AssetMark Reports $116.9B Platform Assets for First Quarter 2024

Rhea-AI Summary

AssetMark Financial Holdings, Inc. (NYSE: AMK) reported strong financial results for the first quarter of 2024. Net income was $38.0 million, adjusted net income was $45.2 million, and total revenue was $190.3 million. Platform assets increased to $116.9 billion, with 21.5% year-over-year growth. Over 3,000 new households and 169 new producing advisors joined the platform. The company realized an 18.6% annualized production lift from existing advisors. The Transaction with GTCR was announced, expected to close in Q4 2024.

Positive

• Strong financial performance for AssetMark in Q1 2024 with net income of $38.0 million and adjusted net income of $45.2 million.

• Total revenue reached $190.3 million for the quarter, showing solid growth.

• Platform assets increased significantly to $116.9 billion, up 21.5% year-over-year.

• Over 3,000 new households and 169 new producing advisors joined the AssetMark platform, indicating growth and expansion.

• An 18.6% annualized production lift from existing advisors demonstrates organic growth and increase in wallet share.

Negative

• The Transaction with GTCR, subject to regulatory approvals, will impact the company's future operations as all financial guidance has been withdrawn.

• AssetMark will not host an earnings call and webcast due to the announced Transaction, affecting communication with investors.

• The company's Capital expenditure increased by 19.0% to $11.9 million, which may impact short-term profitability.

Insights

Financial Analyst

AssetMark's report for Q1 2024 shows a robust increase in net income to $38.0 million, more than doubling from the previous year. The $190.3 million in total revenue with a notable $45.2 million adjusted net income and a healthy 34.6% adjusted EBITDA margin underscore sound financial health and operational efficiency. Platform assets grew significantly by 21.5% year-over-year, an indicator of strong asset acquisition and retention. Positive trends in net flows and market impact net of fees suggest effective capital management strategies. The reported 18.6% annualized production lift from existing advisors and the addition of new producing advisors and households aligns with sustainable growth prospects. However, investors should be aware that these metrics do not account for the impending acquisition by GTCR, which could alter future reports and the direction of the company.

Mergers & Acquisitions Specialist

The acquisition of AssetMark by GTCR is a pivotal development. This transaction promises to reshape AssetMark's operational scope and strategic direction. As acquisitions tend to bring synergies and economies of scale, the long-term benefits often include enhanced market competitiveness and shareholder value. Short-term, however, investors may encounter volatility as the market reacts to integration efforts and any strategic pivots. The deal's closure in Q4 2024 and the lack of further financial guidance from AssetMark suggest a period of uncertainty, as investors will need to closely monitor the execution of this transition and any regulatory hurdles that arise. Such transformations can be a double-edged sword; while they offer growth opportunities, they also come with integration risks and potential cultural clashes.

CONCORD, Calif., May 01, 2024 (GLOBE NEWSWIRE) -- AssetMark Financial Holdings, Inc. (NYSE: AMK) today announced financial results for the quarter ended March 31, 2024.

First Quarter 2024 Financial and Operational Highlights

• Net income for the quarter was $38.0 million, or $0.51 per share.
• Adjusted net income for the quarter was $45.2 million, or $0.60 per share, on total revenue of $190.3 million.
• Adjusted EBITDA for the quarter was $65.9 million, or 34.6% of total revenue.
• Platform assets increased 21.5% year-over-year to $116.9 billion. Quarter-over-quarter platform assets were up 7.3%, due to market impact net of fees of $6.1 billion and quarterly net flows of $1.8 billion.
• Year-to-date annualized net flows as a percentage of beginning-of-year platform assets were 6.8%.
• More than 3,000 new households and 169 new producing advisors joined the AssetMark platform during the first quarter. In total, as of March 31, 2024, there were over 9,200 advisors (approximately 3,200 were engaged advisors) and over 257,000 investor households on the AssetMark platform.
• We realized an 18.6% annualized production lift from existing advisors for the first quarter, indicating that advisors continued to grow organically and increase wallet share on our platform.
  

First Quarter 2024 Key Operating Metrics

	1Q23				1Q24				Variance per year
Operational metrics:
Platform assets (at period-beginning) (millions of dollars)	$	91,470			$	108,929			19.1%
Net flows (millions of dollars)		1,631				1,842			12.9%
Market impact net of fees (millions of dollars)		3,102				6,130			97.6%
Platform assets (at period-end) (millions of dollars)	$	96,203			$	116,901			21.5%
Net flows lift (% of beginning of year platform assets)		1.8	%			1.7	%		(10 bps)
Advisors (at period-end)		9,319				9,280			(0.4)%
Engaged advisors (at period-end)		2,976				3,208			7.8%
Assets from engaged advisors (at period-end) (millions of dollars)	$	88,587			$	109,267			23.3%
Households (at period-end)		243,775				257,162			5.5%
New producing advisors		166				169			1.8%
Production lift from existing advisors (annualized %)		18.8	%			18.6	%		(20 bps)
Assets in custody at ATC (at period-end) (millions of dollars)	$	70,069			$	86,373			23.3%
ATC client cash (at period-end) (millions of dollars)	$	3,189			$	3,170			(0.6)%
Financial metrics:
Total revenue (millions of dollars)*	$	170.3			$	190.3			11.7%
Net income (millions of dollars)	$	17.2			$	38.0			120.9%
Net income margin (%)		10.1	%			20.0	%		990 bps
Capital expenditure (millions of dollars)	$	10.0			$	11.9			19.0%
Non-GAAP financial metrics:
Adjusted EBITDA (millions of dollars)	$	58.8			$	65.9			12.1%
Adjusted EBITDA margin (%)		34.5	%			34.6	%		10 bps
Adjusted net income (millions of dollars)	$	39.7			$	45.2			13.9%

Note: Percentage variance based on actual numbers, not rounded results
All metrics include Adhesion data, except "New producing advisors," "Production lift from existing advisors" in 2023 and ATC related metrics
* The Company reclassified $6.3 million representing the three months of 2023 spread-based expenses to offset spread-based revenue to account for interest credited to customer accounts on a net basis during the three months ended March 31, 2023.

Webcast and Conference Call Information

As previously announced, on April 25, 2024, AssetMark entered into an agreement to be acquired by GTCR (the “Transaction”). A copy of the press release announcing the Transaction can be found on the investor relations page of AssetMark’s website. Additional details and information about the Transaction are included in the Current Report on Form 8-K filed by AssetMark with the Securities and Exchange Commission ("SEC") on April 25, 2024. The Transaction is subject to customary closing conditions and required regulatory approvals and is expected to close in Q4 2024.

Given the announced Transaction, AssetMark will not be hosting an earnings call and webcast to discuss its first quarter 2024 results and is withdrawing all previously provided financial guidance. For further information about AssetMark’s financial performance please refer to AssetMark’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2024, which will be filed subsequently with the SEC.

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 9,200 financial advisors and over 257,000 investor households. As of March 31, 2024, the company had $116.9 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 advance our growth strategy, deliver an industry leading experience to advisors 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, 2023, 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 March 31, 2024, which is expected to be filed on May 7, 2024. 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)

	March 31, 2024				December 31, 2023
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	247,626			$	217,680
Restricted cash		15,000				15,000
Investments, at fair value		20,573				18,003
Fees and other receivables, net		23,164				21,345
Income tax receivable, net		—				1,890
Prepaid expenses and other current assets		15,730				17,193
Total current assets		322,093				291,111
Property, plant and equipment, net		9,201				8,765
Capitalized software, net		113,123				108,955
Other intangible assets, net		681,519				684,142
Operating lease right-of-use assets		19,244				20,408
Goodwill		487,909				487,909
Other assets		23,737				19,273
Total assets	$	1,656,826			$	1,620,563
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	278			$	288
Accrued liabilities and other current liabilities		60,430				75,554
Income tax payable, net		8,539				—
Total current liabilities		69,247				75,842
Long-term debt, net		93,567				93,543
Other long-term liabilities		20,541				18,429
Long-term portion of operating lease liabilities		24,885				26,295
Deferred income tax liabilities, net		139,072				139,072
Total long-term liabilities		278,065				277,339
Total liabilities		347,312				353,181
Stockholders’ equity:
Common stock, $0.001 par value (675,000,000 shares authorized and 74,399,237 and 74,372,889 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively)		74				74
Additional paid-in capital		964,868				960,700
Retained earnings		344,586				306,622
Accumulated other comprehensive loss		(14	)			(14	)
Total stockholders’ equity		1,309,514				1,267,382
Total liabilities and stockholders’ equity	$	1,656,826			$	1,620,563

AssetMark Financial Holdings, Inc.
Unaudited Condensed Consolidated Statements of Comprehensive Income
(in thousands, except share and per share data)

	Three Months Ended March 31,
		2024				2023
Revenue:
Asset-based revenue	$	149,984			$	131,039
Spread-based revenue*		30,093				31,999
Subscription-based revenue		4,252				3,544
Other revenue		5,937				3,716
Total revenue		190,266				170,298
Operating expenses:
Asset-based expenses		44,853				37,434
Spread-based expenses		389				293
Employee compensation		50,007				46,911
General and operating expenses		27,324				25,689
Professional fees		6,081				5,393
Depreciation and amortization		9,922				8,428
Total operating expenses		138,576				124,148
Interest expense		2,294				2,347
Other (income) expense, net		(332	)			19,865
Income before income taxes		49,728				23,938
Provision for income taxes		11,764				6,716
Net income		37,964				17,222
Net comprehensive income	$	37,964			$	17,222
Net income per share attributable to common stockholders:
Basic	$	0.51			$	0.23
Diluted	$	0.50			$	0.23
Weighted average number of common shares outstanding, basic		74,383,265				73,890,162
Weighted average number of common shares outstanding, diluted		75,269,626				74,370,353

* The Company reclassified $6.3 million representing the three months of 2023 spread-based expenses to offset spread-based revenue to account for interest credited to customer accounts on a net basis during the three months ended March 31, 2023.

AssetMark Financial Holdings, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)

	Three Months Ended March 31,
		2024				2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	37,964			$	17,222
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		9,922				8,428
Interest expense, net		(159	)			(9	)
Share-based compensation		4,168				3,822
Debt acquisition cost write-down		—				92
Changes in certain assets and liabilities:
Fees and other receivables, net		(1,578	)			(1,484	)
Receivables from related party		(241	)			(400	)
Prepaid expenses and other current assets		2,493				1,738
Accounts payable, accrued liabilities and other current liabilities		(15,583	)			3,871
Income tax receivable and payable, net		10,429				5,846
Net cash provided by operating activities		47,415				39,126
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Adhesion Wealth		—				(3,000	)
Purchase of investments		(1,562	)			(824	)
Sale of investments		179				66
Purchase of property and equipment		(1,071	)			(220	)
Purchase of computer software		(10,833	)			(9,954	)
Purchase of convertible notes		(4,182	)			—
Net cash used in investing activities		(17,469	)			(13,932	)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on term loan		—				(25,000	)
Net cash used in financing activities		—				(25,000	)
Net change in cash, cash equivalents, and restricted cash		29,946				194
Cash, cash equivalents, and restricted cash at beginning of period		232,680				136,274
Cash, cash equivalents, and restricted cash at end of period	$	262,626			$	136,468
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid, net	$	1,324			$	868
Interest paid	$	2,104			$	3,787
Non-cash operating and investing activities:
Non-cash changes to right-of-use assets	$	—			$	1,742
Non-cash changes to lease liabilities	$	—			$	1,742

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; and
• costs 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; and
• as 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; and
• the 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 months ended March 31, 2024 and 2023 (unaudited).

		Three Months Ended March 31,								Three Months Ended March 31,
(in thousands except for percentages)			2024				2023			2024		2023
Net income		$	37,964			$	17,222			20.0%		10.1%
Provision for income taxes			11,764				6,716			6.2%		3.9%
Interest income			(4,023	)			(2,051	)		(2.2)%		(1.2)%
Interest expense			2,294				2,347			1.2%		1.4%
Depreciation and amortization			9,922				8,428			5.2%		5.0%
EBITDA		$	57,921			$	32,662			30.4%		19.2%
Share-based compensation(1)			4,168				3,822			2.2%		2.2%
Reorganization and integration costs(2)			3,841				1,909			2.0%		1.1%
Acquisition expenses(3)			12				313			—		0.2%
Business continuity plan(4)			—				(6	)		—		—
Accrual for SEC settlement(5)			—				20,000			—		11.8%
Other (income) expense, net			(35	)			88			—		—
Adjusted EBITDA		$	65,907			$	58,788			34.6%		34.5%

(1) “Share-based compensation” represents granted share-based compensation in the form of restricted stock unit 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) “Accrual for SEC settlement” represents an accrual that pertains to a settled SEC matter from 2023 discussed in Note 11 of notes to unaudited condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.

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 months ended March 31, 2024 and 2023 (unaudited), broken out by compensation and non-compensation expenses (unaudited).

		Three Months Ended March 31, 2024											Three Months Ended March 31, 2023
(in thousands)		Compensation			Non- Compensation				Total				Compensation			Non- Compensation				Total
Share-based compensation(1)		$	4,168		$	—			$	4,168			$	3,822		$	—			$	3,822
Reorganization and integration costs(2)			1,532			2,309				3,841				1,064			845				1,909
Acquisition expenses(3)			—			12				12				100			213				313
Business continuity plan(4)			—			—				—				—			(6	)			(6	)
Accrual for SEC settlement(5)			—			—				—				—			20,000				20,000
Other (income) expense, net			—			(35	)			(35	)			—			88				88
Total adjustments to adjusted EBITDA		$	5,700		$	2,286			$	7,986			$	4,986		$	21,140			$	26,126

		Three Months Ended March 31, 2024									Three Months Ended March 31, 2023
(in percentages)		Compensation			Non- Compensation			Total			Compensation			Non- Compensation			Total
Share-based compensation(1)		2.2	%		—			2.2	%		2.2	%		—			2.2	%
Reorganization and integration costs(2)		0.8	%		1.2	%		2.0	%		0.6	%		0.5	%		1.1	%
Acquisition expenses(3)		—			—			—			0.1	%		0.1	%		0.2	%
Business continuity plan(4)		—			—			—			—			—			—
Accrual for SEC settlement(5)		—			—			—			—			11.8	%		11.8	%
Other (income) expense, net		—			—			—			—			—			—
Total adjustments to adjusted EBITDA margin %		3.0	%		1.2	%		4.2	%		2.9	%		12.4	%		15.3	%

(1) “Share-based compensation” represents granted share-based compensation in the form of restricted stock unit 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) “Accrual for SEC settlement” represents an accrual that pertains to a settled SEC matter from 2023 discussed in Note 11 of notes to unaudited condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.

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; and
• amortization 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; and
• other 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 Comprehensive Income (unaudited) for the three months ended March 31, 2024 and 2023, 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 months ended March 31, 2024 and 2023 (unaudited).

	Three Months Ended March 31,
		2024				2023
Revenue:
Asset-based revenue	$	149,984			$	131,039
Spread-based revenue(1)		30,093				31,999
Subscription-based revenue		4,252				3,544
Other revenue		5,937				3,716
Total revenue		190,266				170,298
Operating expenses:
Asset-based expenses		44,853				37,434
Spread-based expenses		389				293
Adjusted employee compensation(2)		44,307				41,925
Adjusted general and operating expenses(2)		25,614				24,805
Adjusted professional fees(2)		5,470				5,225
Adjusted depreciation and amortization(3)		7,742				6,254
Total adjusted operating expenses		128,375				115,936
Interest expense		2,294				2,347
Adjusted other expenses, net(2)		(297	)			(223	)
Adjusted income before income taxes		59,894				52,238
Adjusted provision for income taxes(4)		14,674				12,537
Adjusted net income	$	45,220			$	39,701
Net income per share attributable to common stockholders:
Adjusted earnings per share	$	0.60			$	0.53
Weighted average number of common shares outstanding, diluted		75,269,626				74,370,353

(1) The Company reclassified $6.3 million from spread-based expenses to offset spread-based revenue to account for interest credited to customer accounts on a net basis for the three months March 31, 2023.
(2) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above.
(3) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016.
(4) Consists of adjustments to normalize our estimated tax rate in determining adjusted net income.

Set forth below is a reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted net income for the three months ended March 31, 2024 and 2023 (unaudited).

	Three months ended March 31, 2024												Three months ended March 31, 2023
Reconciliation of Non-GAAP Presentation	GAAP				Adjustments				Adjusted				GAAP			Adjustments				Adjusted
Revenue:
Asset-based revenue	$	149,984			$	—			$	149,984			$	131,039		$	—			$	131,039
Spread-based revenue(1)		30,093				—				30,093				31,999			—				31,999
Subscription-based revenue		4,252				—				4,252				3,544			—				3,544
Other revenue		5,937				—				5,937				3,716			—				3,716
Total revenue		190,266				—				190,266				170,298			—				170,298
Operating expenses:
Asset-based expenses		44,853				—				44,853				37,434			—				37,434
Spread-based expenses		389				—				389				293			—				293
Employee compensation(2)		50,007				(5,700	)			44,307				46,911			(4,986	)			41,925
General and operating expenses(2)		27,324				(1,710	)			25,614				25,689			(884	)			24,805
Professional fees(2)		6,081				(611	)			5,470				5,393			(168	)			5,225
Depreciation and amortization(3)		9,922				(2,180	)			7,742				8,428			(2,174	)			6,254
Total operating expenses		138,576				(10,201	)			128,375				124,148			(8,212	)			115,936
Interest expense		2,294				—				2,294				2,347			—				2,347
Other expenses, net(2)		(332	)			35				(297	)			19,865			(20,088	)			(223	)
Income before income taxes		49,728				10,166				59,894				23,938			28,300				52,238
Provision for income taxes(4)		11,764				2,910				14,674				6,716			5,821				12,537
Net income	$	37,964							$	45,220			$	17,222						$	39,701

(1) The Company reclassified $6.3 million from spread-based expenses to offset spread-based revenue to account for interest credited to customer accounts on a net basis for the three months March 31, 2023.
(2) Consists of the adjustments to EBITDA listed in the adjusted EBITDA reconciliation table above.
(3) Relates to intangible assets established in connection with HTSC’s acquisition of our Company in 2016.
(4) 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 months ended March 31, 2024 and 2023 (unaudited), broken out by compensation and non-compensation expenses (unaudited).

		Three Months Ended March 31, 2024												Three Months Ended March 31, 2023
(in thousands)		Compensation				Non- Compensation				Total				Compensation				Non- Compensation				Total
Net income										$	37,964											$	17,222
Acquisition-related amortization(1)		$	—			$	2,180				2,180			$	—			$	2,174				2,174
Expense adjustments(2)			1,532				2,321				3,853				1,164				21,052				22,216
Share-based compensation			4,168				—				4,168				3,822				—				3,822
Other (income) expense, net			—				(35	)			(35	)			—				88				88
Tax effect of adjustments(3)			(1,397	)			(1,513	)			(2,910	)			(1,197	)			(4,624	)			(5,821	)
Adjusted net income		$	4,303			$	2,953			$	45,220			$	3,789			$	18,690			$	39,701

(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, CFA
Head of Investor Relations
InvestorRelations@assetmark.com 

Media:
Alaina Kleinman
Head of PR & Communications
alaina.kleinman@assetmark.com 

SOURCE: AssetMark Financial Holdings, Inc.

FAQ

What were AssetMark's net income and adjusted net income for the first quarter of 2024?

AssetMark reported a net income of $38.0 million and adjusted net income of $45.2 million for the first quarter of 2024.

How much were AssetMark's total revenue and platform assets in Q1 2024?

AssetMark's total revenue for Q1 2024 was $190.3 million, and platform assets reached $116.9 billion.

How many new households and producing advisors joined the AssetMark platform in the first quarter of 2024?

In Q1 2024, over 3,000 new households and 169 new producing advisors joined the AssetMark platform.

What is the expected timeline for the Transaction between AssetMark and GTCR?

The Transaction with GTCR is expected to close in Q4 2024, subject to regulatory approvals.

Why is AssetMark not hosting an earnings call and webcast for discussing Q1 2024 results?

AssetMark will not host an earnings call or webcast due to the announced Transaction with GTCR and the withdrawal of all financial guidance.