Fellow
Shareholders—

• Highest revenue ever at $709 million
• Highest adjusted EBITDA ever at $250 million
• Highest margin on adjusted EBITDA ever at 35.2%
• Highest reported net income ever at $123 million
• Highest cash flows from operating activities of $175 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. Our balance sheet is strong with $233 million in cash on hand at year-end, and our working capital¹ is $215 million, up 90% from 2022. Additionally, the company has $375 million of undrawn capacity on our revolving credit facility.

As a result, we are entering 2024 as strong a company as ever.

2023 was indeed the year of the advisor and AssetMark’s mission and strategy is aligned to meet the needs of independent financial advisors. In 2023, we invested over $41 million in technology and product development to further this mission.

We have also continued the diversification of our revenue as spread income and subscription income has grown to almost 19% 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 $108.9 billion of assets on the platform. Buoyed by market tailwinds, AssetMark realized positive net flows of $6.1 billion in 2023.

The organic growth of our assets was 6.7% for the year.² This strong organic growth was done amidst a rising interest rate environment that put money on the sidelines for large stretches during the year.

We welcomed 666 new producing advisors to the AssetMark platform in 2023 and by year-end, we had 3,123 engaged advisors on our platform, who collectively comprised 93% of the total assets on the platform.

Revenue

AssetMark’s revenue diversification helped it achieve record revenues once again, up 15.8% to $709 million. Asset-based revenue, which was up 4% to $554 million comprises 78% of our total revenue. Spread-based revenue of $120.3 million was $63 million higher than 2022 as AssetMark and its investors benefited from the rising rate environment. Finally, Subscription-based revenue of $15.2 million was up 16.6% from 2022.

Expenses

In 2023 our reported operating expenses, excluding variable asset-based and spread-based costs, increased 12.3% to $351 million. After removing adjustments to our expenses, our adjusted operating costs went up 6.2% from $285 million to $303 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 2023, we set a new high with an EBITDA margin of 35.2%.

Earnings

As a result of our revenue diversification and the growth of spread-based revenue, our earnings for the year were impressively up 31% to $171 million of adjusted net income, or, $2.30 per diluted share. In addition, we view adjusted EBITDA as an important measure of the company’s strength. Our adjusted EBITDA for 2023 was $250 million, up 25% from 2022.

In Closing

AssetMark has been, and will always be, a mission-driven, client focused business. We surround financial advisors with the tools and support to create great outcomes for their clients. Our strategy is sound and our leadership is energized and focused. We continue 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

• ¹Defined as Current Assets minus Current Liabilities
• ²Defined as Net Flows for 2023 divided by the beginning of year Assets on Platform