AssetMark Financial Holdings, Inc.

Fourth-quarter pro forma total revenue was $180 million, up 13% year over year, and net revenue was $137 million, up 11% year over year. Adjusted EBITDA was $63.8 million, up 21% year over year, with adjusted EBITDA margin at 35.4%; adjusted net income was $44 million, or $0.59 per share, based on a diluted share count of 74.6 million. Full-year 2023 total revenue was a record $709 million, up 15% year over year; net revenue was $545 million, up 20%; adjusted EBITDA was $250 million; adjusted EBITDA margin was 35.2%, up 290 basis points; net income was $123 million, up 19%; adjusted net income was $171 million, up 31%; and adjusted EPS was $2.30, up 30%. Full-year operating cash flow was $175 million. For 2024, management guided to 12%+ platform asset growth, 8%-10% net flows as a percentage of beginning platform assets, 3.5% market appreciation assumption, 10%-14% net revenue growth, 8%-10% operating expense growth, and 15%+ adjusted EBITDA growth with margin expansion north of 50 basis points.

Michael Kim framed 2023 as a milestone year and said the company is simplifying its strategy into three pillars: integrated technology, exceptional service and consulting, and compelling wealth solutions. He emphasized that the firm is seeing a renewed turnaround in adviser and investor sentiment, with stronger flows in December and January, and said AssetMark is doubling down in 2024 on technology upgrades, service enhancements and new product launches. He also stressed that M&A and partnerships remain important to the growth strategy, alongside scaling and lowering cost per account.

Gary Zyla focused on the financial momentum and the balance sheet. He highlighted fourth-quarter platform assets of $108.9 billion, quarterly net flows of $1.3 billion, 154 new producing advisers in the quarter, and 3,123 engaged advisers at year-end, while noting 45% of cash at AssetMark Trust was in fixed-rate terms with an average maturity of 2.28 years and a growth rate of 4.77%. He also called out the $30.5 million reclassification related to interest credited to customer accounts, said the company generated $175 million of operating cash flow in 2023, and guided 2024 operating expense growth of 8%-10% versus 10%-14% net revenue growth.

Analysts pressed on what is driving the stronger start to 2024, and management pointed to improving market sentiment, advisers moving sidelined cash back into strategies, and faster momentum at Adhesion; Gary added that Adhesion now represents a little over $9 billion of assets on the platform versus about $7 million at the end of 2022. Questions also focused on M&A and partnerships, where Michael said the company is looking at both consolidation and capability-building opportunities, including technology, asset management and lead-generation providers. On cash balances and fixed-rate deposits, management said they have started extending maturities with new four- and five-year contracts, but are balancing rate optimization against liquidity and client experience. In response to questions about Huatai ownership rumors, Michael declined to comment on speculation and reiterated that the board remains supportive and that management is focused on organic growth, capital deployment and scale.