by 2025 being an annual revenue run rate of like $50 million, and I think that's going to be very achievable. We're very focused. What we're doing is we're increasing the number of seats. That increases the penetrable assets, and we're introducing solutions to those using our insights to help advisors, you know, better manage those relationships. And it's paying early dividends for us. Our pipeline is deep. I emphasize that. And so I would say that between now and 2025, we fully anticipate that we'll be generating $50 million on an annual basis in asset management fees in our RIA market. That's the beginning. This is a trillion-three type of pool of assets that ultimately we can penetrate, surrender. So as we get going, as we onboard clients, as we help them begin to open accounts on our platform, what we're seeing is clients are going deep. They're not just opening a few accounts. They're beginning to convert big components of their business to an outsourced model, and we are, you know, we're definitely benefiting from that. So we're early days here, significant revenue opportunity, huge addressable market because we serve such a predominant percentage of the RAA current marketplace, and we've got the right tool set and the right people focused on it. I'm very bullish on it.
Surinder
Good to hear. And then one additional question. follow on question related to kind of expenses and the market more broadly, obviously you've talked about expenses being kind of front loaded. They're in the run rate at this point with all of the investments that you guys have made. How does that, how do you think about that expense base if the market has been really chaotic? And so it's difficult to see where things are going, but if we were to, you know, remain at depressed levels or the market doesn't rebound quickly. How do you think about the investments at this point in time in terms of, you know, there's, you know, Pete talked about the idea that, you know, there are some levers where expenses won't come back, but what about, are there areas where you have to maybe think about being more, I'll say prudent or conservative with expenses or how should we think about just the actual expense base in terms of the employee count?
Bill Krager
Yeah, and we're very aware, and we're also very aware of the expectations we've presented to investors. So we're managing the business towards that end. So I would say, you know, at this point, or February of last year, we announced an investment program, fully executed that. You know, so we went out and we now have the team that carries us into the future, right? So that's a big deal. And Those expenses kind of were fully in the shop by the first quarter of this year. That has crossed paths with a historic market downturn, which has created a little more stress on our EBITDA. That said, we are right in the zone here of when we turn the corner to generate EBITDA growth and restore to the 25% adjusted EBITDA level that we've spoken about in the past. A lot goes into that. A lot goes into that in that there are significant projects underway internally where there's a high degree of automation. There's a high degree of infrastructure, automated infrastructure, that will help us bring down the cost to serve and create more and more scale for the business. And so those create, you know, a couple of hundred basis points of EBITDA margin as we roll them in throughout the organization. And my expectation is that we'll begin to see benefit from that by year end. Of course, we have our eye on expenses given market climate. We have curtailed incremental hiring opportunities. as of the end of the first quarter, and we are very focused on manageable expenses. The market continues to be at very depressed levels. We'll be very prudent about how we work to achieve the expectations that we've set for investors, and we're committed to it.
Surinder
Got it. And then just one more of a modeling question. The impact of FX on your expense base in terms of the number of resources offshore?
Brian
It's fairly minimal. On the expense base, I'm not entirely sure. I think from a cash flow perspective, it was about $1 million last quarter. So the main FX exposure is obviously the rupee, the Indian rupee, where we have upwards of $75, $80 million of overall spending that goes on there. And so that's kind of the extent of it.
Surinder
Okay. Got it. Thanks, guys.
Bill Krager
Yeah. Surrender. Thank you.
Operator
Thank you. The next question comes from Patrick O'Shaughnessy from Raymond Jones. James, please go ahead, Patrick.
Bill Krager
Hey, Patrick.
Patrick
How are you? I'm doing well. Thank you. Good. So you spoke about some of the client related headwinds facing the Yodlee business, but I'm curious, how is Yodlee doing competitively? You've certainly kind of revamped the offering, made it more appealing to FinTechs. How do you feel like it's competing out there in the marketplace?
Bill Krager
Yeah. I mean, you know, there's, I would say that anything wealth related we're winning in the, in the large financial institution marketplace, we continue to win those mandates. We continue to enroll and build out our open banking network. We have the most connectivity there. And, you know, Patrick, there's been 125 new logos that we've signed this year. So we're competing. I think what's occurring in the market is also areas of specialty. So Plaid has a segment. MX has a segment. InvestNet has a segment. And we're very strong and have a very strong reputation and a high win rate in those areas where we have the most strength. That's at institutional level type data needs. It's absolutely in the wealth market. I am particularly enthusiastic about about the wealth data platform. There is no, you know, in our industry, in the wealth industry, you know, all businesses are going to convert to the cloud. And we have the specialty to be able to be the cloud-based provider of data services to the industry. That goes beyond the kind of segment of client or type of client that we serve today. It really addresses the entirety of the wealth industry. because of our specialty, because of our aggregation skills, because of how we enrich data, because of the insights that we're able to surface and publish back to clients to help them go deeper with their clients. And that's a unique capability, and I'm very bullish on that.
Patrick
Great. Thank you. And then I guess kind of building off your commentary on the WealthData platform, so as you think about some of these key growth initiatives, whether it's WDP or your managed accounts or your exchanges, Which of those are really kind of enterprise level sales and which are kind of sales to the individual advisors? And does whether it's enterprise versus individual advisor kind of impact the timeline to achieve your hope for revenues?
Bill Krager
Yeah, I think, well, WDP is an institutional offering. But if you think about a small business, they don't have cloud services either, Patrick. So when we look at the RA market, we think there's an enormous opportunity. It's not just their account data. It's business data and how we can kind of help them understand the valuation of their business, growth of their business, the opportunities they have to grow their business. So that is primarily and initially probably an enterprise sale because of the Maturity of the enterprise market versus the understanding with a typical RAA firm is the value that can be created around data. So that's more of a sales job that we have to do. There's a missing gap inside the institutional or enterprise world from a data standpoint. There's antiquated services, and then there's the WDP, which is a very modern service. Yes. Is there a sales to deployment cycle? Because you have to treat the data, you have to normalize the data, you have to scrub the data, you have to test the data. All that needs to take place. So there's a couple of quarters. There's a quarter or two quarters that will have to go on at the institutional level. But that is probably primary. Secondarily would be the RAA market. When it comes to like the exchanges, That's been primarily to date an institutional offering. The investment insurance exchange is up to $16.5 billion in assets that we're serving. We have a line of sight probably to $20 billion. So that continues to grow in getting adoption. It is being very well received by our institutional clients. Here's a data point that I get excited about and people around here kid with me because I get so excited about it. But in the typical annuity process, which we're kind of a platform for that for our clients, the not in good order or the reject rate on applications is just under 50%. For the policies and annuity contracts that we have signed year to date, ours is in the low single digits. And 95% of the advisors who have opened contracts have not needed internal support. They've used our technology to do it. It is a game changer. And as those statistics build, Patrick, you know, we believe that our investment insurance exchange will become the standard at an enterprise level. And we're seeing a lot of success in introducing this to more and more of our clients. So lots of, you know, feel very good about the progress and the quality of the progress we're making there.
Patrick
Got it. Appreciate all that color. And then maybe one last one from me. So this past quarter, your, your 2023 convertible bond rolled into the current bucket on your balance sheet. How are you thinking about that? You know, as it comes due and refinancing, you know, in light of the credit markets not being particularly conducive right now.
Brian
So, you know, it's, it's, it's, We have the capacity between cash on hand and our revolver to just refund it when it comes due at this point. We are exploring other parts of the bond markets and convertible bond markets because they're jumping around quite a bit. We saw the implied spreads. really tightened even in the last week. So, you know, we're watching it. We're monitoring it right now. Whether we do another convert is something we're considering. But, you know, we have capability and flexibility to use other structures as well. So we're pretty comfortable with that.
Bill Krager
Great. Thank you. All right, Patrick. Have a good night. Thank you.
Operator
Thank you, ladies and gentlemen. We have reached the end of the question and answer session, and I would like to turn the call back to Beau Crager for closing remarks.
Bill Krager
Thank you. Thank you so much for joining us this evening. I can't think of a period where what we do is more critical and how we are investing is more relevant for our clients and their customers. I want to thank everybody for joining tonight. I hope everybody is doing well. And I also just want to thank all of my InvestNet colleagues for the work that you do. It is important, and we're making tremendous progress. I look forward to speaking to everybody next quarter. Thank you very much.
Operator
Thank you very much, sir. This concludes today's conference. You may disconnect your lines at this time, and thank you very much for your participation.
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