Good morning to everyone and welcome to Allfunds preliminary financial results presentation for the full year 2022. Thank you for joining us today. For today's presentation, let me begin by remind you the logistics. We would like to spend the first 30 minutes on the presentation and an additional 30 minutes for Q&A. Before we begin, I would like to point out that our earnings press release, the results presentation, and supplemental Excel information can be found right after the event under the IR section of our website at allfunds.com. This call is being broadcast live, and a replay will be available on our website. Joining us on today's presentation are Juan Alcaraz, Allfunds Chief Executive Officer, and Álvaro Perera, the company's CFO. Juan and Álvaro will provide a company update as well as an overview of the company's preliminary 2022 financial results.
After our prepared remarks, we will open the call to questions. During the Q&A, please limit yourself to one question plus one follow-up. You may get back into the queue if you have additional questions. For any questions that may remain unanswered, the IR team will be at your disposal after the event. With that, let me hand it over to our CEO, Mr. Alcaraz.
Thank you very much, Silvia. It's a pleasure to speak to everyone today. We are excited to report our preliminary 2022 results. As you might have seen in the statement we have published early this morning, today we also announced the closing of MainStreet Partners, a unique platform delivering proprietary ESG ratings, ESG scores, and ESG investment strategies via model portfolios and empower reporting. I'm very excited about this 3rd acquisition and the opportunities and added value they will bring to our clients and marketplace. We have included a brief slide on MainStreet Partners in the appendix, and our CFO, Álvaro, will also comment on. Let me first take you through the key highlights of 2022. I think there are key messages, 3 key messages that I would like to highlight on this 2022.
The first one is, the resilience of our business, in one of the most various years of the last decade. The strong business momentum we are living despite the volatility and the good progress on the execution of our strategy. In 2022, we have achieved strong financial results in a very challenging environment. Through the highest combined downturn of fixed income and equities, our assets under administration are down at 13% year-on-year versus a decline of 15% for the European fund industry in the same period. However, we have seen an improved market environment in the second half of 2022 and in the first two months of 2023 that points, hopefully, to an inflection point. Our platform revenue margin stands at 3.4 basis points in the middle of our 2022 guidance.
Our subscription-based revenues are up almost 100% year-on-year, thanks to the M&A activity, but also thanks to a strong organic growth. Our total revenues have remained stable despite the adverse market turmoil. Our EBITDA margin has remained very strong at 71%, demonstrating leverage of the business despite continued investment in growth. We continue to outperform the market as a result of our diversification and the secular growth levers, as I will show you later on. Secondly, we have experienced strong new business activity and momentum. We tend to experience this flight to quality effect in periods of high volatility, and this time was not an exception. We continue to capture market share in the fund industry, thanks to our compelling value proposition. Our flywheel effect remains very strong. We have a strong and diversified pipeline activity with high-quality clients in both platform and subscription-based segments.
In addition, thanks to our capacity to adapt to the higher interest rate environment, we will be developing a new revenue line in 2023, the net treasury income that Álvaro will explain in a minute. Okay? Finally, our strategy is progressing well. We have made significant progress in value-added M&A. In addition to the 2 deals already closed and integrated, we just closed our third acquisition a couple of weeks ago, a majority stake in MainStreet, a specialist on ESG analytics and advisory. All of these acquisitions are bringing high quality, recurring, and growth-accretive subscription revenues. Our digital services are getting traction, thanks to the new areas developed, Allfunds Tech Solutions and Allfunds Data and Analytics. Our subscription-based revenues already represent 10% of our total revenues on a pro forma basis.
That is why I'm really excited now to announce our new target of subscription-based revenues to represent 30% of total revenues in the midterm. The opportunity around digital services continue to grow, and Allfunds is uniquely positioned to benefit from the potential growth of this market. There is a lot more we can achieve with our customer base, and we will continue enhancing and improving our value proposition, both organically and through M&A. We also keep on investing in organic long-term and new growth initiatives, such as the new alternative platform that we will launch this year, becoming one of our main and strategic projects of 2023. Moving to our financial highlights. Well, some key figures that support what I have just described in a challenging market environment, Allfunds has shown financial resilience, growth, and momentum.
Starting with our volumes, 2022 has been a difficult year for our assets under administration that have ended at around EUR 1.3 trillion. As usual, migrations that have amounted to EUR 55 billion in total, in line with the guidance we have been providing throughout the year have been instrumental to offset some of the outflows from existing clients that we have experienced. We have seen an improved performance in the second half of the year, with assets remaining flattish since June. The performance suggests a stabilization in the downward trend, which can be a prelude to our recovery. Before jumping into more detail of the business review, I will start by providing a bit of context. Last year, we have seen perhaps the worst combined underperformance. Return on both the stocks and bonds.
Yeah, excuse me. Okay, now we are back. Okay. Last year, we have seen perhaps the worst combined total return for both stocks and bonds. Market indexes have strongly suffered last year, if we look at the market performance of our platform service assets under management versus the year-to-date market indexes, you will see that equities have had the worst performance of any asset class. As both the stocks and bonds fell, the traditional portfolio of 60% equities and 40% bonds dropped 18% last year, the worst return for this type of portfolio since 2008, no? Allfunds assets were resilient, with only 13% drop. In this challenging context, however, our assets growth continues to outperform markets. How do we achieve this outperformance?
Well, something that you probably have heard from me, in the last, 2 years. This is a result of the diversification we have achieved in the company throughout our 23 year history. Diversification not only by region, but by asset class, by client type, paired together with secular growth levers such as outsourcing, open architecture penetration, share gains from other platforms or legacy structures, and the demographic wealth or savings growth. We managed to consistently beat most of the market indexes. Sifting our attention to the strong activity and the business momentum, despite the conditions in the market, our market share has been growing uninterruptedly for the last 10 years, both in the European fund industry and as well as on the European cross-border UCITS business, or what we call now the open architectural space.
We have reached a 12.6 market shares of December 2022 when taking into consideration only the European fund industry. There is significant upside remaining underpinned by the open architecture penetration, outsourcing trend, and potential to win share from competition. The key to our success resides in our unique selling points, the three unique selling points that you have been also hearing from me in the last two years. First, the global scale with local offering and service. Second, the truly one-stop shop solution, leading on innovation and digital offering, and the unique buy free model for distributors. Moving on to probably one of the most relevant issues for the market at the moment, how are we viewing the business in terms of flows in 2023, no? In these last two months, no?
For almost a year, it is the first time in which we have seen the three engines of assets under administration growth in positive. Since January, we have not seen outflows from clients. We continue with our migrations, and we have a positive market backdrop of around 4%. All of this has translated into a 5% growth of our organic assets year to date. We believe this is important, as in previous cycles we have always gone through a period of stabilization before recovering back the flows into the platform. Depending on how markets might evolve going forward, this might be a prelude to a recovery. We would like to remind you that this recovery usually takes place with some lag, as the majority of the end investors are retail investors who tend to react with a 3-month delay.
Back to 2022 performance, our flywheel effect remains really strong in this period of extreme volatility. As you can see in this slide, we have onboarded 71 new distributors and 132 new fund houses in the year. It is worth highlighting not only our healthy new client migrations of EUR 55 billion, but our very high retention rates. We benefit from long-standing, deeply embedded client relationships with distributors and with fund houses. These excellent metrics highlight the strength of our value proposition. Moving to more detailed information about our clients. I would like to just focus on three messages. We keep on diversifying our client base by region, by origin, and by client type. Second, around 34% of the onboarded clients have been captured from other platforms or legacy providers. Third, we continue onboarding fund houses from new markets. Strong activity and strong momentum.
Our pipeline is growing in both our traditional business and in the subscription-based revenues. On the new distributor activity, pipeline has experienced an increase of around 15% since last summer, which shows again that in turbulent times, clients want to accelerate the outsourcing and look at the leading entity in this space. We are seeing this acceleration of subscription-based revenues pipeline through acquisitions, and notably, thanks to the new, our new subsidiary, Allfunds Tech Solutions. As you can see on the right-hand side of the slide, we are already experiencing early signs of revenue synergies that prove the strategic rationale of these acquisitions. Our pipeline has experienced a 76% increase, thanks to the cross-selling opportunities that these acquisitions bring. There are very good figures, and I think they clearly show the high potential growth that we can capture going forward.
As a result of this, what you can see in this slide is that our improved digital ecosystem has further opportunities ahead, thanks to our strategy focused on both organic and inorganic growth. Our newly rebranded areas, Allfunds Tech Solutions and Allfunds Data Analytics, are already accelerating our ambition to keep leading in the WealthTech space by providing cutting-edge and comprehensive solution for our clients. There are also new features added to Connect, like our new MANCO services with private labeling mandates and fund hosting services. For 2023, there is more to come in our one-stop shop. The closing of MainStreet majority stake acquisition is key for us, as it covers an increasing gap of specialized ESG-related services, such as ESG advisory or scoring and reporting for our clients. This is a high-growth company that will bring value to all our client base.
We have been already working for months on our new proprietary Allfunds alternative platform, through which we will offer new funds and distribution services in the private markets. We will be able to provide you with more details in the coming months. We continue to see a large and growing opportunity in the digital service ecosystem, and we are well-positioned to capture market share. In this slide, what we can see is that all the three companies that we have acquired are successful businesses, specialists in their field, with CEO founders, with their skin in the game. This M&A has helped us already to improve our business mix and diversify our revenues.
Thanks to these acquisitions and to the organic growth of our subscription-based revenues, as I said before, no, we have already achieved in less than two years the target of 10% of subscription-based revenues over total revenues of Allfunds. If we were to include MainStreet, this target would be already overachieved, as it would represent 11%, okay, on a pro forma basis. How this achievement has been possible? Well, with increased level of penetration in our customer base, both in fund houses and distributors, with a fast integration of the newly acquired companies, which has favored a go-to-market strategy deployed and value-added products already set. Targeting also clients outside the platform and achieving real revenue synergies. Finally, with a favorable pricing policy for all our clients.
Our opportunity is massive, and relies on an evolving accessible universe of more than 2,000 clients between the more than 860 distributors that we have, and the more than 1,300 fund houses on our platform. This universe is a large and growing proprietary or captive target addressable market or TAM, that grows on average at around 10% rate on an annual basis. Our goal is to be able to cross-sell and upsell this universe. Cross-selling by further penetrating the client base. We believe our current penetration levels are still low, and we have a lot of potential to improve based on our long-standing relationship with both set of clients, fund houses and distributors.
Upselling by increasing the average fee paid in exchange for these digital services through enhanced tool, services, and solutions. This upselling will be done either organically or through M&A. That is why I'm really excited to finalize this business update with the significant progress we have achieved, and with our target, new target for the future. As I said, at the beginning of my presentation, we want subscription revenues to represent almost one-third of our total revenues in the mid-term. Since day one, this has been the ambition of my team and the vision for this company, our Allfunds 3.0, to remain as a leading B2B WealthTech transforming the digital ecosystem. Let me now turn the call over to Álvaro, who will take you through our financial results, and then I will be back for some closing remarks before taking your question. Thank you very much.
Yeah. Thank you, Juan, and good morning, everyone. I will now run you through the key financial figures and explain the main underlying drivers of this solid performance. As you can see on this slide, we have delivered solid financial results, showing great resilience in a very challenging environment. In fiscal year 2022, the company delivered stable revenues, high profitability, and strong cash flow generation while reinvesting in future growth of the company. We will have a chance to look at these metrics in detail in a couple of minutes, but before that, let's pause on slide 19 to take a quick look at the unedited income statement for the full year 2022. Thank you.
Compared to fiscal year 2021, net revenues are only down by 2% to EUR 495 million, thanks to the contribution of our net subscription revenues, which almost doubled versus the previous year. Our adjusted EBITDA margin remained very strong at 71%, as we managed to offset new costs from recent acquisitions, inflationary pressures, and business-as-usual incremental expenses with good cost management and adjustment to variable compensation. Adjusted profit after tax is up 16% to EUR 225 million, increasing our adjusted EPS from EUR 0.308 to EUR 0.357 per share. Let's now deep dive into the details behind this resilient performance. Turning our attention to revenues, you'll see that the company has been able to largely offset the decline in platform revenues with our subscription revenues.
Compounded annual growth rate since 2020 is around 16%, which is in line with our IPO guidance that, by the way, assumed a normalized market environment. For the full year 2022, the net platform revenues declined by 6% on a year-on-year basis, driven by a more normalized volume of transaction revenue, which are down 14% versus the previous year, and to a lesser extent, by lower commission revenue, which was impacted by lower average AUA and slightly tighter platform margin. On the other hand, the company showed continued uptake of our subscription revenues, which almost doubled to EUR 40 million and increased the relative weight from 6%-8% since last year, representing already a 10% on a pro forma basis.
Even without the contribution from the acquisitions of WebFG and instiHub, which are now fully integrated into Allfunds Tech Solutions, this revenue line has increased by more than 30% on an inorganic basis. And for the avoidance of doubt, please note that these figures do exclude any future positive impact from our recent M&A announcement, MainStreet Partners, which, as you've heard from Juan, would increase the relative weight to around 11%. I think it goes without saying that we are very excited about this trend, what we've achieved since our IPO and the scale of the opportunity ahead. Let's shift our attention to margins. Look, I would like to highlight that our business has demonstrated margin resilience and that our overall net platform revenue margin is in line with the guidance that we provided, 3.4 basis points.
The platform service margin decreased by 0.4 basis points from 5.1 in 2021 to 4.7 basis points. As flagged in previous slides, the full year 2021 margin was impacted by exceptional transaction revenue performance during the first half of the year, which of course explains the slight decline in platform service margin. Furthermore, as you've heard from Juan, 2022 saw the worst market backdrop in history, both combined total return for stocks and bonds. As a result, we've seen a change in the asset mix, which, combined with a shift in demand for less riskier assets, have temporarily affected our platform margin while the market recovers. Perhaps finally, you'll also note that on deal execution margin, we've seen an improvement margin-wise.
This is a result of a better monetization and a migration of a higher margin client. Looking now at our expenses, you'll see that we continue with our discipline on cost while also keeping investing in the future growth and revenue diversification of our company through M&A. Adjusted expenses increased by 2.2%, i.e., EUR 3 million versus 2021, with organic adjusted expenses actually down EUR 8.5 million, offset by EUR 11.6 million coming, sorry, from the integration by the year-end of the acquisitions that we carried out in the beginning of the year. Personnel expenses decreased by EUR 9.3 million, roughly a 10.5% decline despite M&A, thanks to our flexible variable compensation structure.
FTE-wise, we've increased the number from 907 to 1,031, which is, as you can imagine, mainly driven by the M&A. For clarity, this number does not include the employees from Main Street as we closed this literally a few weeks ago. This increase in organic adjusted SGA expenses that you're seeing on the screen is a result of, first, inflationary impact, secondly, the continuous improvement in our technological backbone of the platform, third, the incremental activity, and of course back to traveling, and fourth, the impact of being listed for the full period, right? 12 months. Let me assure you that we remain absolutely committed to maintaining cost control discipline and return to margin expansion as the market conditions normalize.
I will provide further guidance on the cost structure for the 2023 outlook. Let's first look at the adjusted EBITDA numbers. As a result of all the above, our adjusted EBITDA in 2022 was EUR 350 million with a strong EBITDA margin of 71% in line with our guidance and despite the challenging environment and the effect of the M&A. Adjusted EBITDA was 5% below a great 2021. It represents a 15% compounded annual growth rate since 2020. Moving on to investments, our underlying capital expenditure rose to EUR 39.6 million for 2022 due to our ongoing IT development projects to support the future growth of the group.
Maintenance CapEx remains at 4% of net revenues, with the year-on-year increase mainly coming from integration work that we performed following the BNP transaction, as well as some continued development of our digital offering and, of course, our blockchain capabilities. Moving on to cash flow generation, the pro forma normalized free cash flow amounts to EUR 280 million for 2022, which demonstrates that Allfunds is a high cash-generating business with 85% pre-tax cash conversion or 62% post-tax cash conversion. This is a real differentiator of our business model, especially in the current environment, as we are a high cash narrative business and we can fund our innovation investments organically. Yeah, thank you, Silvia.
Before we move into guidance, let's have a very quick look at our latest acquisition, MainStreet, which as you remember, is a trusted ESG partner of top-tier financial institutions in Europe. MainStreet has a recurrent revenue model with around EUR 6 million-7 million revenue, which has been growing at an average of 50% since 2019. It has reached break even in 2022 and is expected to add around 2% EPS accretion in year two. This acquisition, of a 65% stake has been funded with our revolving credit facility and envisages a path to full control by Allfunds in the next 3-5 years. Now moving into 2023 and before getting into guidance, I think it's worth to highlight a few key financial developments you should expect for next year.
First, we are increasing our focus on maximizing current rate environment and our high operational liquidity, creating a new revenue line, net interest income, that will be included as platform revenue. Our current estimate is that we will generate at least EUR 25 million of net interest income for 2023. It's important to bear in mind that this counter-cyclical revenue line should help us compensate market volatility due to the current high-rate environment. Allfunds today is a more diversified company than it was in past years, as you've heard from Juan. We have increased our subscription revenues from 4% of total revenues at the time of the IPO to more than 10%, thanks to our organic and inorganic growth.
Our expectation is for that diversification to keep increasing to at least 12% for 2023, as our subscription revenue business outgrows the rest of the business. Those acquisitions will have a short-term impact on our margin, but we remain committed to improving that as we consolidate them in our platform and get scale. On the cost side, we are confident that the scalability of the platform will generate positive yields as we return to growth, but there are some incremental costs for 2023 that require a rebasement. First, we need to include the effect of M&A, both for the full year effect of WebFG and instiHub and the integration of MainStreet. For 2023, we expect this impact to be around EUR 20 million.
Secondly, variable compensation should return to a normalized level in 2023 after the adjustment of a very challenging 2022, as you've heard. Finally, 2023 will be the first year without a transition service agreement with BNP, which will be a significant improvement below the line, but generates around EUR 6 million-8 million of incremental cost when we transfer the operations to our system, as we explained at the time of IPO. Remember that this will lead, at the same time, to lower adjustment below the line and higher cash and capital generation. Management remains committed to cost discipline and minimize incremental costs. You should also expect some marginal cost increase, mainly from inflationary pressure for 2023.
In summary, 2023 is a year of rebasement, but the fundamentals of our financial profile do not change and remain very strong. A more diversified, leading scalable platform that generates margin expansion as the multiple structural growth drivers of the business normalize. Let's now move into outlook. How does all this translate into our outlook for 2023? Naturally, our near-term P&L is impacted by the performance of equity and fixed income capital markets, which have been experiencing high volatility over the last 12-18 months. Note that the market has already contributed with mid-single-digit growth of AUA year to date, and that this outlook you're looking at is based on the assumption of flat markets for the remainder of the year.
We do expect a gradual recovery to normalize flows from existing clients with inflows in the second half of the year and around EUR 40 billion-EUR 60 billion from new client migrations, all in platform service. Under this scenario, our AUA reaches close to EUR 1.45 trillion by year-end. We also expect high single digit to low double-digit revenue growth, including our net treasury income, of which more than 12% should now come from a more recurring subscription revenue. Finally, we expect adjusted EBITDA margin to be in the mid-60s, temporarily impacted by our recent M&A activity, but trending towards 70%. I would like also to leave you, before I hand it over back to Juan, with slide 29. We wanted to close up with something we have already shared with you in the past.
When looking at past periods of market turmoil, we wanted to remind you how our business model is naturally well-positioned to capitalize on market recovery. Remember, we looked at different crises in the past 10 years as well as the current cycle on the right-hand side. We analyzed what has been the peak and the trough of each crisis. Based on those dates, we have compared the performance of our AUA, excluding, of course, the impact of any acquired M&A. During that period, on average, Global Span's portfolio composed of 60% equity and 40% fixed income. As you will see in each crisis, we have remained resilient in every trough, having actually a better performance. As Juan has already explained at the beginning of this webcast, we are already seeing signs of a potential recovery if markets continue in the same trend.
Thank you very much for your attention, and let me turn it over to Juan for closing remarks.
Thank you very much, Álvaro. I would like to take this opportunity to remind you that following a difficult 2022, Allfunds will focus going forward on those things that remain strictly under our control, no? As I've been saying during, especially during last year, no, to focus on the things that are under our control, no? Therefore, we will improve our value proposition through product development, either organically or through M&A. We will bring new clients into a platform by winning market share and making sure we do not lose any of our existing clients to any competitor. Cost discipline, given the potential negative outlook, diversifying our revenues to increase the subscription-based revenue share, and retaining and attracting the right talent. This company and this management team have a long-term vision, which will lead to our clients' success and value creation for our stakeholders.
Thank you very much for your attention, let's now open to Q&A.
Thank you, Juan. Thank you, Álvaro. Before moving into Q&A, let me remind you that in connection with recent events, as you are all already aware, we issued a statement last Wednesday to confirm that we had received an unsolicited indicative and conditional public offer proposal from Euronext. At this point, there are no further announcements to make. The board is mindful of its responsibilities to the company and its stakeholders, and is currently evaluating carefully the offer proposal. Given the nature of the circumstances, we kindly ask you to avoid any questions on the topic, and further announcements will be made if and when appropriate. Let's move on to questions. Operator, can you please proceed with the first one and include name and company of the caller?
Thank you. Our first question comes from Tom Mills with Jefferies. Tom, please go ahead.
Good morning, Juan, Álvaro, Silvia. Thank you for the presentation. Just had a few questions, please. Firstly, on the NII guide, could you just tell us what you're kind of assuming there in your guidance of at least EUR 25 million for 2023? That'll be very helpful, please. I guess, one thing perhaps that wasn't touched on was the potential inducement ban with maybe some news coming in April. Could you maybe just give us an idea of how you're thinking about that? Obviously, there's no kind of firm proposals on the table at this point. Could you give us an update maybe on how much rebate AUA you have in the mix?
I guess for you guys, there's a potential negative in terms of fee margin, but also a potential positive in terms of opening up your addressable market. Just any comments around those would be very helpful. Thank you.
Mm-hmm.
Álvaro, do you?
Yeah, do you?
Yeah, cover the treasury income.
I don't.
Talk about the regulation.
The what we've included in our 2023 guidance with regards to net treasury income is that EUR 25 million figure. Of course, we are working to improve that number, but that's what's in the guidance page that we have just went through.
Yeah. Thank you, Álvaro. Regarding the potential no ban of rebates, well, I think you explained it extraordinary well. We don't have anything clear at this point. Whenever it happens, if it happens, I think the company will have enough time, you know, to react, at least 2-3 years, in our opinion, in order to mitigate any potential impact, no, on our revenues, no? As you know, I think the good news in any case is that rebates are becoming less and less important, no, for Allfunds, no? I think you also mentioned something really important, which is what happens if in 3, 4, 5 years there are no rebates, no?
The main reason for choosing a platform like Allfunds would just be based on the value proposition of the platform and not in the fact of, you know, having the best rebates in one specific country, no? That is super good news for Allfunds. Super good news. It's true that sometimes, you know, we struggle to compete in specific countries because we still don't have, no, the best terms with the local fund houses. That is an advantage for local platforms. If rebates disappear, well, distributors will just choose the platform with the best added value services, with the best value proposition, and that, as you perfectly know, is in where we are working for what? Since almost since more than 10 years.
Well, 20 years ago, let's say 5 to 7 years ago, when we started, you know, to boost our digital ecosystem, no Connect.
Thank you. Well, that's very helpful.
Thank you. Thank you very much.
Operator, next question, please.
Thank you. Our next question comes from Alex Scott from Barclays. Alex, please go ahead.
Yeah, morning, everyone, and thanks for taking my questions. I had a couple, please. Firstly, on revenue margins, can you give a bit more color on the moving parts for the weaker revenue margin print in H2? Are you comfortable saying this was all cyclical, you know, mixed factors or transactional revenues falling away? Were there any more persistent or underlying negative market trends, too? Sorry, negative trends, too, in the revenue margin? A second question on that revenue margin, picture. Can you give the assumptions for revenue margins that sit behind the FY 2023 revenue guide? Also, you know, including and excluding the additional NI you're generating there would be useful as well.
Then finally, on the subscription revenue target of getting to 30%, can you flesh out a bit as to which areas you'll be looking for for M&A? Equally, do you see a big enough wallet from existing customers to get to 30%? Or will that sort of mix of clients outside the platform, the 16 you talked about in the presentation, have to increase materially to get to the 30%? Thank you.
Do you want me to take the first two?
Okay, I'll take this, the other.
Hi, Alex. On revenue margins, we haven't seen anything structural during 2023. The margin decline that we've experienced as I explained earlier is predominantly linked to this I would say, lower transaction revenue, which is, as you correctly highlighted, cyclical, but also linked to the shift to a more to a less value-added or less riskier asset mix, right? Which as you know well, typically yields a lower margin, right? We do think that this resonates with what's happening and what has happened in the past. We've seen those outflows into money market, guaranteed or, I mean, lower value at fixed income type of products.
We know that based on experience, that those flows tend to go back after the market stabilizes into more investment-type products that yield a higher margin. In summary, we do think this is a purely cyclical, and we do expect the margin to remain within the guidance that we provided at the time. Again, it's very hard to give you a specific number for 2023 'cause as you know, it will depend on when those flows will go back, and of course the transaction income. I think you should assume the range that we've always been providing, no, and 3.3%, around that range, 3.3%-3.4%, that's a good proxy.
In terms of with or without net interest income, I think the way to look at it is I mentioned earlier to Tom that we included around EUR 25 million more in the guidance. If you adjust for that, you'll arrive at your at the platform margin, excluding net interest income. The way we look at it, and that's why we highlighted it during the presentation, this net interest income is a way to hedge ourselves and offset this current rate environment, right? Where people have moved into less riskier asset classes that are yielding, I would say, let me say decent performance, no, decent margin. We're sort of suffering it on the pure asset-based revenue side.
The beauty about Allfunds, and you've heard this from Juan many times, is that we also have these other levers to offset it. This is one of those levers, right? We're generating, I would say a significant amount of revenue on this front. I would look at it in combination with, well, the rest of the platform margin. Regarding subscription revenue, Juan, I think you wanted to take this one.
I think that we have done our homework, no, with the latest acquisitions. I think we are ready to really grow significantly, you know, with our existing clients and with new clients. I'm not really expecting or missing some features, some tools, no? Which means that we are forced to make more M&A. I think that M&A will come just to reinforce what we currently have and to accelerate it, no? Not because today Allfunds' value proposition has any gap. We had gaps, of course, you know, in the past, but that's why we acquired what we have acquired, I mean, to reduce those gaps. Today, again, I think we are ready for the cross-selling, which is already happening as I speak, and for the upselling.
Also very good news coming from a non platform clients, no? We are also seeing appetite from financial institutions that do not work with Allfunds, closing deals, closing agreements with Allfunds Tech Solutions, which is great because I mean, it increases our TAM. In the moment you know that that bank starts using our digital services, the probability or the possibility of Allfunds platform, no core services, to also be able to sell those core platform services to that client also increases. It's a, it's a win-win, no, for the group, no?
Great. Thanks very much. Very helpful.
Thank you.
Welcome.
Next question, please.
Thank you. Our next question comes from Andrew Coombs with Citigroup. Andrew, please go ahead.
Morning. Two big-picture questions. I guess firstly on M&A, you've obviously given the details on MainStreet Partners. You talked about being EPS accretive from year 2. Just intrigued on what you use as your key KPIs for any M&A that you do, and whether the EBITDA margin, whether it's dilutive or accretive factors into that, given the temporary step down in the EBITDA margin that you're guiding for next year. Then second question is the big picture one on competitive dynamics. We've seen Clearstream as a parent for Fund Center now, and Euroclear, the parent from MFEX, for a little bit of time. Clearly, the rationale for those entities was more cross-selling potential with their custody and settlement businesses.
Wondering if you've seen any step change in market share dynamics, not necessarily within the overall space, but within the open outsourced space in particular, and whether that has any implications for pricing. Thank you.
Thank you very much. Well, Álvaro, you can cover the first part.
Sure.
That's the competition side.
Sure. M&A wise, we look at. I mean, you would imagine, right? We look at EPS accretion, we look at diversification of revenue sources, we look at stability of those revenues. Of course, we look at ensuring that it fits within our ecosystem and that there is cross-sale opportunity, apart from, of course, cultural fit, so on and so forth. Of course, we don't focus too much or don't put too much attention to the current EBITDA margin of those businesses, as you might have noticed. I think I mentioned earlier during my presentation that Main Street actually is already break even as of 2022. So it is by definition very dilutive when incorporated into the Allfunds overall numbers.
Having said so, we also think that as we manage to leverage those businesses or as those businesses leverage on Allfunds and on our network and our capabilities, we can very quickly make them more profitable and of course, accretive. That's part of the beauty that, I mean.
Yeah.
Juan described earlier, right? These are businesses that are relatively small, founder-led, profitable. So profitable. No one, actually, below break even. When incorporated into Allfunds, as you suggested, we see that margin dilution.
Mm-hmm.
Anything you'd like to-
Yeah. No, no. No. I mean, I think, yeah, from my side, as Álvaro mentioned, you know, the businesses, the companies need to be profitable, and we want top management. Means that the guy running the company has to be the founder of the company and needs to have skin in the game. Okay? Those to me are the most important features, you know, that I personally look when we analyze M&A on the added value space. Okay? Regarding competition, well, I think that as I've been saying or as I said last year, competition is strong. Not in every country, no, but it's strong in some specific countries, in some specific regions.
We see them now adopting or trying to adopt the concept of the one-stop shop model of Allfunds now that we launched 20 years ago. We see them replicating that model and therefore becoming a better and stronger competitors, which makes, you know, the game even more exciting.
Thank you.
Thank you very much.
Welcome.
Thank you. As a reminder, to ask a question, please press star followed by one on your telephone keypad. Our next question comes from Greg Simpson with BNP Paribas. Greg, please go ahead.
Hi, good morning. Thank you. Thanks for taking my questions. The first one is, could you please talk about how we align the EUR 150 billion of pipeline, I think you cited, and the EUR 40 billion-EUR 60 billion of new client migrations, guided for the year? You know, is the pipeline all the clients you're in discussion with? Is the way to think about it, you think you can win about a third of that pipeline with the EUR 40 billion-EUR 60 billion? Just to confirm what those different metrics are. The second question would be, can you just talk through the actual mechanics around how you earn interest income? Is it across the whole platform business, or is it just on the rebate model?
What is the base of the kind of cash balances that you earn interest on? Then finally, retention rates are very high, but did fall a little bit year-on-year. I think it was 98% in fund houses and then another bit in distributors. Is there any kind of theme you'd call out around, you know, where distributors or fund houses leave Allfunds? Is there any kind of thing to flag or not? Thank you.
Okay. Yeah. Thank you very much. I think regarding the pipe, I'll cover the first one and the third.
Okay.
I'll leave you, Álvaro, the second.
Sure.
You described perfectly well the concept of a pipeline. What we do is when we prepare the budget for following year, October, November, okay, we sit down with all the sales team, all the regional managers, and what we basically do is we collect, as you said, you know, all the conversations that we have with clients, many of them, clients, not just that we have visited, okay, but clients where we have already started to discuss, in many cases, the majority of the cases, clients with an NDA signed, okay? This is how we build the pipeline. I mean, why the pipeline is not the same as migrations, because as you know, you can sign an NDA with a client today, February, okay? Start discussing, negotiating.
It can take 3 months, and afterwards it can take another 6 or 9 months for the assets to be migrated. Not necessarily, you know, all those conversations and those migrations fall into one specific natural year, no? It can go up to 18 months, no, since you start the negotiation. That's why the pipeline is not the same as the migrations, no? The good news is that there is a fantastic momentum, and I see our sales teams really excited, no, with what they are seeing in the market. As we said, no outsourcing, even in this, well, in this, with this market so volatile, nobody really thinks about any distributor really has in mind not to internalize or costs, but exactly the opposite, no? It's all about outsourcing.
It's an ideal, no, environment or context for the company, and you see that reflected, no, in the pipeline, no?
Sure.
Yeah.
Um.
Yeah.
Yeah. Hi, Greg. In terms of treasury income, one of the questions that we've heard most over the last few years was, "Why do you have a banking license?" Right? No one understood. Since a few months back, having that banking license is actually very interesting. Among other things, because we can put all that operational liquidity that we have, both our own funds, but also liquidity that both fund houses and distributors leave at Allfunds for operating purposes, of course, and we can put that into... We can reinvest that at low risk, of course, into well, counterparties that yield an interesting margin.
It doesn't really have to do with whether it's a rebate model or non-rebate model. It's purely cash that is being sent to us so we can buy and redeem funds on behalf of our clients. With those amounts that of course fluctuate over the year, we reinvest those amounts in different counterparties always at low risk, and manage to get that additional income. I think we have not shared any balance sheet numbers at this point, but if helpful, we ended the year at around EUR 1.5 billion-EUR 1.6 billion liquidity. That fluctuates and will fluctuate as I've explained, but I think it could be a good proxy for you to run your sensitivities around what we can expect from this new revenue line.
By the way, of course, I should have mentioned this at the beginning, we have reinforced the finance team, the treasury team, with some key hires, to actually boost this revenue line, as you can imagine.
Thank you, Álvaro. The final question, or third question regarding retention rate. Well, with fund houses, you know that if a fund house decide to quit the agreement, it's because they don't have assets at all, at Allfunds, no? If they don't have assets with Allfunds, probably means that they don't have assets or enough assets, you know, in Europe to keep the business, no? If you see some fund houses again leaving the companies basically because they are closing their Luxembourg deficits and therefore, you know, they are, well, leaving the business in Europe, no? That's the main reason. On the distributor side, I think that the main reason why...
I don't know, we have, we are a little bit worse than 1 year ago or 2 years ago. I mean, bear in mind that there are also sometimes there are M&A activity, no? As you can imagine that, we can potentially lose clients because, you know, a client of Allfunds is acquired by a bank that doesn't use Allfunds, no? That's an example. I think that we just lost 1 client last year, just 1 single client. We onboarded 71 and we lost 1 against a specific competitor in a country which is not core for Allfunds. And I think that is the only client that comes to my mind in this moment. For the moment, I'm, you know, I'm...
I don't see any change in dynamics, no? As I said before, when you asked me about competition will be strong for sure. That's what we expect. We expect stronger competitors without any doubt. Our goal is to keep on enhancing our value proposition in order to keep the existing gap, or if possible, increase it, no? You cannot stay still in this market.
Okay. Thank you.
Thank you.
Thank you. As a final reminder, to ask a question, please press star followed by one on your telephone keypad.
Well, with that, we have no more time for questions. It has been a pleasure to host you on this full-year financial result or preliminary results presentation. The IR team will remain at your disposal for any question. See you next quarter with our trading update. Goodbye.
Thank you very much.