Solaris Energy Infrastructure, Inc. (SEI) Earnings

Management highlights

Overall Financial Performance • SEI reported all-time quarterly records: 15% year-over-year total revenue growth, 36% year-over-year adjusted operating profit growth, and 38% year-over-year adjusted earnings per share growth • Adjusted operating margins expanded 500 basis points vs Q2 2025 and 30 basis points vs Q1 2026, with $82 million in year-over-year revenue growth and only $34 million in incremental expense growth • Q2 2026 sales events totaled $43 million, bringing year-to-date 2026 sales to $110 million, which would have been a full-year record just a few years ago Strategic Growth Investments • Private markets expansion into retail and retirement channels: Management expects this initiative to grow to over $100 million in annual run rate revenue within five years. SEI recently expanded its SEC Registered Transfer Agency to deliver full-stack infrastructure capabilities for asset managers, and holds a rare scaled independent trust platform ideal for private collective investment trusts for retirement plans. 5 large household-name clients signed on for private market retirement solutions in Q2. • Asset management transformation: The business has moved from planning to execution. SEI's ETF lineup grew from $3 billion to over $8 billion in the 12 months prior to Q2 2026, with the 10th ETF (SEUS) launched recently. A new strategic partnership with Carlyle was announced to combine Carlyle's origination and brand with SEI's operational infrastructure. Stratos, the advisor succession and liquidity solution, is seeing strong interest from existing long-tenured SEI advisors and has a healthy pipeline of attractive external RIA acquisition opportunities. • Technology, Data, and AI: SEI is digitizing core operating processes (including NAV delivery) to reduce client friction. AI is being embedded into existing workflows to improve service, automate routine tasks, and accelerate client onboarding. The SEI Data Cloud offering has strong client demand as a foundational infrastructure for data modernization and future AI initiatives. SEI has an enterprise-wide partnership with IBM to support automation and scaling to meet growing client demand.

Guidance

• Management does not provide formal quantitative guidance, but notes that current sales pipelines are the strongest in the company's history, with broad-based momentum across all business segments, supporting encouragement for second half 2026 revenue growth • Management expects private banking margins to continue improving over time, with upside to the historical 25-30% margin range driven by higher-margin professional services attached to all new deals • Share repurchase activity is expected to increase from Q2 2026 levels, and revert to levels consistent with Q1 2026 in the second half of 2026. The firm maintains an undrawn $600 million revolver to support both M&A activity and capital return to shareholders, so there is no tradeoff between pursuing M&A and repurchasing shares • Management expects new private market solutions for retail and retirement to follow a hockey-stick growth curve as the new category matures and new regulatory guidance is issued, and SEI is currently one of only two competitors in the private market retirement space

Segment performance

1. Investment Management Services (IMS): 17% year-over-year revenue growth, generated $32 million of Q2 2026 sales events (three-quarters from alternative investments, 50% from new client wins, 50% from expanded existing client relationships). IMS margins improved both year-over-year and sequentially due to revenue growth and operating leverage. IMS contributed ~74% of total Q2 2026 sales events. 2. Private Banking: 11% year-over-year revenue growth, generated $13 million of Q2 2026 sales events, executed $13 million in annualized contract renewals. Operating margins were more than 4 percentage points higher than Q2 2025, and declined only modestly sequentially from Q1 2026 due to one-time client implementation investments. Private Banking contributed ~30% of total Q2 2026 sales events. 3. Advisor Solutions (including Stratos): 30% year-over-year revenue growth. Stratos contributed $21 million of Q2 2026 revenue (up 11% from Q1 2026) and generated $2 million operating profit before non-controlling interest; adjusted EBITDA for Stratos exceeded $9 million in the quarter. Excluding Stratos, Advisor margins were over 3 percentage points higher than Q2 2025 and flat sequentially vs Q1 2026. 4. Institutional (Asset Management): Operating profit was roughly flat year-over-year as the firm continues to invest in new strategic asset management initiatives. Net sales events were modestly negative for the quarter, though newer offerings like ETFs and SMAs are gaining traction. LSV (a SEI affiliate) generated $2 billion in net inflows during the quarter, with total LSV assets increasing nearly $17 billion driven by market appreciation and inflows.

Risks & headwinds

There were no material new risks or operational failures discussed during this earnings call. Management highlighted that all strategic initiatives are progressing in line with or ahead of expectations, and the sales pipeline strength indicates limited near-term headwinds to performance.

Analyst Q&A

• Q: Private banking margins have improved faster than originally expected, with a target historical range of 25-30% — is there upside to this target, and what is driving the faster improvement? /

  A: Faster improvement is the result of consistent execution of the firm's two-part strategy: targeted growth initiatives and ongoing efficiency improvements. Higher-margin professional services are now included in essentially every new private banking deal, with professional services margins already exceeding the historical 20% overall private banking margin baseline. This dynamic is expected to continue driving incremental margin upside going forward.

• Q: Are you seeing broader increases in outsourcing demand across segments, and how does AI and your IBM partnership position you to capture this demand? /

  A: Yes, there is broad increased demand for outsourcing, driven by clients re-evaluating their own operating models and looking to focus internal resources on core competitive advantages, rather than back-office functions. Client demand is currently strongest for SEI Data Cloud services and AI readiness professional services, as clients need robust data infrastructure to build out their own AI strategies. The IBM enterprise partnership supports SEI's automation journey, helping the firm scale faster to meet growing client demand by automating labor-intensive internal processes.

• Q: Revenue growth has accelerated to 15% year-over-year — are current low-to-mid teens growth rates sustainable into the back half of 2026 and 2027, given recent strong sales activity? /

  A: While the firm does not issue formal guidance, management noted that sales pipelines across all business segments are currently the strongest they have ever been, with broad-based momentum. Management expressed clear encouragement about the trajectory of revenue growth as past strong sales continue to convert into recognized revenue.

• Q: Can you update us on Stratos performance and pipeline after seven months of operation? /

  A: Stratos hit its expected EBITDA target of ~$9 million in Q2 2026, in line with management projections after accounting for modest integration costs. Stratos currently has a record-high pipeline split roughly 50-50 between M&A opportunities and new advisor recruiting. The business has added dedicated technology leadership to accelerate onboarding and improve client experience, and has launched a new OCIO lead generation initiative that benefits both Stratos advisors and SEI's core OCIO business.