Fellow
shareholders:

• Highest revenue ever at $618 million
• Highest adjusted EBITDA ever at $200 million
• Highest margin on adjusted EBITDA ever at 32.3%
• Highest adjusted net income ever at $131 million

AssetMark achieved this growth first by focusing on our mission and core values. Our mission is to make a difference in the lives of our clients and everything we do is focused on that. Our values guide us in this journey—we start with Heart and Integrity, we strive for Excellence and we promote Respect throughout our business.

In addition to the key financial metrics, the financial stability of the company has never been better. In 2022, we generated $140 million of cash from operations and ended the year with $123 million in cash, even after purchasing Adhesion Wealth for $46 million in December. Additionally, the company has $375 million of undrawn capacity on our revolving credit facility.

As a result, we are entering 2023 as strong a company as ever.

In 2022, AssetMark continued its journey to be more than a TAMP. Both our 2021 integration of financial planning software provider Voyant and the closing on our purchase of Adhesion Wealth in December have continued to expand our offerings beyond that of a turnkey asset management platform.

We have also continued the diversification of our revenue as spread income and subscription income has grown to almost 15% of our total revenue. We believe this diversification makes our business stronger and opens up new avenues of growth.

Platform Assets

AssetMark ended the year with $91.5 billion of assets on the platform. Despite market headwinds, AssetMark realized positive net flows of $5.6 billion in 2022. In addition, the acquisition of Adhesion Wealth added $6.9 billion of additional assets to the platform.

The organic growth of our non-acquisition assets was 6.0% for the year.¹ This strong organic growth was done amidst a volatile and down equity market and a rising interest rate environment that put money on the sidelines for large stretches during the year.

We welcomed 690 new producing advisors to the AssetMark platform in 2022 and by year-end, we had 2,882 engaged advisors on our platform, who collectively comprised 90% of the total assets on the platform.

Revenue

Despite the down equity markets, AssetMark’s revenue diversification helped it achieve record revenues once again, up 16.5% to $618 million. Asset-based revenue, which was up 4% to $534 million comprises 86% of our total revenue. Spread-based revenue of $63.4 million was $55 million higher than 2021 as AssetMark and its investors benefited from the rising rate environment. Finally, Subscription-based revenue of $13.0 million was up from $6.4 million.

Expenses

In 2022 our reported operating expenses, excluding variable asset-based and spread-based costs, decreased 5% to $313 million. After removing adjustments to our expenses, our adjusted operating costs went up 10.2% from $259 million to $285 million.

We have always approached our expense growth in a disciplined fashion and target increasing our margins by 0.5% to 1.0% each year. In 2022, we set a new high with an EBITDA margin of 32.3%.

Earnings

As a result of our revenue diversification and the growth of spread-based revenue, our earnings for the year were impressively up 26.3% to $130 million of adjusted net income, or, $1.77 per diluted share. In addition, we view adjusted EBITDA as an important measure of the company’s strength. Our adjusted EBITDA for 2022 was $200 million, up 27% from 2021.

In Closing

We are very much looking forward to 2023. We are hopeful our economy and country can continue to heal and open up. AssetMark has been and will always be a mission-driven, client focused business. We have continued to invest in the future and are well-positioned to have another great year with sufficient capital, low leverage and strong earnings momentum.

Gary Zyla
EVP, Chief Financial Officer

• ¹This is a measure of net flows as a percentage of beginning of year assets. This calculation excludes the impact of the net flows from the 2019 GFPC acquisition and the 2020 OBS acquisition. Including those net flows, the 2020 organic growth was 8.9%