AlTi Global (ALTI) Q3 2026 Earnings Call Transcript

Motley Fool Transcribing, The Motley FoolTue, November 10, 2026 at 7:48 AM UTC

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Monday, Nov. 9, 2026

CALL PARTICIPANTS -

Investor Relations - Jeffrey Schoenborn

Interim Chief Executive Officer and Global Chief Investment Officer - Nancy Curtin

Chief Financial Officer - Patrick Keenan

President and Chief Operating Officer - Kevin Moran

TAKEAWAYS -

Revenue -- $58 million, representing 1% growth compared to the prior year period driven by increased management fees resulting from higher assets under management.

Recurring Management and Advisory Fees -- $55 million, an increase of 7% year over year and 2% sequentially.

Assets Under Management -- $51.6 billion, growing 5% year over year primarily due to strong portfolio performance.

Adjusted EBITDA -- Over $6 million, representing a 15% sequential increase from the second quarter and 1% growth year over year.

Reported Operating Expenses -- $64 million, a 25% improvement from the year-ago period reflecting comprehensive efforts to streamline the organization.

Net Wealth Management Outflows -- $250 million, reflecting a reduction in lower fee rate legacy accounts.

Headcount -- 8% reduction globally over the last 12 months, including a 3% reduction since the end of June to improve corporate overhead efficiency.

Credit Facility -- $85 million agreement reached with Diameter Finance Administration to fund both organic and inorganic growth.

Term Loan Drawdown -- $28 million, which was placed on the balance sheet at the close of the credit facility agreement.

Professional Fees -- 37% reduction year over year, driven by zero-based budgeting and other cost control initiatives.

GAAP Operating Loss -- $6 million, a 79% improvement year over year driven by revenue growth and lower compensation expenses.

Net Loss from Continuing Operations -- $11 million, compared to a net loss of $87 million in the third quarter of 2025.

Zebedee Investment Stake -- $7 million unrealized loss recorded in the third quarter, with an additional $20 million to $23 million loss projected for the fourth quarter.

Normalized Operating Expenses -- $52 million for the quarter when excluding nonrecurring and noncash items.

Client Retention -- 95% rate maintained since 2021, reflecting the durability of the ultra-high-net-worth franchise.

Noncompensation Expenses -- 44% improvement compared to the prior year period, reflecting the absence of prior year nonrecurring bad debt.

Combined Assets -- Approximately $95 billion managed or advised globally across the company platform.

Distributions from Investments -- 17% decline year over year, primarily due to lower distributions from the real estate bridge lending strategy.

Adjusted EBITDA Margin -- 11% for the third quarter, remaining in line with the prior year period.

Total AUA -- $87.3 billion at period end, representing a 6% increase from the prior year.

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RISKS -

Curtin stated, "Subsequent to the third quarter, we received information that will result in a further noncash unrealized loss in Q4," noting the loss is expected to be between $20 million to $23 million due to redemptions at an external manager stake.

AlTi Global, Inc. (NASDAQ:ALTI) reported a 1% increase in total revenue for the third quarter, supported by growth in recurring management fees and significant reductions in operating expenses. Management focused on servicing larger, complex family office relationships and indicated that the core wealth management business is benefiting from secular demand for independent advice. The company established a new credit facility to support growth and is executing a strategy centered on advisor lift-outs in key markets to leverage its existing fixed cost base.

Interim CEO Curtin indicated that the special committee exploring strategic alternatives "continues its work" as of the call date and will provide updates when appropriate.

Management is focusing inorganic growth on advisor "lift-outs" to densify existing offices and expand capacity without the integration challenges of large acquisitions.

CFO Keenan noted that the company plans to repeat the zero-based budgeting process for the 2027 fiscal year to continue identifying cost reductions in professional fees and occupancy.

Moran stated that South Florida remains a key growth market and the company recently added advisory talent to its Miami office to accelerate organic revenue growth.

Curtin noted that the ultra-high-net-worth segment relies on AlTi for an experience that "spans multiple generations, jurisdictions, asset classes, trust, governance structures and operating entities."

The company reported that external strategic managers run with low net market exposure, providing diversification despite more muted performance during periods when markets move higher.

INDUSTRY GLOSSARY -

AUM: Assets under management, referring to assets for which a firm provides continuous and regular billable supervisory or discretionary services.

AUA: Assets under advisement, which includes assets that are managed, custodied, or overseen in a consulting capacity but not necessarily under discretionary management.

OCIO: Outsourced Chief Investment Officer, a service where a firm delegates the management of its investment department to a third-party provider.

TRA: Tax Receivable Agreement, a contract between a company and its pre-IPO owners regarding the sharing of tax benefits from specific tax attributes.

UHNW: Ultra-high-net-worth, referring to individuals or families with investable assets exceeding $30 million.

ZBB: Zero-based budgeting, a method where all expenses must be justified for each new period, starting from a base of zero.

Full Conference Call Transcript

Operator: Greetings. At this time, I would like to welcome everyone to AlTi's Third Quarter 2026 Earnings Conference Call. I would like to advise all parties that this conference call is being recorded, and a replay of the webcast is available on AlTi's Investor Relations website. Now, at this time, I will turn things over to Jeff Schoenborn with AlTi Investor Relations. Please go ahead.

Jeffrey Schoenborn: Good afternoon, and welcome to AlTi Global's Third Quarter 2026 Earnings Conference Call. Today, we will hear prepared remarks from Nancy Curtin, Interim Chief Executive Officer and Global Chief Investment Officer; as well as Pat Keenan, Chief Financial Officer. They will be joined by Kevin Moran, our President and Chief Operating Officer, for the Q&A session. Before we begin, I would like to remind everyone that certain statements made during the call may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, comments made during the prepared remarks and in response to questions.

Forward-looking statements can be identified by the use of words such as anticipate, believe, continue, estimate, expect, future, intend, may, plan and will or similar terms. Because these forward-looking statements involve both known and unknown risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these statements. For a discussion of the risks and uncertainties that could cause actual results to differ, please refer to AlTi's filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. AlTi assumes no obligation or responsibility to update any forward-looking statements.

During this call, some comments may include references to non-GAAP financial measures. Full reconciliations can be found in our earnings presentation and our related SEC filings. With that, I'd like to turn the call over to Nancy Curtin.

Nancy Curtin: Thank you, Jeff, and good afternoon, everyone. We are pleased to be reporting third quarter 2026 results that reflect the positive momentum we're seeing in our wealth management franchise. The secular tailwinds supporting ultra-high-net-worth wealth creation remain exceptionally strong in the United States and other global markets, and we continue to see growing demand for the independent, highly customized, sophisticated investment advice and family office capabilities that truly differentiate AlTi's platform. Not only are we winning new relationships, but we are being very deliberate about partnering with clients who can benefit most from our differentiated offering and for whom we can deliver meaningful value across investments, governance, family office services, planning, trust and stewardship.

These clients rely on us for a highly bespoke experience that often spans multiple generations, jurisdictions, asset classes, trust, governance structures and operating entities. We believe our approach strengthens the durability and long-term economics of our relationship and our franchise. It also aligns directly with our strategy of serving larger, more complex families where our platform, expertise and global capabilities are most differentiated. We are also pleased with investment performance.

Our positioning across a diversified range of traditional and alternative asset classes and intentional exposures and tilts therein have allowed us to both protect capital in more volatile and a rising rate environment, while also benefiting from secular tailwinds of strong growth and earnings in sectors, companies and countries well positioned to benefit from innovation, need for energy security and increasing industrial and investment activity. We've also been particularly pleased with our cautious positioning in long-term government bonds and exposure to various diversifying holdings. The foundation of our business, of course, is the high-touch service and exceptional advice we seek to provide ultra-high-net-worth families around the world.

To maintain and strengthen these investment and integrated wealth advice capabilities, we must continue to recruit, develop and retain exceptional adviser talent. We remain committed to investing in our people, AI platforms and other technology and infrastructure that directly support our clients and the clients' experience. We believe these investments are essential to delivering the extraordinary service, sophisticated advice and superior long-term outcomes that our clients expect from us. To provide us additional capital to invest in our global business and fund organic and inorganic growth, we are very pleased to have entered into a new $85 million credit agreement with Diameter Finance Administration last month.

Having the support of credit investors with the sophistication and experience of Diameter and the other institutional participants, underscores the strength and value of AlTi's global wealth management platform. In addition, we are pleased to report that our expense management efforts continue to bear fruit. As we mentioned last quarter, we continue to reduce corporate overhead, administrative expense, organizational complexity and external vendor costs. This includes, for example, tightly managing corporate and administrative headcount, which has allowed us to reduce global headcount by about 8% over the last 12 months and 3% since the end of June.

We also continue to actively evaluate professional fees, technology duplication, third-party service providers, occupancy costs and other areas where greater efficiency can be achieved without compromising the client experience. As Pat will momentarily cover, we are pleased with the ongoing improvements in operating expenses driven by our focus on cost controls as well as vendor rationalization. Operating expenses improved 25% from the year-ago period, a reflection of AlTi's comprehensive efforts to streamline the organization, simplify operations, reduce complexity and improve scalability. Now, turning to our third quarter financial results. Total assets under management grew to $51.6 billion, primarily due to strong portfolio performance.

We continue to stay the course in volatile markets with positioning technology, energy, power, infrastructure, all benefiting from long-term secular demand tailwinds. AUM growth was achieved even as we maintain a significant portion of the portfolios in alternatives, which do not price immediately at quarter end. Net wealth management outflows were about $250 million during the quarter. This reflected a reduction in lower fee rate legacy accounts, partially offset by new client wins with fee rates that are better aligned with our differentiated offering and value proposition.

It is worth noting that we remain encouraged by our pipeline of prospect opportunities and note for our business, flows in any one quarter can be lumpy given often considerable time lag between contract signing and client funding, hence contributing to delays in fee-paying revenue. As we've noted previously, the external strategic managers we have stakes in run with low net market exposure. So they tend to have a more muted performance when markets move higher, but continue to provide both diversification and downside protection benefits. Note that in the third quarter, we took a minor adjustment to the value of European equities manager, Zebedee, due to its more muted performance in 2026.

Subsequent to the third quarter, we received information that will result in a further noncash unrealized loss in Q4. Zebedee has moved to its co-CIO portfolio management structure with the aim of building perpetuity value for the firm while also promoting talent. That process is catalyzing some redemptions and will be reflected in our holding value of this investment in the next quarter. We currently expect to recognize an unrealized noncash loss of approximately $20 million to $23 million on the stake in fourth quarter's other expense.

As I shared with many of you previously, AlTi's nonstrategic stakes in external managers are largely passive investments that have served as an attractive source of liquidity, which we use to fund our core wealth business. Turning to the top line. AlTi generated $58 million in total revenue in the third quarter of 2026, representing 1% growth compared to the same period last year. Recurring management and advisory fees continue to represent the majority of our revenue base, reflecting the stability and recurring nature of our business model.

We are also pleased to report that adjusted EBITDA for the third quarter of 2026 was over $6 million, up 15% from the sequential quarter and up 1% from the third quarter of 2025, largely driven by the revenue increase, along with continued improvements in our operating expenses. With respect to the ongoing strategic review process, the special committee continues its work. As of today, there's nothing further to report. We will provide updates as appropriate. With that, I'll turn the call over to our CFO, Pat Keenan, to walk through the financials in greater detail. Pat?

Patrick Keenan: Thanks, Nancy, and good afternoon, everyone. Assets under management on September 30, 2026, were $51.6 billion, up 5% year-over-year and in line with sequential quarter end, primarily due to strong portfolio performance. In the third quarter of 2026, AlTi generated $58 million of total revenue, representing a 1% increase versus the same period last year. Recurring management and advisory fees totaled $55 million, up 7% year-over-year and 2% sequentially. Distributions from investments declined by 17% year-over-year, primarily due to lower distributions related to management fees in the real estate bridge lending strategy. As a reminder, the incentive portion of investment distributions tend to be most significant in the first quarter of each year. Turning to operating expenses.

We are continuing to see early benefits of AlTi's comprehensive effort to streamline the organization, simplify operations, reduce complexity and improve scalability. For the quarter, reported operating expenses totaled $64 million, improving 25% from $86 million in the year-ago period with reductions in both compensation and noncompensation expenses. Total compensation and benefits expense improved to $39 million, down 6% from the year-ago period. Non-compensation expenses improved by 44% from the year-ago period, reflecting significant progress under our zero-based budgeting and other expense management initiatives as well as the absence of prior year nonrecurring bad debt and redress provisions related to last year's strategic portfolio realignment.

This included a 37% reduction in professional fees compared to the third quarter of 2025 as well as lower general and administrative and occupancy expenses. These reductions reflect our zero-based budgeting and other cost control initiatives as did the 23% decrease in non-compensation expenses for the first 9 months of 2026 compared to the same period last year. For the third quarter of 2026, adjusted EBITDA was over $6 million, up 1% from the prior year period, driven by growth in recurring management fees and lower operating expense. Adjusted EBITDA margin was 11% in the third quarter of 2026, in line with the prior year period.

Third quarter 2026 other expense totaled less than $5 million, primarily due to a $7 million unrealized loss recorded on the valuation of our investment stake in a European equity strategy, which Nancy discussed earlier. This was partially offset by other income from gains on nonoperating items. Third quarter 2025 other expense totaled $28 million, including an intangible impairment associated with our arbitrage fund in the prior year period. For the third quarter of 2026, we reported a GAAP operating loss of $6 million, a 79% year-over-year improvement, reflecting growth in recurring management fees and lower compensation and non-compensation expenses.

We also improved year-to-date GAAP operating loss by 56% in 2026 compared to the first 9 months of 2025, driven largely by revenue growth as well as reductions in noncompensation expenses that resulted from our efficiency initiatives. And finally, on a GAAP basis, we reported a net loss from continuing operations of $11 million for the third quarter of 2026 compared to $87 million in the prior year period. With that, I'll turn it back to Nancy for her closing remarks.

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Nancy Curtin: Thank you, Pat. We believe AlTi's business is increasingly well positioned at the intersection of several powerful long-term trends, including the global growth of ultra-high-net-worth families, the increasingly complex needs of these sophisticated clients and the demand for independent, highly customized service and advice. Against that backdrop, we remain focused on prudent growth in larger markets and more holistic client relationships, investing in adviser talent and our platform and continuing to improve the operating efficiency of the firm. We believe these actions are strengthening our business, which is already characterized by significant recurring revenues, exceptional client retention and a highly differentiated position in the global ultra-high-net-worth marketplace. With that, I'll now turn the call back to the operator for questions.

Thank you.

Operator: [Operator Instructions] Our first question will be from Wilma Burdis with Raymond James.

Christopher Raymond: This is Chris on for Wilma. First, could you provide some more color on the decision to enter into the $85 million credit facility in October? How much of that is currently drawn? And how do you intend to deploy the additional capital?

Nancy Curtin: Chris, of course, I'm going to turn that over to Pat.

Patrick Keenan: Sure. So the decision was to manage better our larger expenses that relate to different earnouts and acquisitions that we've made in the past as well as payments that we owe to the administrator in relation to putting the international real estate business into administration in the U.K. In terms of what's been drawn down so far, the term loan of $28 million came on to our balance sheet on the date that the credit facility closed, while the revolver remains undrawn on and the delayed draw term loan will be used for any M&A that we may seek in the future.

Christopher Raymond: Great. I guess, kind of, touching on the same topic. Could you provide some additional color on the inorganic opportunities that are of interest? Are there any, like, specific geographies or strategies that you're prioritizing?

Kevin Moran: Chris, it's Kevin Moran. So I can jump in and Nancy may want to jump in as well. So we are -- like for the delayed draw term loan, we're really looking at using that to do what other firms call lift-outs, but to recruit in advisers and teams into the business. So they -- we really see with the ability to do that globally. But certainly in the United States, we hired, I think on our last earnings call, we mentioned the addition of advisory to our Miami office. So South Florida remains of interest. But certainly, we view all of our U.S. locations as key growth markets for what we do.

And in Europe and in Asia, again, we believe we're in the right places. This capital -- this really gives us the capital to execute with our strategy to really accelerate our organic growth strategy, not only here in the United States, but on overseas as well.

Nancy Curtin: And I'll just follow up on that, Chris. As Kevin really alluded to, it's about leveraging the fixed cost base that's already in place so that we get better operating leverage through these lift-outs, densifying offices where we already have a presence and that are strategically important to us. And also the team lift-outs help us expand adviser capacity without huge integration challenges that come with larger acquisitions. So for all these reasons, this is what we will be focused on in the inorganic side. And of course, Miami was a good example of that, the addition of an adviser there.

Christopher Raymond: Yes. Great. And then, given the additional expense improvement, how much of that was driven by the ZBB in this quarter? How much of the initiative remains to be realized? And are we nearing, like, expected run rate there or still room to go?

Patrick Keenan: I think we continue to see the benefits of the ZBB process. So we've actually done it multiple years in a row and plan to do it again for the 2027 fiscal year. I think there are a good amount of reductions that we expect to take place in Q4 and then start to see the results in Q1 and Q2. But again, because we continue to go back to the ZBB well, we'll continue to kind of see those results happen throughout 2027 and 2028.

Nancy Curtin: Thanks, Chris. Great questions.

Operator: And there are no further questions at this time. I would now like to turn the floor back to Nancy Curtin for closing remarks.

Nancy Curtin: I'd like to thank everyone for participating today. We look forward to updating you on our progress in the quarters ahead, and we remain focused on disciplined growth and expense management. We really appreciate your interest and look forward to speaking to you again. Thank you.

Operator: Thank you. This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.

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