Services Revenue Boosted by Surge in Client Assets

• In Q1-2025, client assets were up 8% YTD to $12.97B, exceeding our forecast by 6%. 
• Q1 revenue was down 0.3% YoY amid lower revenue from interest on unallocated client capital, but exceeded our forecast by 1.1%, as we had anticipated a steeper decline in interest revenue. EPS declined 5.9% YoY, but still beat our forecast by 2.4% on stronger-than-expected revenue.
• Over 50% of revenue came from interest on unallocated client capital held in cash accounts at major Canadian banks/credit unions. Since June 2024, the BoC has cut rates seven times (225 bp), with the potential for one or two more cuts this year, due to slowing GDP growth, high unemployment, and cooling inflation. Consequently, we anticipate interest revenue declining in the coming quarters.
• A key highlight of Q1 was a 4% YoY increase in services revenue from core divisions (Investment Account Services and Health Service Plans), driven by higher transaction volumes. Services revenue will likely continue benefiting from organic demand growth for alternative investments.

• Dividends held steady at $1.80/quarter, aligning with our estimate 
• While lower rates have historically boosted financial stocks, Trump’s tariff threats have negatively impacted both Canadian and U.S. equities across the board. Although tariffs will not directly affect OLY, we believe they could be impacted by a potential tariff-induced recession.
• Given the uncertainties, we are taking a cautious stance on financial stocks. We expect Trump may reverse or soften his new tariff measures due to their potential negative impact on U.S. consumers and businesses.  Should this occur, we would revert to a bullish stance on financials.
• OLY’s EV/EBITDA is 6.7x vs the sector average of 12.4x, a 46% discount. 

Price Performance (1-year 

Primary Services

The leading Canadian custodian/ administrator of alternative investments. OLY manages 137k+ accounts; its platform caters to a comprehensive range of investments not supported by banks, and other traditional trading/investment platforms

• Investment Account Services (IAS): OLY is a trustee/custodian/administrator of self-directed registered investment accounts for alternative investments
• Health Services Plans: Administers health spending accounts for small/mid-sized corporations
• Currency and Global Payments: Facilitates the buying and selling of currencies for corporations and individuals
• Corporate and Shareholder Services: Offers corporate trust, and transfer agency services, such as maintenance of security holder registries, organizing annual meetings, and administering dividend reinvestments
• Exempt Edge: Provides IT services to exempt market dealers, issuers, and investment advisors 

In Q1-2025, 77% of revenue came from IAS, 10% from health service plans, and the remaining 13% from other services, largely consistent with the prior year. Client assets were up 8% YTD to $13B, coming in 6% above our estimate

Appendix