Good morning, ladies and gentlemen, and welcome to Allfunds' third quarter 2023 trading update conference call. Joining us today are Allfunds' CEO, Juan Alcaraz, the CFO, Álvaro Perera, and the Global Head of Investor Relations, Silvia Rios. Mr. Alcaraz will make a brief introduction, and there will be a question and answer session that will follow. This conference call is being recorded, and an audio reply will be available at allfunds.com during the day. At this time, I would like to hand the call over to Mr. Juan Alcaraz. Sir, you may begin.
Thank you very much. Good morning to everyone, and thank you for joining us in this third quarter 2023 trading update. Looking at the evolution of global markets, even though activity was down during the quarter for both equities and fixed income, I think we have achieved a good performance for Allfunds over the period. We are happy to see an improvement in the outflows that we experienced in the last quarter, Q2, experiencing a reduction of almost 2%, so around EUR 7 billion less, okay, so in the flows from existing clients. Also, Allfunds assets growth on a year-on-year and year-to-date basis remains healthy, at 2.5% and 2% respectively, demonstrating greater resilience as a result of new client migrations onboarding to our platform.
This compares to an increase, no, in the industry of 2.3% of the European, okay, across the mutual fund industry, according to Morningstar. We continue to outgrow the market, even in such difficult times as this. As I said many times before, one of the key competitive advantages and one of the most difficult ones to replicate for our competitors is our flywheel effect. This quarter, too, it remains as strong as ever, allowing us to diversify our client base, especially in expansion markets. Let me note some interesting things during the quarter. We had negative outflows in this period, but that's not surprising, given the very difficult circumstances that we are operating under, higher volatility via market, as well as rising interest rates. These negative outflows are concentrated in Southern Europe and in Switzerland.
However, we are seeing positive inflows in France, Benelux, and Northern Europe, and also in Asia and Brazil, where we continue to see that the vast majority of existing clients account for resilient flows. By asset class, the main contributor in terms of inflows have been money market funds, as well as alternative non-UCITS. We have managed to increase in 54% our capital commitments in this asset class since the beginning of the year. Let me take you through some details. Our platform service assets decreased in the quarter by 1.6% to EUR 930 billion, given the high volatility experienced in global markets, especially in August and September. The decrease was mainly due to the risk-off sentiment environment across equities and fixed income asset classes.
The effects of challenging market performance were also conservative when compared with the global benchmarks against which Allfunds aligns its own performance. This includes the STOXX Europe 600, with a 2.5 decrease, the MSCI World Index, with almost a 4% decrease in this period, or the Bloomberg Global Aggregate Index, that was down 3.6% in this period. As you have seen, we have experienced organic outflows from existing clients, a slight, slightly above Q1, but significantly lower than Q2, that we have largely offset with the new client migration during the quarter. This resulted in modest net outflows of about -0.6% during the quarter. The existing client outflows were concentrated on the months of August and September, as I said before, especially the last half of September.
As you perfectly know, I mean, July was a good month, no? Unfortunately, you know, August and September were pretty negative, no? As opposed to what happened in Q1 and Q2, we have seen in this third quarter a stabilization in the outflows in the fixed income asset class. In terms of migrations, you will see that we have managed to onboard EUR 9 billion in the platform. We have continued to see strong new client activity, with 41 new clients onboarded and 60 new fund houses this year to date, okay? Demonstrating our ability to continue to win market share and deliver excellent client outcomes. The majority of the clients onboarded this quarter come from America and Asia, to a lesser extent, Central Europe and Middle East.
As an interesting note, we have onboarded larger clients over the period, with 20% of the clients having an average size higher than EUR 10 billion, and 35% of our clients, total clients, onboarded year to date, have an average size higher than EUR 5 billion. Our new client pipeline remains very strong, and while it might be more weighted to the last quarter of the year, we remain confident in achieving the level of migrations that we always know, establish as our goal of between EUR 40 billion up to EUR 60 billion, no, on a yearly basis, no? We are very excited with the good progress with our strategy around subscription-based business. We continue seeing banks and financial institutions wanting to upgrade their tech offering, and we are becoming a strong partner for these investments, no?
There is good traction on the upselling and cross-selling efforts from the different areas. We have seen an acceleration in the pipeline which is now well diversified, not by product, by region, and it has doubled, no, since the beginning of the year. The prospects for the end of the year remain very positive. Finally, I would like to spend the last minute of the call on our alternative solution platform. Remember the new platform that we launched before summer? As I said back in July, this is one of the most relevant projects we have currently, and we continue devoting time and efforts to bring it up to speed. Just this quarter, we have made significant progress in the automatization of the billing and execution of this type of assets.
In parallel, we have almost completed the Allfunds Private Partners program, which fits perfectly with our strategy, you know, in this asset class. Next week, we will publish the name of the new partner, number seven. With these seven partners, we will close the program for 2023, okay? We are not expecting new partners until next year, but as you know, our goal is to have a program with less than 10 strategic partners, okay? We are about to finish with next year contribution of around two more partners. As a final update, I would like to remind you that we are just waiting for the closing of the Iccrea deal to occur in the coming weeks, that will also reinforce our core platform business. This addition will certainly provide further collaboration areas with the new business lines created.
We also remain very active in the M&A space, looking at several opportunities, both platform and subscription-based, well, definitely to help us, you know, to accelerate our strategy, our growth strategy. We enter the final quarter of the year with good momentum and in a strong position to continue delivering against our strategy. Thank you very much for being with us today, and let's now open for Q&A. Thank you.
Ladies and gentlemen, we will now begin the Q&A session. If you would like to ask a question, please press star five on your telephone keypad. If you change your mind, please press star five again. Please ensure that your device is unmuted locally before proceeding with your question. Our first question comes from Alex Medhurst from Barclays. Now your line is open.
Yeah, good morning, and thanks very much for taking my question. Three quick ones from me, if that's okay. Firstly, I wondered if you could comment on any changes in the balance of outflows between, you know, the Swiss clients we were flagging in the first half of the year and the other large Southern European institutions that were also impacting H1.
Secondly, just wondered if we get an update on the revenue margin outlook, you know, ex-Net, Net Treasury Income. I guess that's in the context of trading volumes running low across the market, flows you called out being into low-margin money market funds. Also, there's a favorable mix shift going on here over the last year or so towards the platform service AUA, away from dealing and execution. Lastly, can you comment any change in sort of cash balances on which you earn Net Treasury Income since the end of H1? Thank you.
Okay. Thank you very much. I mean, well, regarding the Swiss, Southern European, or the rest of our clients, as I stated now during the call, well, in these regions, let's say Southern Europe, basically Spain, Italy, also in Switzerland, we are still seeing negative outflows. Nothing really more to comment about this. No, I mean, we are not in this moment giving any more specific, no, let's say, disclose per client or things like that, no. What is what it is in this moment. Regarding the asset classes, you mentioned money market funds. No, I, well, for me, it's a positive surprise, no, that we are seeing a big number of clients of the platform, you know, using Allfunds also to invest in money market funds, okay?
Probably not in countries like Spain and Italy, okay, because they use their proprietary funds, but in other regions, no. Well, very good news regarding the growth, no, in alternatives products, no. Well, this is like 50% of the questions that you made. I'm gonna ask Álvaro, our CFO, to take the other questions regarding revenue margin and the other topics that you want to discuss. Álvaro, please.
Sure. Sure. Thank you, Juan. Hi, Alex. On revenue margin outlook, what we expect is a slight decrease of the platform margins in the second half as a result of a weaker AUA mix, as you mentioned, which is driven by a more challenging market backdrop, especially in the light of the recent events now in the Middle East. However, we consider this effect to be temporary. In any case, we do reiterate our guidance of 3.4-3.6 for the full year, including the treasury. You know, I hate unbundling the treasury from the overall margin because it works as a natural hedge, no, against this environment of raising rates.
With regards to the, let's say, ex-treasury margin, as I was saying at the beginning of my response, we do expect some slight decrease versus the first half of 2023. With regards to cash balances, we have not seen.
A significant change in average balances so far versus the first half of 2023. I'm mentioning the average of the year and not the end of H1 because what you might have seen in June's balance sheet is that the cash position was, I would say, abnormally high, driven by a few portfolio rebalancing movements towards the end of the quarter that normalized, no, a few weeks afterwards.
Overall, and looking at the NTI, no, the treasury revenue for the full year, I have to say that I'm highly satisfied with the progress of this revenue line and confident that we will deliver a number which will be hopefully at the high end of the guidance that we shared back in July. Towards EUR 60 million for the full year.
Great. Thank you very much.
Next question.
Welcome.
Comes from Bruce Hamilton from Morgan Stanley. Now your line is open.
Hi, morning. Thanks for taking my questions. Just a quick couple of questions on the kind of situation within Intesa and Santander. I think we're getting close to the point where you will kind of look to extend those contracts for two years. Should we still be thinking base case, you pay EUR 30 million to each, and then we extend to November 2025? Secondly, will we get any clarity on the state of affairs beyond 2025 at the same time, or is that a negotiation that you're yet to sort of go through? If those relationships move from exclusive to non-exclusive beyond 2025, I guess the consequence would be you get a slightly lower share of flows, and perhaps there's a fee margin consequence as well.
Just if you could help us understand what it would mean if those are exclusive or no longer exclusive beyond 2025. Thank you.
Thank you, Bruce. Well, very quick answer. The first thing is, yes, we are going to pay that money in order to extend the exclusivity, basically because this was something negotiated, you know, back in 2017, as part of the deal, no, between Santander, Intesa, and H&F and GIC, okay? Regarding if there are negotiations to extend, to further extend, no, I mean, we always talk, you know, with these two institutions, of course, you know, that is something that, as of today, there's nothing close, because as I said, not today, we are focusing on 2024 and 2025, no.
I mean, if we do not extend, not exclusivity, do we expect to see an impact, you know, in our business with them? I don't think so. I mean, bear in mind that with Banco Santander, no, we have been working without exclusivity from year 2000 up to 2017, okay? The exclusivity just came because, well, HNF and GIC paid a big check, you know, to Santander for the business, and they wanted, no, to in some way, well, to protect, no, that investment. We don't like to work with exclusivity with our clients. The clients have to be happy, you know, with the level of service that we provide, and that's the way we like to operate.
We are not obsessed, you know, with extending exclusivities or things like that. I don't know others, but definitely not in the case of Allfunds, so. No, I mean, if we do not extend the exclusivity further than November, December of 2025, we will keep on working, as again, as we have been working with them for 17 or 18 years, no? In the case of Intesa, it's a little bit less, but I think we started to work with them in 2003, so I don't know, 20 years. I don't know. They are really important clients, extraordinarily loyal clients, you know, they operate with Allfunds in every single jurisdiction in where they have operations. It's not just in Spain or Italy, it is all around the world.
It's not just about billing and execution. It's about digital, you know, it's about ESG, it's about blockchain. I mean, we have so many initiatives in place, you know, with these two strategic clients and banks that, well, that's how I see it, okay?
Got it.
Thank you.
Okay, that's helpful color. Thank you.
Next question comes from Anthony Brodaty from HSBC. Now your line is open.
Hi, good morning. Good morning, all. Thank you to take my questions. Two questions. The first one is on the acquisition pipeline. You quickly spoke about opportunities in both segments. Would it possible to be more specific in terms of target, in terms of size, in terms of geographies on the potential acquisition that we could see in the future? Or is it a near future or more long term? The second question is about details on the evolution of the group in Asia or in the U.S. What should we expect in coming quarters in this particular region? Asia was supposed to be a driver of growth for the company on the...
Where are we today? Thank you.
Okay, Anthony. I mean, what I can say is that the short-term target is much more focused today in Europe rather than in any other geography on the M&A space. Okay, unfortunately, I cannot be more specific, okay, and tell you which are the key countries in world today, you know, we are analyzing M&A opportunities. Let's say that it's all about Europe, okay? Regarding Asia, well, I think we have the market so that we want to have in Singapore, you know, in Hong Kong, we are keep on growing our market share. We have the Mainland China opportunity where, you know, last year we opened our Shanghai office. Unfortunately, you know, that the open architecture for international funds, you know, is extraordinarily limited by this QDII quotas, very limited.
We are there, you know, waiting for the opportunity. Whenever, you know, this market opens, what we are doing is closing the agreements with all the Chinese local institutions, no? I mean, first to work with their offshore units, so basically Hong Kong and Singapore. Again, you know, in the moment that that market opens, we want to become, you know, and I think that we will become the bridge for international funds in Mainland China, okay? There are other regions or countries, no, like Korea, South Korea, potentially Japan, no, that we are starting now to explore, okay?
In Southeast Asia, we have clients in the Philippines, in Malaysia, and in Thailand, no, and you know, we keep on gaining market share. But you know, I mean, the truth is that the size of that business in Southeast Asia is pretty, pretty small, limited, and the company just wants to work with the top two, top three financial institutions in this country. I mean, I don't expect that we are gonna bring 50 or 60 banks in Thailand, no, because we just want the very, very, very, very best ones, no. Regarding the U.S., we have an office in Miami that is performing extraordinarily well, but it's true that it's all about offshore business, so non-U.S. domicile funds, no.
It's basically private banks established in Florida that channel, you know, the investments of high net worth individuals, no, in Latin America. For U.S. onshore, well, I think that there are just two ways for us to become a significant player in the U.S., no, and one is with a strategic alliance, and the other one is with a significant inorganic, no, movement, no. There are no more options for us, no. I mean, I think that to think that we can start from scratch and to try to replicate what we have done ex-U.S., no, in the U.S., is not realistic, no. It could take us decades, no. Strategic alliances and inorganic growth, but not in the very short term, really, Anthony.
We are much more focused today on reinforcing our position in Europe, to tell you the truth, in the very short term, again.
Thank you.
The next question comes from Gregory Simpson from BNP. Now, your line is open.
Hi, good morning. Yeah, two questions on my side. Despite the market backdrop, the industry data shows Europe still having pretty strong inflows into passive funds this year. Can you remind us, in broad terms, how this passive trend impacts Allfunds? Is it still the case that only a small portion of AUAs is passive on the platform? Would additionally use Allfunds if they want to use passive products as part of their asset allocation, for instance? That's the first question. The second one, can I just check on the recent acquisitions? The release is some quite positive wording around pipelines. I think Web, the former Web financial business, you talk about doubling the MainStreet business.
I think you said the pipeline, you know, growing four-fold. Should we expect these businesses to grow at a faster pace than what they were doing organically as you upsell to the broader client base that you have? I just want to check what the outlook is around this kind of, you know, what seems like pretty good questioning about the pipeline. Thank you.
Okay, thank you. We will come back to you, you know, with the specific growth of passives products. I mean, the quick answer is that definitely, yes. I mean, we have all types of passive funds in the platform. I need to check exactly which has been the growth, okay, in this asset class. We will definitely tell you, you know. I just mentioned the two asset classes, which I mentioned, and they were not passive funds, were money market funds and illiquids, no? Illiquids and semi-illiquids. Yeah, but we will come back to you and tell you Allfunds growth, no, in this passive asset class, okay?
Regarding the pipeline, no, that we have in a subscription fee, no, well, I mean, we had internal discussions regarding what is the pipeline, no? It's clients that we have already started to negotiate, clients in where we already have an NDA signed. What I can tell you is that we have been very conservative with this figure that we have given to the market of the fact that we have doubled the pipeline, okay? In some specific business lines, the pipeline is four to five times bigger than six or nine months before, okay? Regarding the traction that this added value services, the traction that these services are getting is impressive.
However, something that, at the beginning, you know, when in 2022, 2021, you know, when we started to build this new value proposition, no, we thought that the time, okay, that takes to close the deal was going to be smaller, let's say, no? What we are seeing is that we start discussions with the client, with the prospect, and it can take us six months, okay, to close the deal. Is it bad, good? Well, I don't know. It depends on the size of the deal, no. If it takes six months to sell a EUR 10,000 license, of course, it's not a very good KPI, you know?
You know, if it takes six months to be able to win a big, big contract, no, to develop, I don't know, the digital value proposition of a big commercial bank, probably then is, it's a reasonable, no, time frame. Again, very, very strong pipeline. It's true that with the big companies and with big deals, it's not a one, two, or three months of time frame. It can take six-nine months, no. This, well, in some way can be reflected, no, in the revenues, no, in the annual revenues, no, that we make, no.
Greg, hi, Álvaro here. Just, just a quick comment on the ETFs and passives. Just to let you know that you might remember towards, oh, as of December last year, they represented roughly 7.3% of our book, increased to, I think around 8.5% in June. As of September, it has increased a bit more. We are around 9%, but not, not more.
That's helpful. Thank you.
You're welcome.
The next question comes from Andrew Lowe, from Citi. Now your line is open.
Thanks for taking the questions. Just a couple of clarifications. I see consensus sits below 12% in terms of subscription revenues as a share of total for 2023. Are you sort of reconfirming the expectation for that to be above 12? Do we sort of have an idea of where that may land in 2024? Then the second question, I just wondered if you could add any comments about recent press reports about a strategic review, and maybe related to that, what are your thoughts on when you may be able to present a Capital Markets Day to us, maybe next year? Thanks.
Álvaro, do you wanna take this one?
Sure. Hi, Andrew. On relative weight of subscription revenues, as you've heard from Juan, we're witnessing good progress. But we will most likely be south of that 12% guidance that we provided for the full year 2023. Having said so, in the second half, we are already seeing that percentage closer to or above that 12%, no. Hopefully, if we continue at this path, at this speed, next year, we should see an increase now in that relative weight of the subscription business.
Álvaro, sorry, yes. It's just to point out that in the case of all, remember, now the MainStreet acquisition, it was supposed not to be integrated in the company last year, 2022, and we had some delays, okay? Finally, MainStreet became part of our ecosystem in February, March, no? Okay, so, yeah. H1, as Álvaro was saying, okay, we have been probably below expectations, but it's also true, you know, that we didn't have, you know, the product, no, because the company was not Allfunds yet, no? Also bear in mind that the other companies that were acquired took place in summer of 2022, okay? It took us also six months to integrate them, no.
I think what is important is what Álvaro was saying, to point out second half, no, H2 of 2023, in where, you know, all the acquisitions that we have made are already, well, ready, you know, to deliver, no, basically. Sorry, Álvaro, yes, to point out, you know, the timing, because I think it's important, no. I mean, all the companies form part of Allfunds Group. One of them, like, six months ago, no, and the other ones, 12, 13, 14 months ago, no.
Yeah. Thank you, Juan. So, on, if you want, I'll comment on, I mean, on the question around capital markets, but I don't know, Juan, if you wanna make any comments on the strategic review, our IR. On Capital Markets Day, Andrew, definitely something that we are discussing and considering internally. We haven't agreed on a date yet, but we see that definitely as something that will be positive now for the company and for the investors community as a whole.
I think I don't know if there is, yeah.
No comments regarding the retailing business strategy further than what we already said now in July.
Yeah. There are no news, no, regarding, yeah, no, no specific, no, news regarding this topic that I'm aware of.
Okay. Thank you.
Thank you.
The next question come from Ian White, from Autonomous. Now your line is open.
Hi, morning. Thanks for doing the call. Just a few follow-ups from my side, please. First of all, just a clarification, actually, on a previous question. Am I right to understand that a decision is still to be made on the question of exclusivity payments to Santander and Intesa? That's what I took from your answer, I think. Just to be clear on that, please. Secondly, I think earlier in the year, you commented on some sort of lumpy migration opportunities in the pipeline, some potentially bigger deals, I think EUR 15 billion AUA, that sort of ballpark might have been a number that was sort of floated. I'm assuming those haven't gone through in nine months 2023. Just what's the latest on those, please?
Are those conversions that are in progress or we might see now in 2024? That's question two. Just finally, obviously, we've had another period of relatively high inflation again in 2023. Just wondered how you were thinking about that with respect to pricing, particularly on the subscription-based services looking ahead into 2024. I'm assuming there's sort of nothing, no major change likely on the sort of platform service, given I think you did an exercise a couple of years ago there. Basically, there's some scope to raise prices a little bit faster than trend, given the inflationary backdrop. Thanks very much.
Thank you. Well, regarding the payment, you know, to extend two more years, I mean, yes, very clear. Yes, yes, we are paying in November, okay, for these two years, because that was negotiated, as I said, in 2017. Yes, okay? What else regarding?
Migrations, Juan, the client.
Migrations. Okay, no, that client unfortunately, you know, is not migrating this year. The main reason is they're in the middle of an IT transformation project, and it has been delayed again. Well, we are not expecting to see, you know, that migration of that specific client until next year, okay? This is, I think it's a good example, no, sometimes of the uncertainty, you know, and volatility in some way that migrations can also have, no? Especially if they are big, no.
That's why we prefer, no, mid-sized clients, small clients that migrate EUR 500 million, you know, EUR 2 billion, EUR 3 billion, rather than very big clients, no, that sometimes, you know, they unilaterally, no, they decide to postpone or to delay a migration, and if it represents one-third, no, or 40% of your plan, no, year-on-year plan, well, you suffer a lot, no? So again, that migration is not going to happen this year. It's not at risk, okay, at all, but it has been postponed for 2024.
Sorry, Juan, on inflation, do you want me to?
Yes, please
Cover that? Hi, Ian. On inflation, as you correctly pointed out, no, we don't expect any major change on the platform service. With regards to subscription, correct, there will be obviously some impact going forward, given the structure of the contracts. Yes.
Can you provide any sense of how that impact is calculated or the size of that, please? Is there a way to think about it across the subscription book?
It's not entirely across the subscription book. I mean, I don't want to throw you a number here, but let's say a significant portion of the ARR has inflation clauses included. We do expect definitely a push in terms of revenues coming from inflation next year.
Okay, got it. Thank you.
You're welcome.
Next question comes from Carlos Peixoto from Caixa, CaixaBank. Now your line is open.
Yes. Hi. Hi, good morning, Carlos Peixoto from CaixaBank. Just a very quick ones from my side. I see here, these are more broad questions, I think. I see here in the release, you mentioned that basically, like, the new client pipeline, you think it will allow the company to meet the guidance that was previously announced, and well, I believe you're referring to the outlook in the first half presentation. There, you mention EUR 1.4 trillion-EUR 1.45 trillion assets under management at the end of the year.
Looking at where the balances are now and basically assuming market performance in the end of the year will probably not be that big. That it looks as though it would take for you to be above the migration guidance of $40 to 60 billion to reach that. I was trying to understand if I'm missing here something that was specifically one of the answers to the previous questions. And you also mentioned probably the big migration that had discussed previously wasn't coming in this year.
I guess that would put the range of the migrations towards the lower end rather than the upper end. Within this, I also wanted to ask if you still see the high single-digit to low double-digit growth in revenues as feasible for the year, considering the pressure on margin that you also mentioned for the second half of the year. Thank you very much.
Thank you, Carlos. Do you want Álvaro, right, to, yeah, to walk us through the guidance, you know?
Sure.
Yeah, regarding migration, and yes, Carlos, I mean, I mean, you are right. It can be... We don't know yet. I mean, I'm not talking about this specific client, but, as you can imagine, we don't know yet how we are going to finish, okay, 2023. But as I said, you know, something between, I don't know, 40-60, 45-55, we are gonna be there. Again, without this client, okay? Regarding the volume, you are right. I mean, of course, you know, if with this market volatility, it's gonna be very difficult to be above EUR 1.4 trillion. I think the good news will come on the revenue side, Álvaro, no?
Yeah. No, definitely. Thank you, Juan. The EUR 1.4 trillion mark that assumed a gradual recovery of flows and stable markets in the second half of the year, which we are not seeing. Despite the strong pipeline of new clients, it seems very challenging unless we see an improvement in Q4. In the absence of any market recovery, we will most likely end 2023 south of that EUR 1.4 trillion mark. Having said so, we do reiterate our guidance of high-single-digit revenue guidance.
Yeah.
Any other questions, Carlos?
Yeah, no, thank you.
You're welcome.
Next question comes from Iulian Dobrovolschi from ABN. Now your line is open.
Hello, good morning, gentlemen, and thanks for the update. Two questions from my side. The first one is on the outflows. We've seen now seven quarters of continuous outflows from existing clients, and if you add all of them up, we sum up everything to about EUR 85 billion in AUA or slightly, kind of, let's say, more than EUR 30 million in revenues, back-of-the-pocket calculation. I'm just wondering what should happen in order for Allfunds to see a reversion to this trend, and how quickly can we expect most of these assets to come back? The second question is on the alts, the alternative solutions. Just wondering, when do you actually expect the alternative solutions to start to significantly contribute to the top line?
Let's say, kind of, mid-single-digit revenue figure over there. Also, besides this, what sort of efficiency in terms of yields do you expect to get from this initiative?
Okay. Thank you, Iulian. I think, well, it's a very good question. I mean, I'm talking about the outflows, no, you're putting in context, no, what's going on, no, in the industry. This is not really Allfunds, no? It's the financial community, no, and the capital markets. We saw a terrible performance last year, no, in equity and fixed income. Obviously, that affected Allfunds as well as every single bank, no, in the world, no. This year, what we have seen is, well, something that also pretty uncommon, no, to see this interest rate rise in such a short period of time, no?
That also is negative also for the open architectural model, no. You know, that banks use third-party funds for added value, let's say products, no, for risk products, no, risky products, I mean, not for money market funds or guarantee funds, no. Let's say that we have suffered these two waves, two tsunamis, no? One, volatility in the markets, 2022, and this year, well, also volatility in the market, and definitely this really fast interest rates rise, no? Yes, and this is what it explains, no, this continuous outflows, no, from existing clients. When is it going to change?
Well, I think that first we need on the interest rate side, we need a stabilization of interest rates, which I think, no, but I'm not an expert, as a macro expert, as you can imagine, but it looks like, no, the consensus is that we are very close to that is stabilization and in fact, no, the projections for end of 2024 is that we will start seeing interest rates potentially to go down. This would be good news, not, I mean, it's not just for Allfunds, you know, but for again, for all the companies industry, no, that is, well, that believes in investments, no, versus bank deposits or cash accounts and basically savings, no.
As I said during the presentation, this risk of a scenario, no, is what we are suffering, we started to suffer last year, and we continue to suffer. Interest rates, I think we have a much better, no, let's say, view of what is going to happen. I think that, as I said, no, it's a matter of three more quarters, probably. Market volatility is something that really nobody knows. You know, because we see all these geopolitical, no, turbulences, and there's nothing that really Allfunds can do that, no. What are we doing?
Well, as you have seen, no, we are really focused on gaining new clients, increasing our market share, and improving, no, and enhancing our value proposition in order to have a better, most efficient, and more and more competitive value proposition and platform. I mean, that's all we can do really in this moment and wait to see that inflection point, no? I mean, we really love the data that we have. Today, the data and our correlation to the market is not contributing. However, we are going to deliver record revenues in the history of this company. Well, I think this is a clear also proof, no, of resilience, no?
How after the probably the two worst, no, years in the history of two decades company, no, the company keep on beating and winning and increasing our revenues, no. At the same time, no, that we reinforce our value proposition and we gain market share, let's say that that is in what I'm really focusing, no, and where we put all our efforts, no. Market volatility and interest rates, as you can imagine, today are headwinds, but there's not much that we can do but, well, again, revenues, market share, and making Allfunds better, no. That's our day-to-day obsession, let's say, no.
Perhaps, Iulian, on the question around alternatives, we have seen this new revenue line growing, this project growing nicely. Remember that we're still in early stages. This was launched in March this year. I think it's early to share what you're asking, but we will, of course, be more than happy to share any progress and any targets in the coming quarters as we continue progressing, no?
Yeah. I think that.
Got it.
Once we have the platform ready, no, which is the case, now we have it, and we are in a go-to-market mode in this moment. Yeah, what we can tell you is that for next year, 2024, there's gonna be a specific budget for this initiative, okay, for this platform. Something that, as you can imagine, we didn't have for this year, no, because this year was the year of creating, no, of signing all the agreements with the partners, no, and creating the platform. But next year there's gonna be a specific budget in assets, no, and in margin. I guess that in February, whenever, you know, we have the full year review, we will be able to give you much more detail on which is the goal, no?
Our goal for 2024, no, in alternatives products, no.
Yes. Thank you very much.
Thank you.
Next question comes from Andrew Lowe, from Citi. Now your line is open.
Hi, guys, thanks for the follow-up. Just quickly, in your response to Ian's question, you mentioned a single distributor who's been delayed until 2024. When you first disclosed this pipeline of large clients in Q1, I thought there were at least two, EUR double-digit billions, in the pipeline. Could you just clarify, is it a single client or are there two or more of those large clients left in the pipeline? Thanks.
What I can tell you is that there are no, let's say, above EUR 10 billion client that is going to be migrated before the end of the year. No. There is a delay in the big client, let's say, that we discussed in H1, and there is also another pretty big client that we didn't know if it was going to joining in Q4 or Q1, so I don't think we can say that it's a delay, okay? That again is not going to join in 2023. The delay is just from one big client.
Got it.
The significant.
That's really helpful. Okay.
Yeah.
Thanks.
The next question comes from Fernando Gil de Santivañes from Bestinver Securities. Now your line is open.
Hi, good morning. Thank you for taking my question. Just a quick one on capital, and I guess it's to you or for you, Álvaro. Do you see any regulatory capital headwinds in the near term that might limit or allow higher distributions once the buyback is concluded? Thank you.
Hello, Fernando. No, we don't see any headwinds. As you know, we operate already with a relatively high level of capital, including our buffer. We have seen over the last quarters increases in the countercyclical buffers, and we might see some additional increases in the future, but overall, nothing that would prevent us from continuing to deliver on our capital allocation strategy framework, and definitely not on different distribution.
Okay. Thank you very much.
You're welcome.
There are no further question at this time, and I would like to hand over the call to the management team. Thank you.
Well, thank you very much, everyone, for joining and listening today. We will update you shortly with our next event for the full year results in February. Thank you very much.
Thank you.