Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries AssetMark Reports $99.6B Platform Assets for Third Quarter 2023 By: AssetMark, Inc. via GlobeNewswire November 06, 2023 at 16:15 PM EST CONCORD, Calif., Nov. 06, 2023 (GLOBE NEWSWIRE) -- AssetMark Financial Holdings, Inc. (NYSE: AMK) today announced financial results for the quarter ended September 30, 2023. Third Quarter 2023 Financial and Operational Highlights Net income for the quarter was $38.4 million, or $0.52 per share.Adjusted net income for the quarter was $46.0 million, or $0.62 per share, on total revenue of $190.5 million.Adjusted EBITDA for the quarter was $66.5 million, or 34.9% of total revenue.Platform assets increased 25.5% year-over-year to $99.6 billion. Quarter-over-quarter platform assets were down 1.2%, due to negative market impact net of fees of $2.7 billion, partially offset by quarterly net flows of $1.5 billion.Year-to-date annualized net flows as a percentage of beginning-of-year platform assets were 7.1%.More than 3,400 new households and 158 new producing advisors joined the AssetMark platform during the third quarter. In total, as of September 30, 2023, there were over 9,300 advisors (approximately 3,000 were engaged advisors) and over 251,000 investor households on the AssetMark platform.We realized an 18.7% annualized production lift from existing advisors for the third quarter, indicating that advisors continued to grow organically and increase wallet share on our platform. “The third quarter was another record quarter for AssetMark, highlighted by all-time highs across many financial and operating metrics. We realized our sixth straight quarter of record adjusted EBITDA, while also expanding margins 90 bps year-over-year to a record 34.9%. Simply put, the results for the third quarter were excellent, and we feel we are well on track for the best year in our company’s history,” said AssetMark CEO Michael Kim. “We are focused on continued execution of our strategy and three long-term priorities: hyper growth, accelerated capital deployment and enhanced scalability, which we believe will create continued value for our advisors, their clients, and our shareholders.” Third Quarter 2023 Key Operating Metrics 3Q22 3Q23 Variance per yearOperational metrics: Platform assets (at period-beginning) (millions of dollars)$ 82,127 $ 100,762 22.7 %Net flows (millions of dollars) 1,207 1,543 27.8 %Market impact net of fees (millions of dollars) (3,952) (2,708) NMAcquisition impact (millions of dollars) — — NMPlatform assets (at period-end) (millions of dollars)$ 79,382 $ 99,597 25.5 %Net flows lift (% of beginning of year platform assets) 1.3 % 1.7 % 40 bpsAdvisors (at period-end) 8,702 9,354 7.5 %Engaged advisors (at period-end) 2,601 2,995 15.1 %Assets from engaged advisors (at period-end) (millions of dollars)$ 72,195 $ 91,900 27.3 %Households (at period-end) 223,098 251,424 12.7 %New producing advisors 159 158 (0.6)%Production lift from existing advisors (annualized %) 14.9 % 18.7 % 380 bpsAssets in custody at ATC (at period-end) (millions of dollars)$ 61,539 $ 73,445 19.3 %ATC client cash (at period-end) (millions of dollars)$3,510 $2,897 (17.5)% Financial metrics: Total revenue (millions of dollars)$ 154.7 $ 190.5 23.1 %Net income (millions of dollars)$ 30.1 $ 38.4 27.6 %Net income margin (%) 19.5 % 20.1 % 60 bpsCapital expenditure (millions of dollars)$ 9.0 $ 11.6 28.9 % Non-GAAP financial metrics: Adjusted EBITDA (millions of dollars)$ 52.7 $ 66.5 26.2 %Adjusted EBITDA margin (%) 34.0 % 34.9 % 90 bpsAdjusted net income (millions of dollars)$ 35.0 $ 46.0 31.4 % Note: Percentage variance based on actual numbers, not rounded resultsAll metrics include Adhesion data, except "New producing advisors," "Production lift from existing advisors" and ATC related metrics. Webcast and Conference Call Information AssetMark will host a live conference call and webcast to discuss its third quarter 2023 results. In conjunction with this earnings press release, AssetMark has posted an earnings presentation on its investor relations website at http://ir.assetmark.com. Conference call and webcast details are as follows: Date: November 6, 2023Time: 2:00 p.m. PT; 5:00 p.m. ETPhone: Listeners can pre-register for the conference call here: https://www.netroadshow.com/events/login?show=c8140a9d&confId=55622. Upon registering, you will be provided with participant dial-in numbers, passcode and unique registrant ID. In the 10 minutes prior to the call start time, you may use the conference access information (dial in number, direct event passcode and registrant ID) provided in the confirmation email received at the point of registering to join the call directly.Webcast: http://ir.assetmark.com. Please access the website 10 minutes prior to the start time. The webcast will be available in recorded form at http://ir.assetmark.com for 14 days from November 6, 2023. About AssetMark Financial Holdings, Inc. AssetMark operates a wealth management platform that powers independent financial advisors and their clients. Together with our affiliates Voyant and Adhesion Wealth, we serve advisors of all models at every stage of their journey with flexible, purpose-built solutions that champion client engagement and drive efficiency. Our ecosystem of solutions equips advisors with services and capabilities that would otherwise require significant investments of time and money, ultimately enabling them to deliver better investor outcomes and enhance their productivity, profitability and client satisfaction. Founded in 1996 and based in Concord, California, the company has over 1,000 employees. Today, the AssetMark platform serves over 9,300 financial advisors and over 251,000 investor households. As of September 30, 2023, the company had $99.6 billion in platform assets. Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our future financial and operating performance, which involve risks and uncertainties. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “will,” “may,” “could,” “should,” “believe,” “expect,” “estimate,” “potential” or “continue,” the negative of these terms and other comparable terminology that conveys uncertainty of future events or outcomes. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause actual results to differ materially from statements made in this presentation, including our ability to enhance shareholder value, advance our growth strategy and meet our operating and financial performance guidance. Other potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022, which is on file with the Securities and Exchange Commission and available on our investor relations website at http://ir.assetmark.com. Additional information will be set forth in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, which is expected to be filed on November 7, 2023. All information provided in this presentation is based on information available to us as of the date of this presentation and any forward-looking statements contained herein are based on assumptions that we believe are reasonable as of this date. Undue reliance should not be placed on the forward-looking statements in this presentation, which are inherently uncertain. We undertake no duty to update this information unless required by law. AssetMark Financial Holdings, Inc.Unaudited Condensed Consolidated Balance Sheets(in thousands except share data and par value) September 30, 2023 December 31, 2022 (unaudited) ASSETS Current assets: Cash and cash equivalents$ 214,754 $ 123,274 Restricted cash 14,000 13,000 Investments, at fair value 16,294 13,714 Fees and other receivables, net 20,464 20,082 Income tax receivable, net — 265 Prepaid expenses and other current assets 13,086 16,870 Total current assets 278,598 187,205 Property, plant and equipment, net 7,672 8,495 Capitalized software, net 105,593 89,959 Other intangible assets, net 686,765 694,627 Operating lease right-of-use assets 21,625 22,002 Goodwill 487,353 487,225 Other assets 17,721 13,417 Total assets$ 1,605,327 $ 1,502,930 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable$ 1,781 $ 4,624 Accrued liabilities and other current liabilities 65,458 69,196 Income tax payable, net 25,755 — Total current liabilities 92,994 73,820 Long-term debt, net 93,519 112,138 Other long-term liabilities 16,666 15,185 Long-term portion of operating lease liabilities 27,539 27,924 Deferred income tax liabilities, net 147,497 147,497 Total long-term liabilities 285,221 302,744 Total liabilities 378,215 376,564 Stockholders’ equity: Common stock, $0.001 par value (675,000,000 shares authorized and 74,264,226 and 73,847,596 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively) 74 74 Additional paid-in capital 955,208 942,946 Retained earnings 271,987 183,503 Accumulated other comprehensive loss (157) (157)Total stockholders’ equity 1,227,112 1,126,366 Total liabilities and stockholders’ equity$ 1,605,327 $ 1,502,930 AssetMark Financial Holdings, Inc.Unaudited Condensed Consolidated Statements of Income and Comprehensive Income(in thousands, except share and per share data) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2023 2022 2023 2022Revenue: Asset-based revenue$ 143,840 $ 128,173 $ 412,215 $ 409,498 Spread-based revenue 37,329 21,160 112,863 30,265 Subscription-based revenue 3,891 3,126 11,128 9,703 Other revenue 5,462 2,204 14,110 4,707 Total revenue 190,522 154,663 550,316 454,173 Operating expenses: Asset-based expenses 43,092 36,476 119,870 118,429 Spread-based expenses 8,492 2,142 23,052 3,188 Employee compensation 46,613 41,589 141,623 121,852 General and operating expenses 22,714 21,667 72,757 65,949 Professional fees 7,369 5,877 21,134 17,104 Depreciation and amortization 8,965 7,961 26,077 23,141 Total operating expenses 137,245 115,712 404,513 349,663 Interest expense 2,305 1,560 6,789 4,207 Other (income) expense, net (2,192) (11) 17,385 195 Income before income taxes 53,164 37,402 121,629 100,108 Provision for income taxes 14,779 7,293 33,145 22,440 Net income 38,385 30,109 88,484 77,668 Net comprehensive income$ 38,385 $ 30,109 $ 88,484 $ 77,668 Net income per share attributable to common stockholders: Basic$ 0.52 $ 0.41 $ 1.19 $ 1.05 Diluted$ 0.51 $ 0.41 $ 1.19 $ 1.05 Weighted average number of common shares outstanding, basic 74,261,667 73,842,297 74,047,412 73,682,881 Weighted average number of common shares outstanding, diluted 74,695,260 73,844,689 74,521,370 73,783,858 AssetMark Financial Holdings, Inc.Unaudited Condensed Consolidated Statements of Cash Flows(in thousands) Nine Months EndedSeptember 30, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net income$ 88,484 $ 77,668 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 26,077 23,141 Interest (income) expense, net (184) 607 Share-based compensation 12,262 10,096 Debt acquisition cost write-down 92 130 Changes in certain assets and liabilities: Fees and other receivables, net (879) (7,338)Receivables from related party 480 568 Prepaid expenses and other current assets 7,751 6,732 Accounts payable, accrued liabilities and other current liabilities (675) (12,664)Income tax receivable and payable, net 26,020 (3,341)Net cash provided by operating activities 159,428 95,599 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Adhesion Wealth (3,000) — Purchase of investments (1,936) (2,211)Sale of investments 289 384 Purchase of property and equipment (1,155) (1,440)Purchase of computer software (31,871) (26,049)Purchase of convertible notes (4,275) (8,600)Net cash used in investing activities (41,948) (37,916)CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of long-term debt, net — 122,508 Proceeds from revolving credit facility draw down 50,000 — Payments on revolving credit facility (50,000) (115,000)Payments on term loan (25,000) (4,688)Net cash (used in) provided by financing activities (25,000) 2,820 Net change in cash, cash equivalents, and restricted cash 92,480 60,503 Cash, cash equivalents, and restricted cash at beginning of period 136,274 89,707 Cash, cash equivalents, and restricted cash at end of period$ 228,754 $ 150,210 SUPPLEMENTAL CASH FLOW INFORMATION Income taxes paid, net$ 6,962 $ 26,176 Interest paid$ 7,837 $ 2,714 Non-cash operating and investing activities: Non-cash changes to right-of-use assets$ 3,360 $ 3,396 Non-cash changes to lease liabilities$ 3,360 $ 3,396 Explanations and Reconciliations of Non-GAAP Financial Measures In addition to our results determined in accordance with U.S. generally accepted accounting principles (“GAAP”), we believe adjusted EBITDA, adjusted EBITDA margin and adjusted net income, all of which are non-GAAP measures, are useful in evaluating our performance. We use adjusted EBITDA, adjusted EBITDA margin and adjusted net income to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that such non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, such non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate our business. Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA is defined as EBITDA (net income plus interest expense, income tax expense, depreciation and amortization and less interest income), further adjusted to exclude certain non-cash charges and other adjustments set forth below. Adjusted EBITDA margin is defined as adjusted EBITDA divided by total revenue. Adjusted EBITDA and adjusted EBITDA margin are useful financial metrics in assessing our operating performance from period to period because they exclude certain items that we believe are not representative of our core business, such as certain material non-cash items and other adjustments such as share-based compensation, strategic initiatives and reorganization and integration costs. We believe that adjusted EBITDA and adjusted EBITDA margin, viewed in addition to, and not in lieu of, our reported GAAP results, provide useful information to investors regarding our performance and overall results of operations for various reasons, including: non-cash equity grants made to employees at a certain price and point in time do not necessarily reflect how our business is performing at any particular time; as such, share-based compensation expense is not a key measure of our operating performance; andcosts associated with acquisitions and the resulting integrations, debt refinancing, restructuring, conversions, as well as other non-recurring litigation costs can vary from period to period and transaction to transaction; as such, expenses associated with these activities are not considered a key measure of our operating performance. We use adjusted EBITDA and adjusted EBITDA margin: as measures of operating performance;for planning purposes, including the preparation of budgets and forecasts;to allocate resources to enhance the financial performance of our business;to evaluate the effectiveness of our business strategies;in communications with our board of directors concerning our financial performance; andas considerations in determining compensation for certain employees. Adjusted EBITDA and adjusted EBITDA margin have limitations as analytical tools, and should not be considered in isolation to, or as substitutes for, analysis of our results as reported under GAAP. Some of these limitations are: adjusted EBITDA and adjusted EBITDA margin do not reflect all cash expenditures, future requirements for capital expenditures or contractual commitments;adjusted EBITDA and adjusted EBITDA margin do not reflect changes in, or cash requirements for, working capital needs;adjusted EBITDA and adjusted EBITDA margin do not reflect interest expense on our debt or the cash requirements necessary to service interest or principal payments; andthe definitions of adjusted EBITDA and adjusted EBITDA margin can differ significantly from company to company and as a result have limitations when comparing similarly titled measures across companies. Set forth below is a reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted EBITDA for the three and nine months ended September 30, 2023 and 2022 (unaudited). Three Months EndedSeptember 30, Three Months EndedSeptember 30,(in thousands except for percentages) 2023 2022 2023 2022Net income$ 38,385 $ 30,109 20.1 % 19.5 %Provision for income taxes 14,779 7,293 7.8 % 4.7 %Interest income (3,186) (849) (1.7)% (0.5)%Interest expense 2,305 1,560 1.2 % 1.0 %Depreciation and amortization 8,965 7,961 4.7 % 5.1 %EBITDA$ 61,248 $ 46,074 32.1 % 29.8 %Share-based compensation(1) 4,288 3,923 2.3 % 2.5 %Reorganization and integration costs(2) 2,662 2,281 1.4 % 1.5 %Acquisition expenses(3) 195 379 0.1 % 0.2 %Business continuity plan(4) — 14 — — SEC settlement(5) (1,673) — (0.9)% — Other (income) expense, net$ (263) $ (11) (0.1)% — Adjusted EBITDA$ 66,457 $ 52,660 34.9 % 34.0 % Nine Months EndedSeptember 30, Nine Months EndedSeptember 30,(in thousands except for percentages) 2023 2022 2023 2022Net income$ 88,484 $ 77,668 16.1 % 17.1 %Provision for income taxes 33,145 22,440 6.0 % 4.9 %Interest income (7,746) (1,107) (1.4)% (0.2)%Interest expense 6,789 4,207 1.2 % 0.9 %Depreciation and amortization 26,077 23,141 4.7 % 5.1 %EBITDA$ 146,749 $ 126,349 26.6 % 27.8 %Share-based compensation(1) 12,262 10,096 2.2 % 2.2 %Reorganization and integration costs(2) 8,127 8,600 1.5 % 1.9 %Acquisition expenses(3) 368 1,313 0.1 % 0.3 %Business continuity plan(4) (6) 234 — 0.1 %SEC settlement(5) 18,327 — 3.3 % — Other (income) expense, net (186) 195 — — Adjusted EBITDA$ 185,641 $ 146,787 33.7 % 32.3 % (1)“Share-based compensation” represents granted share-based compensation in the form of restricted stock unit, stock option and stock appreciation right grants by us to certain of our directors and employees. Although this expense occurred in each measurement period, we have added the expense back in our calculation of adjusted EBITDA because of its noncash impact.(2)“Reorganization and integration costs” includes costs related to our functional reorganization within our Operations, Technology and Retirement functions as well as duplicate costs related to the outsourcing of back-office operations functions. While we have incurred such expenses in all periods measured, these expenses serve varied reorganization and integration initiatives, each of which is non-recurring. We do not consider these expenses to be part of our core operations.(3)“Acquisition expenses” includes employee severance, transition and retention expenses, duplicative general and administrative expenses and other professional fees related to acquisitions.(4)“Business continuity plan” includes incremental compensation and other costs that are directly related to a transition to a hybrid workforce in 2022.(5)“SEC settlement” represents the amount paid by us pursuant to our settlement with the SEC discussed in Note 12 of notes to unaudited condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. Set forth below is a summary of the adjustments involved in the reconciliation from net income and net income margin, the most directly comparable GAAP financial measures, to adjusted EBITDA and adjusted EBITDA margin for three and nine months ended September 30, 2023 and 2022 (unaudited), broken out by compensation and non-compensation expenses (unaudited). Three Months Ended September 30, 2023 Three Months Ended September 30, 2022(in thousands) Compensation Non-Compensation Total Compensation Non-Compensation TotalShare-based compensation(1) $ 4,288 $ — $ 4,288 $ 3,923 $ — $ 3,923 Reorganization and integration costs(2) 1,101 1,561 2,662 829 1,452 2,281 Acquisition expenses(3) — 195 195 (4) 383 379 Business continuity plan(4) — — — — 14 14 SEC settlement(5) — (1,673) (1,673) — — — Other (income) expense, net — (263) (263) — (11) (11)Total adjustments to adjusted EBITDA $ 5,389 $ (180) $ 5,209 $ 4,748 $ 1,838 $ 6,586 Three Months Ended September 30, 2023 Three Months Ended September 30, 2022(in percentages) Compensation Non-Compensation Total Compensation Non-Compensation TotalShare-based compensation(1) 2.3 % — 2.3 % 2.5 % — 2.5 %Reorganization and integration costs(2) 0.6 % 0.8 % 1.4 % 0.5 % 1.0 % 1.5 %Acquisition expenses(3) — 0.1 % 0.1 % — 0.2 % 0.2 %Business continuity plan(4) — — — — — — SEC settlement(5) — (0.9)% (0.9)% — — — Other (income) expense, net — (0.1)% (0.1)% — — — Total adjustments to adjusted EBITDA margin % 2.9 % (0.1)% 2.8 % 3.0 % 1.2 % 4.2 % (1)“Share-based compensation” represents granted share-based compensation in the form of restricted stock unit, stock option and stock appreciation right grants by us to certain of our directors and employees. Although this expense occurred in each measurement period, we have added the expense back in our calculation of adjusted EBITDA because of its noncash impact.(2)“Reorganization and integration costs” includes costs related to our functional reorganization within our Operations, Technology and Retirement functions as well as duplicate costs related to the outsourcing of back-office operations functions. While we have incurred such expenses in all periods measured, these expenses serve varied reorganization and integration initiatives, each of which is non-recurring. We do not consider these expenses to be part of our core operations.(3)“Acquisition expenses” includes employee severance, transition and retention expenses, duplicative general and administrative expenses and other professional fees related to acquisitions.(4)“Business continuity plan” includes incremental compensation and other costs that are directly related to a transition to a hybrid workforce in 2022.(5)“SEC settlement” represents the amount paid by us pursuant to our settlement with the SEC discussed in Note 12 of notes to unaudited condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022(in thousands)Compensation Non-Compensation Total Compensation Non-Compensation TotalShare-based compensation(1)$ 12,262 $ — $ 12,262 $ 10,096 $ — $ 10,096 Reorganization and integration costs(2) 3,370 4,757 8,127 2,823 5,777 8,600 Acquisition expenses(3) 100 268 368 (4) 1,317 1,313 Business continuity plan(4) — (6) (6) (2) 236 234 SEC settlement(5) — 18,327 18,327 — — — Other (income) expense, net — (186) (186) — 195 195 Total adjustments to adjusted EBITDA$ 15,732 $ 23,160 $ 38,892 $ 12,913 $ 7,525 $ 20,438 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022(in percentages)Compensation Non-Compensation Total Compensation Non-Compensation TotalShare-based compensation(1) 2.2 % — 2.2 % 2.2 % — 2.2 %Reorganization and integration costs(2) 0.6 % 0.9 % 1.5 % 0.6 % 1.3 % 1.9 %Acquisition expenses(3) — 0.1 % 0.1 % — 0.3 % 0.3 %Business continuity plan(4) — — — — 0.1 % 0.1 %SEC settlement(5) — 3.3 % 3.3 % — — — Other (income) expense, net — — — — — — Total adjustments to adjusted EBITDA margin % 2.8 % 4.3 % 7.1 % 2.8 % 1.7 % 4.5 % (1)“Share-based compensation” represents granted share-based compensation in the form of restricted stock unit, stock option and stock appreciation right grants by us to certain of our directors and employees. Although this expense occurred in each measurement period, we have added the expense back in our calculation of adjusted EBITDA because of its noncash impact.(2)“Reorganization and integration costs” includes costs related to our functional reorganization within our Operations, Technology and Retirement functions as well as duplicate costs related to the outsourcing of back-office operations functions. While we have incurred such expenses in all periods measured, these expenses serve varied reorganization and integration initiatives, each of which is non-recurring. We do not consider these expenses to be part of our core operations.(3)“Acquisition expenses” includes employee severance, transition and retention expenses, duplicative general and administrative expenses and other professional fees related to acquisitions.(4)“Business continuity plan” includes incremental compensation and other costs that are directly related to a transition to a hybrid workforce in 2022.(5)“SEC settlement” represents the amount paid by us pursuant to our settlement with the SEC discussed in Note 12 of notes to unaudited condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. Adjusted Net Income Adjusted net income represents net income before: (a) share-based compensation expense, (b) amortization of acquisition-related intangible assets, (c) acquisition and related integration expenses, (d) restructuring and conversion costs and (e) certain other expenses. Reconciled items are tax effected using the income tax rates in effect for the applicable period, adjusted for any potentially non-deductible amounts. We prepared adjusted net income to eliminate the effects of items that we do not consider indicative of our core operating performance. We believe that adjusted net income, viewed in addition to, and not in lieu of, our reported GAAP results, provides useful information to investors regarding our performance and overall results of operations for various reasons, including the following: non-cash equity grants made to employees at a certain price and point in time do not necessarily reflect how our business is performing at any particular time; as such, share-based compensation expense is not a key measure of our operating performance;costs associated with acquisitions and related integrations, debt refinancing, restructuring and conversions can vary from period to period and transaction to transaction; as such, expenses associated with these activities are not considered a key measure of our operating performance; andamortization expenses can vary substantially from company to company and from period to period depending upon each company’s financing and accounting methods, the fair value and average expected life of acquired intangible assets and the method by which assets were acquired; as such, the amortization of intangible assets obtained in acquisitions is not considered a key measure of our operating performance. Adjusted net income does not purport to be an alternative to net income or cash flows from operating activities. The term adjusted net income is not defined under GAAP, and adjusted net income is not a measure of net income, operating income or any other performance or liquidity measure derived in accordance with GAAP. Therefore, adjusted net income has limitations as an analytical tool and should not be considered in isolation to, or as a substitute for, analysis of our results as reported under GAAP. Some of these limitations are: adjusted net income does not reflect all cash expenditures, future requirements for capital expenditures or contractual commitments;adjusted net income does not reflect changes in, or cash requirements for, working capital needs; andother companies in the financial services industry may calculate adjusted net income differently than we do, limiting its usefulness as a comparative measure. The schedule set forth below presents the Company’s GAAP results from the Condensed Consolidated Statements of Income (unaudited) for the three and nine months ended September 30, 2023 and 2022, with certain line items adjusted for the items described above. Included below is also a reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted net income for the three and nine months and years ended September 30, 2023 and 2022 (unaudited). Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2023 2022 2023 2022 Revenue: Asset-based revenue$ 143,840 $ 128,173 $ 412,215 $ 409,498 Spread-based revenue 37,329 21,160 112,863 30,265 Subscription-based revenue 3,891 3,126 11,128 9,703 Other revenue 5,462 2,204 14,110 4,707 Total revenue 190,522 154,663 550,316 454,173 Operating expenses: Asset-based expenses 43,092 36,476 119,870 118,429 Spread-based expenses 8,492 2,142 23,052 3,188 Adjusted employee compensation(1) 41,224 36,841 125,891 108,939 Adjusted general and operating expenses(1) 21,118 20,509 69,654 61,873 Adjusted professional fees(1) 7,209 5,186 19,218 13,850 Adjusted depreciation and amortization(2) 6,785 6,232 19,542 17,955 Total adjusted operating expenses 127,920 107,386 377,227 324,234 Interest expense 2,305 1,560 6,789 4,207 Adjusted other expenses, net(1) (256) — (756) — Adjusted income before income taxes 60,553 45,717 167,056 125,732 Adjusted provision for income taxes(3) 14,532 10,744 40,093 29,548 Adjusted net income$ 46,021 $ 34,973 $ 126,963 $ 96,184 Net income per share attributable to common stockholders: Adjusted earnings per share(4)$ 0.62 $ 0.47 $ 1.70 $ 1.30 Weighted average number of common shares outstanding, diluted 74,695,260 73,844,689 74,521,370 73,783,858 (1) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above.(2) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016.(3) Consists of adjustments to normalize our estimated tax rate in determining adjusted net income.(4) In Q1 2022, we began using the diluted GAAP shares outstanding given that our restricted stock awards fully vested in 2021 resulting in no material reconciling differences compared to the adjusted diluted common shares outstanding historically used for calculating adjusted earnings per share. Set forth below is a reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted net income for the three and nine months ended September 30, 2023 and 2022 (unaudited). Three months ended September 30, 2023 Three months ended September 30, 2022Reconciliation of Non-GAAP PresentationGAAP Adjustments Adjusted GAAP Adjustments AdjustedRevenue: Asset-based revenue$ 143,840 $ — $ 143,840 $ 128,173 $ — $ 128,173 Spread-based revenue 37,329 — 37,329 21,160 — 21,160 Subscription-based revenue 3,891 — 3,891 3,126 — 3,126 Other revenue 5,462 — 5,462 2,204 — 2,204 Total revenue 190,522 — 190,522 154,663 — 154,663 Operating expenses: Asset-based expenses 43,092 — 43,092 36,476 — 36,476 Spread-based expenses 8,492 — 8,492 2,142 — 2,142 Employee compensation(1) 46,613 (5,389) 41,224 41,589 (4,748) 36,841 General and operating expenses(1) 22,714 (1,596) 21,118 21,667 (1,158) 20,509 Professional fees(1) 7,369 (160) 7,209 5,877 (691) 5,186 Depreciation and amortization(2) 8,965 (2,180) 6,785 7,961 (1,729) 6,232 Total operating expenses 137,245 (9,325) 127,920 115,712 (8,326) 107,386 Interest expense 2,305 — 2,305 1,560 — 1,560 Other expenses, net(1) (2,192) 1,936 (256) (11) 11 — Income before income taxes 53,164 7,389 60,553 37,402 8,315 45,717 Provision for income taxes(3) 14,779 (247) 14,532 7,293 3,451 10,744 Net income$ 38,385 $ 46,021 $ 30,109 $ 34,973 (1) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above.(2) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016.(3) Consists of adjustments to normalize our estimated tax rate in determining adjusted net income. Nine months ended September 30, 2023 Nine months ended September 30, 2022Reconciliation of Non-GAAP PresentationGAAP Adjustments Adjusted GAAP Adjustments AdjustedRevenue: Asset-based revenue$ 412,215 $ — $ 412,215 $ 409,498 $ — $ 409,498 Spread-based revenue 112,863 — 112,863 30,265 — 30,265 Subscription-based revenue 11,128 — 11,128 9,703 — 9,703 Other revenue 14,110 — 14,110 4,707 — 4,707 Total revenue 550,316 — 550,316 454,173 — 454,173 Operating expenses: Asset-based expenses 119,870 — 119,870 118,429 — 118,429 Spread-based expenses 23,052 — 23,052 3,188 — 3,188 Employee compensation(1) 141,623 (15,732) 125,891 121,852 (12,913) 108,939 General and operating expenses(1) 72,757 (3,103) 69,654 65,949 (4,076) 61,873 Professional fees(1) 21,134 (1,916) 19,218 17,104 (3,254) 13,850 Depreciation and amortization(2) 26,077 (6,535) 19,542 23,141 (5,186) 17,955 Total operating expenses 404,513 (27,286) 377,227 349,663 (25,429) 324,234 Interest expense 6,789 — 6,789 4,207 — 4,207 Other expenses, net(1) 17,385 (18,141) (756) 195 (195) — Income before income taxes 121,629 45,427 167,056 100,108 25,624 125,732 Provision for income taxes(3) 33,145 6,948 40,093 22,440 7,108 29,548 Net income$ 88,484 $ 126,963 $ 77,668 $ 96,184 (1) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above.(2) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016.(3) Consists of adjustments to normalize our estimated tax rate in determining adjusted net income. Set forth below is a summary of the adjustments involved in the reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted net income for three and nine months ended September 30, 2023 and 2022 (unaudited), broken out by compensation and non-compensation expenses (unaudited). Three Months Ended September 30, 2023 Three Months Ended September 30, 2022(in thousands) Compensation Non-Compensation Total Compensation Non-Compensation TotalNet income $ 38,385 $ 30,109 Acquisition-related amortization(1) $ — $ 2,180 2,180 $ — $ 1,729 1,729 Expense adjustments(2) 1,101 83 1,184 825 1,849 2,674 Share-based compensation 4,288 — 4,288 3,923 — 3,923 Other (income) expense, net — (263) (263) — (11) (11)Tax effect of adjustments(3) (1,293) 1,540 247 (1,116) (2,335) (3,451)Adjusted net income $ 4,096 $ 3,540 $ 46,021 $ 3,632 $ 1,232 $ 34,973 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022(in thousands) Compensation Non-Compensation Total Compensation Non-Compensation TotalNet income $ 88,484 $ 77,668 Acquisition-related amortization(1) $ — $ 6,535 6,535 $ — $ 5,186 5,186 Expense adjustments(2) 3,470 23,346 26,816 2,817 7,330 10,147 Share-based compensation 12,262 — 12,262 10,096 — 10,096 Other (income) expense, net — (186) (186) — 195 195 Tax effect of adjustments(3) (3,776) (3,172) (6,948) (3,035) (4,073) (7,108)Adjusted net income $ 11,956 $ 26,523 $ 126,963 $ 9,878 $ 8,638 $ 96,184 (1)Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016.(2)Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above other than share-based compensation.(3)Consists of adjustments to normalize our estimated tax rate in determining adjusted net income. Contacts Investors:Taylor J. Hamilton, CFAHead of Investor RelationsInvestorRelations@assetmark.com Media: Alaina KleinmanHead of PR & Communicationsalaina.kleinman@assetmark.com SOURCE: AssetMark Financial Holdings, Inc. Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
AssetMark Reports $99.6B Platform Assets for Third Quarter 2023 By: AssetMark, Inc. via GlobeNewswire November 06, 2023 at 16:15 PM EST CONCORD, Calif., Nov. 06, 2023 (GLOBE NEWSWIRE) -- AssetMark Financial Holdings, Inc. (NYSE: AMK) today announced financial results for the quarter ended September 30, 2023. Third Quarter 2023 Financial and Operational Highlights Net income for the quarter was $38.4 million, or $0.52 per share.Adjusted net income for the quarter was $46.0 million, or $0.62 per share, on total revenue of $190.5 million.Adjusted EBITDA for the quarter was $66.5 million, or 34.9% of total revenue.Platform assets increased 25.5% year-over-year to $99.6 billion. Quarter-over-quarter platform assets were down 1.2%, due to negative market impact net of fees of $2.7 billion, partially offset by quarterly net flows of $1.5 billion.Year-to-date annualized net flows as a percentage of beginning-of-year platform assets were 7.1%.More than 3,400 new households and 158 new producing advisors joined the AssetMark platform during the third quarter. In total, as of September 30, 2023, there were over 9,300 advisors (approximately 3,000 were engaged advisors) and over 251,000 investor households on the AssetMark platform.We realized an 18.7% annualized production lift from existing advisors for the third quarter, indicating that advisors continued to grow organically and increase wallet share on our platform. “The third quarter was another record quarter for AssetMark, highlighted by all-time highs across many financial and operating metrics. We realized our sixth straight quarter of record adjusted EBITDA, while also expanding margins 90 bps year-over-year to a record 34.9%. Simply put, the results for the third quarter were excellent, and we feel we are well on track for the best year in our company’s history,” said AssetMark CEO Michael Kim. “We are focused on continued execution of our strategy and three long-term priorities: hyper growth, accelerated capital deployment and enhanced scalability, which we believe will create continued value for our advisors, their clients, and our shareholders.” Third Quarter 2023 Key Operating Metrics 3Q22 3Q23 Variance per yearOperational metrics: Platform assets (at period-beginning) (millions of dollars)$ 82,127 $ 100,762 22.7 %Net flows (millions of dollars) 1,207 1,543 27.8 %Market impact net of fees (millions of dollars) (3,952) (2,708) NMAcquisition impact (millions of dollars) — — NMPlatform assets (at period-end) (millions of dollars)$ 79,382 $ 99,597 25.5 %Net flows lift (% of beginning of year platform assets) 1.3 % 1.7 % 40 bpsAdvisors (at period-end) 8,702 9,354 7.5 %Engaged advisors (at period-end) 2,601 2,995 15.1 %Assets from engaged advisors (at period-end) (millions of dollars)$ 72,195 $ 91,900 27.3 %Households (at period-end) 223,098 251,424 12.7 %New producing advisors 159 158 (0.6)%Production lift from existing advisors (annualized %) 14.9 % 18.7 % 380 bpsAssets in custody at ATC (at period-end) (millions of dollars)$ 61,539 $ 73,445 19.3 %ATC client cash (at period-end) (millions of dollars)$3,510 $2,897 (17.5)% Financial metrics: Total revenue (millions of dollars)$ 154.7 $ 190.5 23.1 %Net income (millions of dollars)$ 30.1 $ 38.4 27.6 %Net income margin (%) 19.5 % 20.1 % 60 bpsCapital expenditure (millions of dollars)$ 9.0 $ 11.6 28.9 % Non-GAAP financial metrics: Adjusted EBITDA (millions of dollars)$ 52.7 $ 66.5 26.2 %Adjusted EBITDA margin (%) 34.0 % 34.9 % 90 bpsAdjusted net income (millions of dollars)$ 35.0 $ 46.0 31.4 % Note: Percentage variance based on actual numbers, not rounded resultsAll metrics include Adhesion data, except "New producing advisors," "Production lift from existing advisors" and ATC related metrics. Webcast and Conference Call Information AssetMark will host a live conference call and webcast to discuss its third quarter 2023 results. In conjunction with this earnings press release, AssetMark has posted an earnings presentation on its investor relations website at http://ir.assetmark.com. Conference call and webcast details are as follows: Date: November 6, 2023Time: 2:00 p.m. PT; 5:00 p.m. ETPhone: Listeners can pre-register for the conference call here: https://www.netroadshow.com/events/login?show=c8140a9d&confId=55622. Upon registering, you will be provided with participant dial-in numbers, passcode and unique registrant ID. In the 10 minutes prior to the call start time, you may use the conference access information (dial in number, direct event passcode and registrant ID) provided in the confirmation email received at the point of registering to join the call directly.Webcast: http://ir.assetmark.com. Please access the website 10 minutes prior to the start time. The webcast will be available in recorded form at http://ir.assetmark.com for 14 days from November 6, 2023. About AssetMark Financial Holdings, Inc. AssetMark operates a wealth management platform that powers independent financial advisors and their clients. Together with our affiliates Voyant and Adhesion Wealth, we serve advisors of all models at every stage of their journey with flexible, purpose-built solutions that champion client engagement and drive efficiency. Our ecosystem of solutions equips advisors with services and capabilities that would otherwise require significant investments of time and money, ultimately enabling them to deliver better investor outcomes and enhance their productivity, profitability and client satisfaction. Founded in 1996 and based in Concord, California, the company has over 1,000 employees. Today, the AssetMark platform serves over 9,300 financial advisors and over 251,000 investor households. As of September 30, 2023, the company had $99.6 billion in platform assets. Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our future financial and operating performance, which involve risks and uncertainties. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “will,” “may,” “could,” “should,” “believe,” “expect,” “estimate,” “potential” or “continue,” the negative of these terms and other comparable terminology that conveys uncertainty of future events or outcomes. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause actual results to differ materially from statements made in this presentation, including our ability to enhance shareholder value, advance our growth strategy and meet our operating and financial performance guidance. Other potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022, which is on file with the Securities and Exchange Commission and available on our investor relations website at http://ir.assetmark.com. Additional information will be set forth in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, which is expected to be filed on November 7, 2023. All information provided in this presentation is based on information available to us as of the date of this presentation and any forward-looking statements contained herein are based on assumptions that we believe are reasonable as of this date. Undue reliance should not be placed on the forward-looking statements in this presentation, which are inherently uncertain. We undertake no duty to update this information unless required by law. AssetMark Financial Holdings, Inc.Unaudited Condensed Consolidated Balance Sheets(in thousands except share data and par value) September 30, 2023 December 31, 2022 (unaudited) ASSETS Current assets: Cash and cash equivalents$ 214,754 $ 123,274 Restricted cash 14,000 13,000 Investments, at fair value 16,294 13,714 Fees and other receivables, net 20,464 20,082 Income tax receivable, net — 265 Prepaid expenses and other current assets 13,086 16,870 Total current assets 278,598 187,205 Property, plant and equipment, net 7,672 8,495 Capitalized software, net 105,593 89,959 Other intangible assets, net 686,765 694,627 Operating lease right-of-use assets 21,625 22,002 Goodwill 487,353 487,225 Other assets 17,721 13,417 Total assets$ 1,605,327 $ 1,502,930 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable$ 1,781 $ 4,624 Accrued liabilities and other current liabilities 65,458 69,196 Income tax payable, net 25,755 — Total current liabilities 92,994 73,820 Long-term debt, net 93,519 112,138 Other long-term liabilities 16,666 15,185 Long-term portion of operating lease liabilities 27,539 27,924 Deferred income tax liabilities, net 147,497 147,497 Total long-term liabilities 285,221 302,744 Total liabilities 378,215 376,564 Stockholders’ equity: Common stock, $0.001 par value (675,000,000 shares authorized and 74,264,226 and 73,847,596 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively) 74 74 Additional paid-in capital 955,208 942,946 Retained earnings 271,987 183,503 Accumulated other comprehensive loss (157) (157)Total stockholders’ equity 1,227,112 1,126,366 Total liabilities and stockholders’ equity$ 1,605,327 $ 1,502,930 AssetMark Financial Holdings, Inc.Unaudited Condensed Consolidated Statements of Income and Comprehensive Income(in thousands, except share and per share data) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2023 2022 2023 2022Revenue: Asset-based revenue$ 143,840 $ 128,173 $ 412,215 $ 409,498 Spread-based revenue 37,329 21,160 112,863 30,265 Subscription-based revenue 3,891 3,126 11,128 9,703 Other revenue 5,462 2,204 14,110 4,707 Total revenue 190,522 154,663 550,316 454,173 Operating expenses: Asset-based expenses 43,092 36,476 119,870 118,429 Spread-based expenses 8,492 2,142 23,052 3,188 Employee compensation 46,613 41,589 141,623 121,852 General and operating expenses 22,714 21,667 72,757 65,949 Professional fees 7,369 5,877 21,134 17,104 Depreciation and amortization 8,965 7,961 26,077 23,141 Total operating expenses 137,245 115,712 404,513 349,663 Interest expense 2,305 1,560 6,789 4,207 Other (income) expense, net (2,192) (11) 17,385 195 Income before income taxes 53,164 37,402 121,629 100,108 Provision for income taxes 14,779 7,293 33,145 22,440 Net income 38,385 30,109 88,484 77,668 Net comprehensive income$ 38,385 $ 30,109 $ 88,484 $ 77,668 Net income per share attributable to common stockholders: Basic$ 0.52 $ 0.41 $ 1.19 $ 1.05 Diluted$ 0.51 $ 0.41 $ 1.19 $ 1.05 Weighted average number of common shares outstanding, basic 74,261,667 73,842,297 74,047,412 73,682,881 Weighted average number of common shares outstanding, diluted 74,695,260 73,844,689 74,521,370 73,783,858 AssetMark Financial Holdings, Inc.Unaudited Condensed Consolidated Statements of Cash Flows(in thousands) Nine Months EndedSeptember 30, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net income$ 88,484 $ 77,668 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 26,077 23,141 Interest (income) expense, net (184) 607 Share-based compensation 12,262 10,096 Debt acquisition cost write-down 92 130 Changes in certain assets and liabilities: Fees and other receivables, net (879) (7,338)Receivables from related party 480 568 Prepaid expenses and other current assets 7,751 6,732 Accounts payable, accrued liabilities and other current liabilities (675) (12,664)Income tax receivable and payable, net 26,020 (3,341)Net cash provided by operating activities 159,428 95,599 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Adhesion Wealth (3,000) — Purchase of investments (1,936) (2,211)Sale of investments 289 384 Purchase of property and equipment (1,155) (1,440)Purchase of computer software (31,871) (26,049)Purchase of convertible notes (4,275) (8,600)Net cash used in investing activities (41,948) (37,916)CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of long-term debt, net — 122,508 Proceeds from revolving credit facility draw down 50,000 — Payments on revolving credit facility (50,000) (115,000)Payments on term loan (25,000) (4,688)Net cash (used in) provided by financing activities (25,000) 2,820 Net change in cash, cash equivalents, and restricted cash 92,480 60,503 Cash, cash equivalents, and restricted cash at beginning of period 136,274 89,707 Cash, cash equivalents, and restricted cash at end of period$ 228,754 $ 150,210 SUPPLEMENTAL CASH FLOW INFORMATION Income taxes paid, net$ 6,962 $ 26,176 Interest paid$ 7,837 $ 2,714 Non-cash operating and investing activities: Non-cash changes to right-of-use assets$ 3,360 $ 3,396 Non-cash changes to lease liabilities$ 3,360 $ 3,396 Explanations and Reconciliations of Non-GAAP Financial Measures In addition to our results determined in accordance with U.S. generally accepted accounting principles (“GAAP”), we believe adjusted EBITDA, adjusted EBITDA margin and adjusted net income, all of which are non-GAAP measures, are useful in evaluating our performance. We use adjusted EBITDA, adjusted EBITDA margin and adjusted net income to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that such non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, such non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate our business. Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA is defined as EBITDA (net income plus interest expense, income tax expense, depreciation and amortization and less interest income), further adjusted to exclude certain non-cash charges and other adjustments set forth below. Adjusted EBITDA margin is defined as adjusted EBITDA divided by total revenue. Adjusted EBITDA and adjusted EBITDA margin are useful financial metrics in assessing our operating performance from period to period because they exclude certain items that we believe are not representative of our core business, such as certain material non-cash items and other adjustments such as share-based compensation, strategic initiatives and reorganization and integration costs. We believe that adjusted EBITDA and adjusted EBITDA margin, viewed in addition to, and not in lieu of, our reported GAAP results, provide useful information to investors regarding our performance and overall results of operations for various reasons, including: non-cash equity grants made to employees at a certain price and point in time do not necessarily reflect how our business is performing at any particular time; as such, share-based compensation expense is not a key measure of our operating performance; andcosts associated with acquisitions and the resulting integrations, debt refinancing, restructuring, conversions, as well as other non-recurring litigation costs can vary from period to period and transaction to transaction; as such, expenses associated with these activities are not considered a key measure of our operating performance. We use adjusted EBITDA and adjusted EBITDA margin: as measures of operating performance;for planning purposes, including the preparation of budgets and forecasts;to allocate resources to enhance the financial performance of our business;to evaluate the effectiveness of our business strategies;in communications with our board of directors concerning our financial performance; andas considerations in determining compensation for certain employees. Adjusted EBITDA and adjusted EBITDA margin have limitations as analytical tools, and should not be considered in isolation to, or as substitutes for, analysis of our results as reported under GAAP. Some of these limitations are: adjusted EBITDA and adjusted EBITDA margin do not reflect all cash expenditures, future requirements for capital expenditures or contractual commitments;adjusted EBITDA and adjusted EBITDA margin do not reflect changes in, or cash requirements for, working capital needs;adjusted EBITDA and adjusted EBITDA margin do not reflect interest expense on our debt or the cash requirements necessary to service interest or principal payments; andthe definitions of adjusted EBITDA and adjusted EBITDA margin can differ significantly from company to company and as a result have limitations when comparing similarly titled measures across companies. Set forth below is a reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted EBITDA for the three and nine months ended September 30, 2023 and 2022 (unaudited). Three Months EndedSeptember 30, Three Months EndedSeptember 30,(in thousands except for percentages) 2023 2022 2023 2022Net income$ 38,385 $ 30,109 20.1 % 19.5 %Provision for income taxes 14,779 7,293 7.8 % 4.7 %Interest income (3,186) (849) (1.7)% (0.5)%Interest expense 2,305 1,560 1.2 % 1.0 %Depreciation and amortization 8,965 7,961 4.7 % 5.1 %EBITDA$ 61,248 $ 46,074 32.1 % 29.8 %Share-based compensation(1) 4,288 3,923 2.3 % 2.5 %Reorganization and integration costs(2) 2,662 2,281 1.4 % 1.5 %Acquisition expenses(3) 195 379 0.1 % 0.2 %Business continuity plan(4) — 14 — — SEC settlement(5) (1,673) — (0.9)% — Other (income) expense, net$ (263) $ (11) (0.1)% — Adjusted EBITDA$ 66,457 $ 52,660 34.9 % 34.0 % Nine Months EndedSeptember 30, Nine Months EndedSeptember 30,(in thousands except for percentages) 2023 2022 2023 2022Net income$ 88,484 $ 77,668 16.1 % 17.1 %Provision for income taxes 33,145 22,440 6.0 % 4.9 %Interest income (7,746) (1,107) (1.4)% (0.2)%Interest expense 6,789 4,207 1.2 % 0.9 %Depreciation and amortization 26,077 23,141 4.7 % 5.1 %EBITDA$ 146,749 $ 126,349 26.6 % 27.8 %Share-based compensation(1) 12,262 10,096 2.2 % 2.2 %Reorganization and integration costs(2) 8,127 8,600 1.5 % 1.9 %Acquisition expenses(3) 368 1,313 0.1 % 0.3 %Business continuity plan(4) (6) 234 — 0.1 %SEC settlement(5) 18,327 — 3.3 % — Other (income) expense, net (186) 195 — — Adjusted EBITDA$ 185,641 $ 146,787 33.7 % 32.3 % (1)“Share-based compensation” represents granted share-based compensation in the form of restricted stock unit, stock option and stock appreciation right grants by us to certain of our directors and employees. Although this expense occurred in each measurement period, we have added the expense back in our calculation of adjusted EBITDA because of its noncash impact.(2)“Reorganization and integration costs” includes costs related to our functional reorganization within our Operations, Technology and Retirement functions as well as duplicate costs related to the outsourcing of back-office operations functions. While we have incurred such expenses in all periods measured, these expenses serve varied reorganization and integration initiatives, each of which is non-recurring. We do not consider these expenses to be part of our core operations.(3)“Acquisition expenses” includes employee severance, transition and retention expenses, duplicative general and administrative expenses and other professional fees related to acquisitions.(4)“Business continuity plan” includes incremental compensation and other costs that are directly related to a transition to a hybrid workforce in 2022.(5)“SEC settlement” represents the amount paid by us pursuant to our settlement with the SEC discussed in Note 12 of notes to unaudited condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. Set forth below is a summary of the adjustments involved in the reconciliation from net income and net income margin, the most directly comparable GAAP financial measures, to adjusted EBITDA and adjusted EBITDA margin for three and nine months ended September 30, 2023 and 2022 (unaudited), broken out by compensation and non-compensation expenses (unaudited). Three Months Ended September 30, 2023 Three Months Ended September 30, 2022(in thousands) Compensation Non-Compensation Total Compensation Non-Compensation TotalShare-based compensation(1) $ 4,288 $ — $ 4,288 $ 3,923 $ — $ 3,923 Reorganization and integration costs(2) 1,101 1,561 2,662 829 1,452 2,281 Acquisition expenses(3) — 195 195 (4) 383 379 Business continuity plan(4) — — — — 14 14 SEC settlement(5) — (1,673) (1,673) — — — Other (income) expense, net — (263) (263) — (11) (11)Total adjustments to adjusted EBITDA $ 5,389 $ (180) $ 5,209 $ 4,748 $ 1,838 $ 6,586 Three Months Ended September 30, 2023 Three Months Ended September 30, 2022(in percentages) Compensation Non-Compensation Total Compensation Non-Compensation TotalShare-based compensation(1) 2.3 % — 2.3 % 2.5 % — 2.5 %Reorganization and integration costs(2) 0.6 % 0.8 % 1.4 % 0.5 % 1.0 % 1.5 %Acquisition expenses(3) — 0.1 % 0.1 % — 0.2 % 0.2 %Business continuity plan(4) — — — — — — SEC settlement(5) — (0.9)% (0.9)% — — — Other (income) expense, net — (0.1)% (0.1)% — — — Total adjustments to adjusted EBITDA margin % 2.9 % (0.1)% 2.8 % 3.0 % 1.2 % 4.2 % (1)“Share-based compensation” represents granted share-based compensation in the form of restricted stock unit, stock option and stock appreciation right grants by us to certain of our directors and employees. Although this expense occurred in each measurement period, we have added the expense back in our calculation of adjusted EBITDA because of its noncash impact.(2)“Reorganization and integration costs” includes costs related to our functional reorganization within our Operations, Technology and Retirement functions as well as duplicate costs related to the outsourcing of back-office operations functions. While we have incurred such expenses in all periods measured, these expenses serve varied reorganization and integration initiatives, each of which is non-recurring. We do not consider these expenses to be part of our core operations.(3)“Acquisition expenses” includes employee severance, transition and retention expenses, duplicative general and administrative expenses and other professional fees related to acquisitions.(4)“Business continuity plan” includes incremental compensation and other costs that are directly related to a transition to a hybrid workforce in 2022.(5)“SEC settlement” represents the amount paid by us pursuant to our settlement with the SEC discussed in Note 12 of notes to unaudited condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022(in thousands)Compensation Non-Compensation Total Compensation Non-Compensation TotalShare-based compensation(1)$ 12,262 $ — $ 12,262 $ 10,096 $ — $ 10,096 Reorganization and integration costs(2) 3,370 4,757 8,127 2,823 5,777 8,600 Acquisition expenses(3) 100 268 368 (4) 1,317 1,313 Business continuity plan(4) — (6) (6) (2) 236 234 SEC settlement(5) — 18,327 18,327 — — — Other (income) expense, net — (186) (186) — 195 195 Total adjustments to adjusted EBITDA$ 15,732 $ 23,160 $ 38,892 $ 12,913 $ 7,525 $ 20,438 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022(in percentages)Compensation Non-Compensation Total Compensation Non-Compensation TotalShare-based compensation(1) 2.2 % — 2.2 % 2.2 % — 2.2 %Reorganization and integration costs(2) 0.6 % 0.9 % 1.5 % 0.6 % 1.3 % 1.9 %Acquisition expenses(3) — 0.1 % 0.1 % — 0.3 % 0.3 %Business continuity plan(4) — — — — 0.1 % 0.1 %SEC settlement(5) — 3.3 % 3.3 % — — — Other (income) expense, net — — — — — — Total adjustments to adjusted EBITDA margin % 2.8 % 4.3 % 7.1 % 2.8 % 1.7 % 4.5 % (1)“Share-based compensation” represents granted share-based compensation in the form of restricted stock unit, stock option and stock appreciation right grants by us to certain of our directors and employees. Although this expense occurred in each measurement period, we have added the expense back in our calculation of adjusted EBITDA because of its noncash impact.(2)“Reorganization and integration costs” includes costs related to our functional reorganization within our Operations, Technology and Retirement functions as well as duplicate costs related to the outsourcing of back-office operations functions. While we have incurred such expenses in all periods measured, these expenses serve varied reorganization and integration initiatives, each of which is non-recurring. We do not consider these expenses to be part of our core operations.(3)“Acquisition expenses” includes employee severance, transition and retention expenses, duplicative general and administrative expenses and other professional fees related to acquisitions.(4)“Business continuity plan” includes incremental compensation and other costs that are directly related to a transition to a hybrid workforce in 2022.(5)“SEC settlement” represents the amount paid by us pursuant to our settlement with the SEC discussed in Note 12 of notes to unaudited condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. Adjusted Net Income Adjusted net income represents net income before: (a) share-based compensation expense, (b) amortization of acquisition-related intangible assets, (c) acquisition and related integration expenses, (d) restructuring and conversion costs and (e) certain other expenses. Reconciled items are tax effected using the income tax rates in effect for the applicable period, adjusted for any potentially non-deductible amounts. We prepared adjusted net income to eliminate the effects of items that we do not consider indicative of our core operating performance. We believe that adjusted net income, viewed in addition to, and not in lieu of, our reported GAAP results, provides useful information to investors regarding our performance and overall results of operations for various reasons, including the following: non-cash equity grants made to employees at a certain price and point in time do not necessarily reflect how our business is performing at any particular time; as such, share-based compensation expense is not a key measure of our operating performance;costs associated with acquisitions and related integrations, debt refinancing, restructuring and conversions can vary from period to period and transaction to transaction; as such, expenses associated with these activities are not considered a key measure of our operating performance; andamortization expenses can vary substantially from company to company and from period to period depending upon each company’s financing and accounting methods, the fair value and average expected life of acquired intangible assets and the method by which assets were acquired; as such, the amortization of intangible assets obtained in acquisitions is not considered a key measure of our operating performance. Adjusted net income does not purport to be an alternative to net income or cash flows from operating activities. The term adjusted net income is not defined under GAAP, and adjusted net income is not a measure of net income, operating income or any other performance or liquidity measure derived in accordance with GAAP. Therefore, adjusted net income has limitations as an analytical tool and should not be considered in isolation to, or as a substitute for, analysis of our results as reported under GAAP. Some of these limitations are: adjusted net income does not reflect all cash expenditures, future requirements for capital expenditures or contractual commitments;adjusted net income does not reflect changes in, or cash requirements for, working capital needs; andother companies in the financial services industry may calculate adjusted net income differently than we do, limiting its usefulness as a comparative measure. The schedule set forth below presents the Company’s GAAP results from the Condensed Consolidated Statements of Income (unaudited) for the three and nine months ended September 30, 2023 and 2022, with certain line items adjusted for the items described above. Included below is also a reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted net income for the three and nine months and years ended September 30, 2023 and 2022 (unaudited). Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2023 2022 2023 2022 Revenue: Asset-based revenue$ 143,840 $ 128,173 $ 412,215 $ 409,498 Spread-based revenue 37,329 21,160 112,863 30,265 Subscription-based revenue 3,891 3,126 11,128 9,703 Other revenue 5,462 2,204 14,110 4,707 Total revenue 190,522 154,663 550,316 454,173 Operating expenses: Asset-based expenses 43,092 36,476 119,870 118,429 Spread-based expenses 8,492 2,142 23,052 3,188 Adjusted employee compensation(1) 41,224 36,841 125,891 108,939 Adjusted general and operating expenses(1) 21,118 20,509 69,654 61,873 Adjusted professional fees(1) 7,209 5,186 19,218 13,850 Adjusted depreciation and amortization(2) 6,785 6,232 19,542 17,955 Total adjusted operating expenses 127,920 107,386 377,227 324,234 Interest expense 2,305 1,560 6,789 4,207 Adjusted other expenses, net(1) (256) — (756) — Adjusted income before income taxes 60,553 45,717 167,056 125,732 Adjusted provision for income taxes(3) 14,532 10,744 40,093 29,548 Adjusted net income$ 46,021 $ 34,973 $ 126,963 $ 96,184 Net income per share attributable to common stockholders: Adjusted earnings per share(4)$ 0.62 $ 0.47 $ 1.70 $ 1.30 Weighted average number of common shares outstanding, diluted 74,695,260 73,844,689 74,521,370 73,783,858 (1) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above.(2) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016.(3) Consists of adjustments to normalize our estimated tax rate in determining adjusted net income.(4) In Q1 2022, we began using the diluted GAAP shares outstanding given that our restricted stock awards fully vested in 2021 resulting in no material reconciling differences compared to the adjusted diluted common shares outstanding historically used for calculating adjusted earnings per share. Set forth below is a reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted net income for the three and nine months ended September 30, 2023 and 2022 (unaudited). Three months ended September 30, 2023 Three months ended September 30, 2022Reconciliation of Non-GAAP PresentationGAAP Adjustments Adjusted GAAP Adjustments AdjustedRevenue: Asset-based revenue$ 143,840 $ — $ 143,840 $ 128,173 $ — $ 128,173 Spread-based revenue 37,329 — 37,329 21,160 — 21,160 Subscription-based revenue 3,891 — 3,891 3,126 — 3,126 Other revenue 5,462 — 5,462 2,204 — 2,204 Total revenue 190,522 — 190,522 154,663 — 154,663 Operating expenses: Asset-based expenses 43,092 — 43,092 36,476 — 36,476 Spread-based expenses 8,492 — 8,492 2,142 — 2,142 Employee compensation(1) 46,613 (5,389) 41,224 41,589 (4,748) 36,841 General and operating expenses(1) 22,714 (1,596) 21,118 21,667 (1,158) 20,509 Professional fees(1) 7,369 (160) 7,209 5,877 (691) 5,186 Depreciation and amortization(2) 8,965 (2,180) 6,785 7,961 (1,729) 6,232 Total operating expenses 137,245 (9,325) 127,920 115,712 (8,326) 107,386 Interest expense 2,305 — 2,305 1,560 — 1,560 Other expenses, net(1) (2,192) 1,936 (256) (11) 11 — Income before income taxes 53,164 7,389 60,553 37,402 8,315 45,717 Provision for income taxes(3) 14,779 (247) 14,532 7,293 3,451 10,744 Net income$ 38,385 $ 46,021 $ 30,109 $ 34,973 (1) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above.(2) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016.(3) Consists of adjustments to normalize our estimated tax rate in determining adjusted net income. Nine months ended September 30, 2023 Nine months ended September 30, 2022Reconciliation of Non-GAAP PresentationGAAP Adjustments Adjusted GAAP Adjustments AdjustedRevenue: Asset-based revenue$ 412,215 $ — $ 412,215 $ 409,498 $ — $ 409,498 Spread-based revenue 112,863 — 112,863 30,265 — 30,265 Subscription-based revenue 11,128 — 11,128 9,703 — 9,703 Other revenue 14,110 — 14,110 4,707 — 4,707 Total revenue 550,316 — 550,316 454,173 — 454,173 Operating expenses: Asset-based expenses 119,870 — 119,870 118,429 — 118,429 Spread-based expenses 23,052 — 23,052 3,188 — 3,188 Employee compensation(1) 141,623 (15,732) 125,891 121,852 (12,913) 108,939 General and operating expenses(1) 72,757 (3,103) 69,654 65,949 (4,076) 61,873 Professional fees(1) 21,134 (1,916) 19,218 17,104 (3,254) 13,850 Depreciation and amortization(2) 26,077 (6,535) 19,542 23,141 (5,186) 17,955 Total operating expenses 404,513 (27,286) 377,227 349,663 (25,429) 324,234 Interest expense 6,789 — 6,789 4,207 — 4,207 Other expenses, net(1) 17,385 (18,141) (756) 195 (195) — Income before income taxes 121,629 45,427 167,056 100,108 25,624 125,732 Provision for income taxes(3) 33,145 6,948 40,093 22,440 7,108 29,548 Net income$ 88,484 $ 126,963 $ 77,668 $ 96,184 (1) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above.(2) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016.(3) Consists of adjustments to normalize our estimated tax rate in determining adjusted net income. Set forth below is a summary of the adjustments involved in the reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted net income for three and nine months ended September 30, 2023 and 2022 (unaudited), broken out by compensation and non-compensation expenses (unaudited). Three Months Ended September 30, 2023 Three Months Ended September 30, 2022(in thousands) Compensation Non-Compensation Total Compensation Non-Compensation TotalNet income $ 38,385 $ 30,109 Acquisition-related amortization(1) $ — $ 2,180 2,180 $ — $ 1,729 1,729 Expense adjustments(2) 1,101 83 1,184 825 1,849 2,674 Share-based compensation 4,288 — 4,288 3,923 — 3,923 Other (income) expense, net — (263) (263) — (11) (11)Tax effect of adjustments(3) (1,293) 1,540 247 (1,116) (2,335) (3,451)Adjusted net income $ 4,096 $ 3,540 $ 46,021 $ 3,632 $ 1,232 $ 34,973 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022(in thousands) Compensation Non-Compensation Total Compensation Non-Compensation TotalNet income $ 88,484 $ 77,668 Acquisition-related amortization(1) $ — $ 6,535 6,535 $ — $ 5,186 5,186 Expense adjustments(2) 3,470 23,346 26,816 2,817 7,330 10,147 Share-based compensation 12,262 — 12,262 10,096 — 10,096 Other (income) expense, net — (186) (186) — 195 195 Tax effect of adjustments(3) (3,776) (3,172) (6,948) (3,035) (4,073) (7,108)Adjusted net income $ 11,956 $ 26,523 $ 126,963 $ 9,878 $ 8,638 $ 96,184 (1)Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016.(2)Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above other than share-based compensation.(3)Consists of adjustments to normalize our estimated tax rate in determining adjusted net income. Contacts Investors:Taylor J. Hamilton, CFAHead of Investor RelationsInvestorRelations@assetmark.com Media: Alaina KleinmanHead of PR & Communicationsalaina.kleinman@assetmark.com SOURCE: AssetMark Financial Holdings, Inc.
CONCORD, Calif., Nov. 06, 2023 (GLOBE NEWSWIRE) -- AssetMark Financial Holdings, Inc. (NYSE: AMK) today announced financial results for the quarter ended September 30, 2023. Third Quarter 2023 Financial and Operational Highlights Net income for the quarter was $38.4 million, or $0.52 per share.Adjusted net income for the quarter was $46.0 million, or $0.62 per share, on total revenue of $190.5 million.Adjusted EBITDA for the quarter was $66.5 million, or 34.9% of total revenue.Platform assets increased 25.5% year-over-year to $99.6 billion. Quarter-over-quarter platform assets were down 1.2%, due to negative market impact net of fees of $2.7 billion, partially offset by quarterly net flows of $1.5 billion.Year-to-date annualized net flows as a percentage of beginning-of-year platform assets were 7.1%.More than 3,400 new households and 158 new producing advisors joined the AssetMark platform during the third quarter. In total, as of September 30, 2023, there were over 9,300 advisors (approximately 3,000 were engaged advisors) and over 251,000 investor households on the AssetMark platform.We realized an 18.7% annualized production lift from existing advisors for the third quarter, indicating that advisors continued to grow organically and increase wallet share on our platform. “The third quarter was another record quarter for AssetMark, highlighted by all-time highs across many financial and operating metrics. We realized our sixth straight quarter of record adjusted EBITDA, while also expanding margins 90 bps year-over-year to a record 34.9%. Simply put, the results for the third quarter were excellent, and we feel we are well on track for the best year in our company’s history,” said AssetMark CEO Michael Kim. “We are focused on continued execution of our strategy and three long-term priorities: hyper growth, accelerated capital deployment and enhanced scalability, which we believe will create continued value for our advisors, their clients, and our shareholders.” Third Quarter 2023 Key Operating Metrics 3Q22 3Q23 Variance per yearOperational metrics: Platform assets (at period-beginning) (millions of dollars)$ 82,127 $ 100,762 22.7 %Net flows (millions of dollars) 1,207 1,543 27.8 %Market impact net of fees (millions of dollars) (3,952) (2,708) NMAcquisition impact (millions of dollars) — — NMPlatform assets (at period-end) (millions of dollars)$ 79,382 $ 99,597 25.5 %Net flows lift (% of beginning of year platform assets) 1.3 % 1.7 % 40 bpsAdvisors (at period-end) 8,702 9,354 7.5 %Engaged advisors (at period-end) 2,601 2,995 15.1 %Assets from engaged advisors (at period-end) (millions of dollars)$ 72,195 $ 91,900 27.3 %Households (at period-end) 223,098 251,424 12.7 %New producing advisors 159 158 (0.6)%Production lift from existing advisors (annualized %) 14.9 % 18.7 % 380 bpsAssets in custody at ATC (at period-end) (millions of dollars)$ 61,539 $ 73,445 19.3 %ATC client cash (at period-end) (millions of dollars)$3,510 $2,897 (17.5)% Financial metrics: Total revenue (millions of dollars)$ 154.7 $ 190.5 23.1 %Net income (millions of dollars)$ 30.1 $ 38.4 27.6 %Net income margin (%) 19.5 % 20.1 % 60 bpsCapital expenditure (millions of dollars)$ 9.0 $ 11.6 28.9 % Non-GAAP financial metrics: Adjusted EBITDA (millions of dollars)$ 52.7 $ 66.5 26.2 %Adjusted EBITDA margin (%) 34.0 % 34.9 % 90 bpsAdjusted net income (millions of dollars)$ 35.0 $ 46.0 31.4 % Note: Percentage variance based on actual numbers, not rounded resultsAll metrics include Adhesion data, except "New producing advisors," "Production lift from existing advisors" and ATC related metrics. Webcast and Conference Call Information AssetMark will host a live conference call and webcast to discuss its third quarter 2023 results. In conjunction with this earnings press release, AssetMark has posted an earnings presentation on its investor relations website at http://ir.assetmark.com. Conference call and webcast details are as follows: Date: November 6, 2023Time: 2:00 p.m. PT; 5:00 p.m. ETPhone: Listeners can pre-register for the conference call here: https://www.netroadshow.com/events/login?show=c8140a9d&confId=55622. Upon registering, you will be provided with participant dial-in numbers, passcode and unique registrant ID. In the 10 minutes prior to the call start time, you may use the conference access information (dial in number, direct event passcode and registrant ID) provided in the confirmation email received at the point of registering to join the call directly.Webcast: http://ir.assetmark.com. Please access the website 10 minutes prior to the start time. The webcast will be available in recorded form at http://ir.assetmark.com for 14 days from November 6, 2023. About AssetMark Financial Holdings, Inc. AssetMark operates a wealth management platform that powers independent financial advisors and their clients. Together with our affiliates Voyant and Adhesion Wealth, we serve advisors of all models at every stage of their journey with flexible, purpose-built solutions that champion client engagement and drive efficiency. Our ecosystem of solutions equips advisors with services and capabilities that would otherwise require significant investments of time and money, ultimately enabling them to deliver better investor outcomes and enhance their productivity, profitability and client satisfaction. Founded in 1996 and based in Concord, California, the company has over 1,000 employees. Today, the AssetMark platform serves over 9,300 financial advisors and over 251,000 investor households. As of September 30, 2023, the company had $99.6 billion in platform assets. Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our future financial and operating performance, which involve risks and uncertainties. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “will,” “may,” “could,” “should,” “believe,” “expect,” “estimate,” “potential” or “continue,” the negative of these terms and other comparable terminology that conveys uncertainty of future events or outcomes. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause actual results to differ materially from statements made in this presentation, including our ability to enhance shareholder value, advance our growth strategy and meet our operating and financial performance guidance. Other potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022, which is on file with the Securities and Exchange Commission and available on our investor relations website at http://ir.assetmark.com. Additional information will be set forth in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, which is expected to be filed on November 7, 2023. All information provided in this presentation is based on information available to us as of the date of this presentation and any forward-looking statements contained herein are based on assumptions that we believe are reasonable as of this date. Undue reliance should not be placed on the forward-looking statements in this presentation, which are inherently uncertain. We undertake no duty to update this information unless required by law. AssetMark Financial Holdings, Inc.Unaudited Condensed Consolidated Balance Sheets(in thousands except share data and par value) September 30, 2023 December 31, 2022 (unaudited) ASSETS Current assets: Cash and cash equivalents$ 214,754 $ 123,274 Restricted cash 14,000 13,000 Investments, at fair value 16,294 13,714 Fees and other receivables, net 20,464 20,082 Income tax receivable, net — 265 Prepaid expenses and other current assets 13,086 16,870 Total current assets 278,598 187,205 Property, plant and equipment, net 7,672 8,495 Capitalized software, net 105,593 89,959 Other intangible assets, net 686,765 694,627 Operating lease right-of-use assets 21,625 22,002 Goodwill 487,353 487,225 Other assets 17,721 13,417 Total assets$ 1,605,327 $ 1,502,930 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable$ 1,781 $ 4,624 Accrued liabilities and other current liabilities 65,458 69,196 Income tax payable, net 25,755 — Total current liabilities 92,994 73,820 Long-term debt, net 93,519 112,138 Other long-term liabilities 16,666 15,185 Long-term portion of operating lease liabilities 27,539 27,924 Deferred income tax liabilities, net 147,497 147,497 Total long-term liabilities 285,221 302,744 Total liabilities 378,215 376,564 Stockholders’ equity: Common stock, $0.001 par value (675,000,000 shares authorized and 74,264,226 and 73,847,596 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively) 74 74 Additional paid-in capital 955,208 942,946 Retained earnings 271,987 183,503 Accumulated other comprehensive loss (157) (157)Total stockholders’ equity 1,227,112 1,126,366 Total liabilities and stockholders’ equity$ 1,605,327 $ 1,502,930 AssetMark Financial Holdings, Inc.Unaudited Condensed Consolidated Statements of Income and Comprehensive Income(in thousands, except share and per share data) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2023 2022 2023 2022Revenue: Asset-based revenue$ 143,840 $ 128,173 $ 412,215 $ 409,498 Spread-based revenue 37,329 21,160 112,863 30,265 Subscription-based revenue 3,891 3,126 11,128 9,703 Other revenue 5,462 2,204 14,110 4,707 Total revenue 190,522 154,663 550,316 454,173 Operating expenses: Asset-based expenses 43,092 36,476 119,870 118,429 Spread-based expenses 8,492 2,142 23,052 3,188 Employee compensation 46,613 41,589 141,623 121,852 General and operating expenses 22,714 21,667 72,757 65,949 Professional fees 7,369 5,877 21,134 17,104 Depreciation and amortization 8,965 7,961 26,077 23,141 Total operating expenses 137,245 115,712 404,513 349,663 Interest expense 2,305 1,560 6,789 4,207 Other (income) expense, net (2,192) (11) 17,385 195 Income before income taxes 53,164 37,402 121,629 100,108 Provision for income taxes 14,779 7,293 33,145 22,440 Net income 38,385 30,109 88,484 77,668 Net comprehensive income$ 38,385 $ 30,109 $ 88,484 $ 77,668 Net income per share attributable to common stockholders: Basic$ 0.52 $ 0.41 $ 1.19 $ 1.05 Diluted$ 0.51 $ 0.41 $ 1.19 $ 1.05 Weighted average number of common shares outstanding, basic 74,261,667 73,842,297 74,047,412 73,682,881 Weighted average number of common shares outstanding, diluted 74,695,260 73,844,689 74,521,370 73,783,858 AssetMark Financial Holdings, Inc.Unaudited Condensed Consolidated Statements of Cash Flows(in thousands) Nine Months EndedSeptember 30, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net income$ 88,484 $ 77,668 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 26,077 23,141 Interest (income) expense, net (184) 607 Share-based compensation 12,262 10,096 Debt acquisition cost write-down 92 130 Changes in certain assets and liabilities: Fees and other receivables, net (879) (7,338)Receivables from related party 480 568 Prepaid expenses and other current assets 7,751 6,732 Accounts payable, accrued liabilities and other current liabilities (675) (12,664)Income tax receivable and payable, net 26,020 (3,341)Net cash provided by operating activities 159,428 95,599 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Adhesion Wealth (3,000) — Purchase of investments (1,936) (2,211)Sale of investments 289 384 Purchase of property and equipment (1,155) (1,440)Purchase of computer software (31,871) (26,049)Purchase of convertible notes (4,275) (8,600)Net cash used in investing activities (41,948) (37,916)CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of long-term debt, net — 122,508 Proceeds from revolving credit facility draw down 50,000 — Payments on revolving credit facility (50,000) (115,000)Payments on term loan (25,000) (4,688)Net cash (used in) provided by financing activities (25,000) 2,820 Net change in cash, cash equivalents, and restricted cash 92,480 60,503 Cash, cash equivalents, and restricted cash at beginning of period 136,274 89,707 Cash, cash equivalents, and restricted cash at end of period$ 228,754 $ 150,210 SUPPLEMENTAL CASH FLOW INFORMATION Income taxes paid, net$ 6,962 $ 26,176 Interest paid$ 7,837 $ 2,714 Non-cash operating and investing activities: Non-cash changes to right-of-use assets$ 3,360 $ 3,396 Non-cash changes to lease liabilities$ 3,360 $ 3,396 Explanations and Reconciliations of Non-GAAP Financial Measures In addition to our results determined in accordance with U.S. generally accepted accounting principles (“GAAP”), we believe adjusted EBITDA, adjusted EBITDA margin and adjusted net income, all of which are non-GAAP measures, are useful in evaluating our performance. We use adjusted EBITDA, adjusted EBITDA margin and adjusted net income to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that such non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, such non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate our business. Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA is defined as EBITDA (net income plus interest expense, income tax expense, depreciation and amortization and less interest income), further adjusted to exclude certain non-cash charges and other adjustments set forth below. Adjusted EBITDA margin is defined as adjusted EBITDA divided by total revenue. Adjusted EBITDA and adjusted EBITDA margin are useful financial metrics in assessing our operating performance from period to period because they exclude certain items that we believe are not representative of our core business, such as certain material non-cash items and other adjustments such as share-based compensation, strategic initiatives and reorganization and integration costs. We believe that adjusted EBITDA and adjusted EBITDA margin, viewed in addition to, and not in lieu of, our reported GAAP results, provide useful information to investors regarding our performance and overall results of operations for various reasons, including: non-cash equity grants made to employees at a certain price and point in time do not necessarily reflect how our business is performing at any particular time; as such, share-based compensation expense is not a key measure of our operating performance; andcosts associated with acquisitions and the resulting integrations, debt refinancing, restructuring, conversions, as well as other non-recurring litigation costs can vary from period to period and transaction to transaction; as such, expenses associated with these activities are not considered a key measure of our operating performance. We use adjusted EBITDA and adjusted EBITDA margin: as measures of operating performance;for planning purposes, including the preparation of budgets and forecasts;to allocate resources to enhance the financial performance of our business;to evaluate the effectiveness of our business strategies;in communications with our board of directors concerning our financial performance; andas considerations in determining compensation for certain employees. Adjusted EBITDA and adjusted EBITDA margin have limitations as analytical tools, and should not be considered in isolation to, or as substitutes for, analysis of our results as reported under GAAP. Some of these limitations are: adjusted EBITDA and adjusted EBITDA margin do not reflect all cash expenditures, future requirements for capital expenditures or contractual commitments;adjusted EBITDA and adjusted EBITDA margin do not reflect changes in, or cash requirements for, working capital needs;adjusted EBITDA and adjusted EBITDA margin do not reflect interest expense on our debt or the cash requirements necessary to service interest or principal payments; andthe definitions of adjusted EBITDA and adjusted EBITDA margin can differ significantly from company to company and as a result have limitations when comparing similarly titled measures across companies. Set forth below is a reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted EBITDA for the three and nine months ended September 30, 2023 and 2022 (unaudited). Three Months EndedSeptember 30, Three Months EndedSeptember 30,(in thousands except for percentages) 2023 2022 2023 2022Net income$ 38,385 $ 30,109 20.1 % 19.5 %Provision for income taxes 14,779 7,293 7.8 % 4.7 %Interest income (3,186) (849) (1.7)% (0.5)%Interest expense 2,305 1,560 1.2 % 1.0 %Depreciation and amortization 8,965 7,961 4.7 % 5.1 %EBITDA$ 61,248 $ 46,074 32.1 % 29.8 %Share-based compensation(1) 4,288 3,923 2.3 % 2.5 %Reorganization and integration costs(2) 2,662 2,281 1.4 % 1.5 %Acquisition expenses(3) 195 379 0.1 % 0.2 %Business continuity plan(4) — 14 — — SEC settlement(5) (1,673) — (0.9)% — Other (income) expense, net$ (263) $ (11) (0.1)% — Adjusted EBITDA$ 66,457 $ 52,660 34.9 % 34.0 % Nine Months EndedSeptember 30, Nine Months EndedSeptember 30,(in thousands except for percentages) 2023 2022 2023 2022Net income$ 88,484 $ 77,668 16.1 % 17.1 %Provision for income taxes 33,145 22,440 6.0 % 4.9 %Interest income (7,746) (1,107) (1.4)% (0.2)%Interest expense 6,789 4,207 1.2 % 0.9 %Depreciation and amortization 26,077 23,141 4.7 % 5.1 %EBITDA$ 146,749 $ 126,349 26.6 % 27.8 %Share-based compensation(1) 12,262 10,096 2.2 % 2.2 %Reorganization and integration costs(2) 8,127 8,600 1.5 % 1.9 %Acquisition expenses(3) 368 1,313 0.1 % 0.3 %Business continuity plan(4) (6) 234 — 0.1 %SEC settlement(5) 18,327 — 3.3 % — Other (income) expense, net (186) 195 — — Adjusted EBITDA$ 185,641 $ 146,787 33.7 % 32.3 % (1)“Share-based compensation” represents granted share-based compensation in the form of restricted stock unit, stock option and stock appreciation right grants by us to certain of our directors and employees. Although this expense occurred in each measurement period, we have added the expense back in our calculation of adjusted EBITDA because of its noncash impact.(2)“Reorganization and integration costs” includes costs related to our functional reorganization within our Operations, Technology and Retirement functions as well as duplicate costs related to the outsourcing of back-office operations functions. While we have incurred such expenses in all periods measured, these expenses serve varied reorganization and integration initiatives, each of which is non-recurring. We do not consider these expenses to be part of our core operations.(3)“Acquisition expenses” includes employee severance, transition and retention expenses, duplicative general and administrative expenses and other professional fees related to acquisitions.(4)“Business continuity plan” includes incremental compensation and other costs that are directly related to a transition to a hybrid workforce in 2022.(5)“SEC settlement” represents the amount paid by us pursuant to our settlement with the SEC discussed in Note 12 of notes to unaudited condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. Set forth below is a summary of the adjustments involved in the reconciliation from net income and net income margin, the most directly comparable GAAP financial measures, to adjusted EBITDA and adjusted EBITDA margin for three and nine months ended September 30, 2023 and 2022 (unaudited), broken out by compensation and non-compensation expenses (unaudited). Three Months Ended September 30, 2023 Three Months Ended September 30, 2022(in thousands) Compensation Non-Compensation Total Compensation Non-Compensation TotalShare-based compensation(1) $ 4,288 $ — $ 4,288 $ 3,923 $ — $ 3,923 Reorganization and integration costs(2) 1,101 1,561 2,662 829 1,452 2,281 Acquisition expenses(3) — 195 195 (4) 383 379 Business continuity plan(4) — — — — 14 14 SEC settlement(5) — (1,673) (1,673) — — — Other (income) expense, net — (263) (263) — (11) (11)Total adjustments to adjusted EBITDA $ 5,389 $ (180) $ 5,209 $ 4,748 $ 1,838 $ 6,586 Three Months Ended September 30, 2023 Three Months Ended September 30, 2022(in percentages) Compensation Non-Compensation Total Compensation Non-Compensation TotalShare-based compensation(1) 2.3 % — 2.3 % 2.5 % — 2.5 %Reorganization and integration costs(2) 0.6 % 0.8 % 1.4 % 0.5 % 1.0 % 1.5 %Acquisition expenses(3) — 0.1 % 0.1 % — 0.2 % 0.2 %Business continuity plan(4) — — — — — — SEC settlement(5) — (0.9)% (0.9)% — — — Other (income) expense, net — (0.1)% (0.1)% — — — Total adjustments to adjusted EBITDA margin % 2.9 % (0.1)% 2.8 % 3.0 % 1.2 % 4.2 % (1)“Share-based compensation” represents granted share-based compensation in the form of restricted stock unit, stock option and stock appreciation right grants by us to certain of our directors and employees. Although this expense occurred in each measurement period, we have added the expense back in our calculation of adjusted EBITDA because of its noncash impact.(2)“Reorganization and integration costs” includes costs related to our functional reorganization within our Operations, Technology and Retirement functions as well as duplicate costs related to the outsourcing of back-office operations functions. While we have incurred such expenses in all periods measured, these expenses serve varied reorganization and integration initiatives, each of which is non-recurring. We do not consider these expenses to be part of our core operations.(3)“Acquisition expenses” includes employee severance, transition and retention expenses, duplicative general and administrative expenses and other professional fees related to acquisitions.(4)“Business continuity plan” includes incremental compensation and other costs that are directly related to a transition to a hybrid workforce in 2022.(5)“SEC settlement” represents the amount paid by us pursuant to our settlement with the SEC discussed in Note 12 of notes to unaudited condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022(in thousands)Compensation Non-Compensation Total Compensation Non-Compensation TotalShare-based compensation(1)$ 12,262 $ — $ 12,262 $ 10,096 $ — $ 10,096 Reorganization and integration costs(2) 3,370 4,757 8,127 2,823 5,777 8,600 Acquisition expenses(3) 100 268 368 (4) 1,317 1,313 Business continuity plan(4) — (6) (6) (2) 236 234 SEC settlement(5) — 18,327 18,327 — — — Other (income) expense, net — (186) (186) — 195 195 Total adjustments to adjusted EBITDA$ 15,732 $ 23,160 $ 38,892 $ 12,913 $ 7,525 $ 20,438 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022(in percentages)Compensation Non-Compensation Total Compensation Non-Compensation TotalShare-based compensation(1) 2.2 % — 2.2 % 2.2 % — 2.2 %Reorganization and integration costs(2) 0.6 % 0.9 % 1.5 % 0.6 % 1.3 % 1.9 %Acquisition expenses(3) — 0.1 % 0.1 % — 0.3 % 0.3 %Business continuity plan(4) — — — — 0.1 % 0.1 %SEC settlement(5) — 3.3 % 3.3 % — — — Other (income) expense, net — — — — — — Total adjustments to adjusted EBITDA margin % 2.8 % 4.3 % 7.1 % 2.8 % 1.7 % 4.5 % (1)“Share-based compensation” represents granted share-based compensation in the form of restricted stock unit, stock option and stock appreciation right grants by us to certain of our directors and employees. Although this expense occurred in each measurement period, we have added the expense back in our calculation of adjusted EBITDA because of its noncash impact.(2)“Reorganization and integration costs” includes costs related to our functional reorganization within our Operations, Technology and Retirement functions as well as duplicate costs related to the outsourcing of back-office operations functions. While we have incurred such expenses in all periods measured, these expenses serve varied reorganization and integration initiatives, each of which is non-recurring. We do not consider these expenses to be part of our core operations.(3)“Acquisition expenses” includes employee severance, transition and retention expenses, duplicative general and administrative expenses and other professional fees related to acquisitions.(4)“Business continuity plan” includes incremental compensation and other costs that are directly related to a transition to a hybrid workforce in 2022.(5)“SEC settlement” represents the amount paid by us pursuant to our settlement with the SEC discussed in Note 12 of notes to unaudited condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. Adjusted Net Income Adjusted net income represents net income before: (a) share-based compensation expense, (b) amortization of acquisition-related intangible assets, (c) acquisition and related integration expenses, (d) restructuring and conversion costs and (e) certain other expenses. Reconciled items are tax effected using the income tax rates in effect for the applicable period, adjusted for any potentially non-deductible amounts. We prepared adjusted net income to eliminate the effects of items that we do not consider indicative of our core operating performance. We believe that adjusted net income, viewed in addition to, and not in lieu of, our reported GAAP results, provides useful information to investors regarding our performance and overall results of operations for various reasons, including the following: non-cash equity grants made to employees at a certain price and point in time do not necessarily reflect how our business is performing at any particular time; as such, share-based compensation expense is not a key measure of our operating performance;costs associated with acquisitions and related integrations, debt refinancing, restructuring and conversions can vary from period to period and transaction to transaction; as such, expenses associated with these activities are not considered a key measure of our operating performance; andamortization expenses can vary substantially from company to company and from period to period depending upon each company’s financing and accounting methods, the fair value and average expected life of acquired intangible assets and the method by which assets were acquired; as such, the amortization of intangible assets obtained in acquisitions is not considered a key measure of our operating performance. Adjusted net income does not purport to be an alternative to net income or cash flows from operating activities. The term adjusted net income is not defined under GAAP, and adjusted net income is not a measure of net income, operating income or any other performance or liquidity measure derived in accordance with GAAP. Therefore, adjusted net income has limitations as an analytical tool and should not be considered in isolation to, or as a substitute for, analysis of our results as reported under GAAP. Some of these limitations are: adjusted net income does not reflect all cash expenditures, future requirements for capital expenditures or contractual commitments;adjusted net income does not reflect changes in, or cash requirements for, working capital needs; andother companies in the financial services industry may calculate adjusted net income differently than we do, limiting its usefulness as a comparative measure. The schedule set forth below presents the Company’s GAAP results from the Condensed Consolidated Statements of Income (unaudited) for the three and nine months ended September 30, 2023 and 2022, with certain line items adjusted for the items described above. Included below is also a reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted net income for the three and nine months and years ended September 30, 2023 and 2022 (unaudited). Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2023 2022 2023 2022 Revenue: Asset-based revenue$ 143,840 $ 128,173 $ 412,215 $ 409,498 Spread-based revenue 37,329 21,160 112,863 30,265 Subscription-based revenue 3,891 3,126 11,128 9,703 Other revenue 5,462 2,204 14,110 4,707 Total revenue 190,522 154,663 550,316 454,173 Operating expenses: Asset-based expenses 43,092 36,476 119,870 118,429 Spread-based expenses 8,492 2,142 23,052 3,188 Adjusted employee compensation(1) 41,224 36,841 125,891 108,939 Adjusted general and operating expenses(1) 21,118 20,509 69,654 61,873 Adjusted professional fees(1) 7,209 5,186 19,218 13,850 Adjusted depreciation and amortization(2) 6,785 6,232 19,542 17,955 Total adjusted operating expenses 127,920 107,386 377,227 324,234 Interest expense 2,305 1,560 6,789 4,207 Adjusted other expenses, net(1) (256) — (756) — Adjusted income before income taxes 60,553 45,717 167,056 125,732 Adjusted provision for income taxes(3) 14,532 10,744 40,093 29,548 Adjusted net income$ 46,021 $ 34,973 $ 126,963 $ 96,184 Net income per share attributable to common stockholders: Adjusted earnings per share(4)$ 0.62 $ 0.47 $ 1.70 $ 1.30 Weighted average number of common shares outstanding, diluted 74,695,260 73,844,689 74,521,370 73,783,858 (1) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above.(2) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016.(3) Consists of adjustments to normalize our estimated tax rate in determining adjusted net income.(4) In Q1 2022, we began using the diluted GAAP shares outstanding given that our restricted stock awards fully vested in 2021 resulting in no material reconciling differences compared to the adjusted diluted common shares outstanding historically used for calculating adjusted earnings per share. Set forth below is a reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted net income for the three and nine months ended September 30, 2023 and 2022 (unaudited). Three months ended September 30, 2023 Three months ended September 30, 2022Reconciliation of Non-GAAP PresentationGAAP Adjustments Adjusted GAAP Adjustments AdjustedRevenue: Asset-based revenue$ 143,840 $ — $ 143,840 $ 128,173 $ — $ 128,173 Spread-based revenue 37,329 — 37,329 21,160 — 21,160 Subscription-based revenue 3,891 — 3,891 3,126 — 3,126 Other revenue 5,462 — 5,462 2,204 — 2,204 Total revenue 190,522 — 190,522 154,663 — 154,663 Operating expenses: Asset-based expenses 43,092 — 43,092 36,476 — 36,476 Spread-based expenses 8,492 — 8,492 2,142 — 2,142 Employee compensation(1) 46,613 (5,389) 41,224 41,589 (4,748) 36,841 General and operating expenses(1) 22,714 (1,596) 21,118 21,667 (1,158) 20,509 Professional fees(1) 7,369 (160) 7,209 5,877 (691) 5,186 Depreciation and amortization(2) 8,965 (2,180) 6,785 7,961 (1,729) 6,232 Total operating expenses 137,245 (9,325) 127,920 115,712 (8,326) 107,386 Interest expense 2,305 — 2,305 1,560 — 1,560 Other expenses, net(1) (2,192) 1,936 (256) (11) 11 — Income before income taxes 53,164 7,389 60,553 37,402 8,315 45,717 Provision for income taxes(3) 14,779 (247) 14,532 7,293 3,451 10,744 Net income$ 38,385 $ 46,021 $ 30,109 $ 34,973 (1) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above.(2) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016.(3) Consists of adjustments to normalize our estimated tax rate in determining adjusted net income. Nine months ended September 30, 2023 Nine months ended September 30, 2022Reconciliation of Non-GAAP PresentationGAAP Adjustments Adjusted GAAP Adjustments AdjustedRevenue: Asset-based revenue$ 412,215 $ — $ 412,215 $ 409,498 $ — $ 409,498 Spread-based revenue 112,863 — 112,863 30,265 — 30,265 Subscription-based revenue 11,128 — 11,128 9,703 — 9,703 Other revenue 14,110 — 14,110 4,707 — 4,707 Total revenue 550,316 — 550,316 454,173 — 454,173 Operating expenses: Asset-based expenses 119,870 — 119,870 118,429 — 118,429 Spread-based expenses 23,052 — 23,052 3,188 — 3,188 Employee compensation(1) 141,623 (15,732) 125,891 121,852 (12,913) 108,939 General and operating expenses(1) 72,757 (3,103) 69,654 65,949 (4,076) 61,873 Professional fees(1) 21,134 (1,916) 19,218 17,104 (3,254) 13,850 Depreciation and amortization(2) 26,077 (6,535) 19,542 23,141 (5,186) 17,955 Total operating expenses 404,513 (27,286) 377,227 349,663 (25,429) 324,234 Interest expense 6,789 — 6,789 4,207 — 4,207 Other expenses, net(1) 17,385 (18,141) (756) 195 (195) — Income before income taxes 121,629 45,427 167,056 100,108 25,624 125,732 Provision for income taxes(3) 33,145 6,948 40,093 22,440 7,108 29,548 Net income$ 88,484 $ 126,963 $ 77,668 $ 96,184 (1) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above.(2) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016.(3) Consists of adjustments to normalize our estimated tax rate in determining adjusted net income. Set forth below is a summary of the adjustments involved in the reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted net income for three and nine months ended September 30, 2023 and 2022 (unaudited), broken out by compensation and non-compensation expenses (unaudited). Three Months Ended September 30, 2023 Three Months Ended September 30, 2022(in thousands) Compensation Non-Compensation Total Compensation Non-Compensation TotalNet income $ 38,385 $ 30,109 Acquisition-related amortization(1) $ — $ 2,180 2,180 $ — $ 1,729 1,729 Expense adjustments(2) 1,101 83 1,184 825 1,849 2,674 Share-based compensation 4,288 — 4,288 3,923 — 3,923 Other (income) expense, net — (263) (263) — (11) (11)Tax effect of adjustments(3) (1,293) 1,540 247 (1,116) (2,335) (3,451)Adjusted net income $ 4,096 $ 3,540 $ 46,021 $ 3,632 $ 1,232 $ 34,973 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022(in thousands) Compensation Non-Compensation Total Compensation Non-Compensation TotalNet income $ 88,484 $ 77,668 Acquisition-related amortization(1) $ — $ 6,535 6,535 $ — $ 5,186 5,186 Expense adjustments(2) 3,470 23,346 26,816 2,817 7,330 10,147 Share-based compensation 12,262 — 12,262 10,096 — 10,096 Other (income) expense, net — (186) (186) — 195 195 Tax effect of adjustments(3) (3,776) (3,172) (6,948) (3,035) (4,073) (7,108)Adjusted net income $ 11,956 $ 26,523 $ 126,963 $ 9,878 $ 8,638 $ 96,184 (1)Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016.(2)Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above other than share-based compensation.(3)Consists of adjustments to normalize our estimated tax rate in determining adjusted net income. Contacts Investors:Taylor J. Hamilton, CFAHead of Investor RelationsInvestorRelations@assetmark.com Media: Alaina KleinmanHead of PR & Communicationsalaina.kleinman@assetmark.com SOURCE: AssetMark Financial Holdings, Inc.