SS&C(SSNC) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) The unaudited condensed consolidated financial statements for the quarter ended March 31, 2025, show an increase in total assets to $20.4 billion and total equity to $6.86 billion, with net income rising to $213.0 million from $157.6 million in the prior-year period, driven by higher revenues, and strong cash flow from operations at $272.2 million Balance Sheet Highlights (in millions) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $515.0 | $567.1 | | Goodwill | $9,283.9 | $9,218.1 | | Total assets | $20,404.9 | $19,044.7 | | Liabilities & Equity | | | | Total long-term debt | $6,837.0 | $6,989.6 | | Total liabilities | $13,545.1 | $12,435.6 | | Total equity | $6,859.8 | $6,609.1 | Income Statement Highlights (in millions, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenues | $1,513.9 | $1,435.0 | | Gross profit | $747.1 | $707.2 | | Operating income | $357.9 | $332.9 | | Net income attributable to SS&C | $213.0 | $157.6 | | Diluted EPS | $0.84 | $0.62 | Cash Flow Summary (in millions) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $272.2 | $180.5 | | Net cash used in investing activities | $(63.3) | $(50.6) | | Net cash provided by (used in) financing activities | $935.3 | $(835.9) | - The company operates as a single operating and reportable segment, with the Chief Operating Decision Maker (CODM) reviewing financial information on a consolidated basis[19] - In February 2025, the company acquired FPS Trust Company for approximately $6.0 million[35] - Goodwill increased to $9,283.9 million at March 31, 2025, from $9,218.1 million at year-end 2024, primarily due to acquisitions and foreign currency translation effects[36] - During Q1 2025, the company repurchased 2.4 million shares of common stock for approximately $206.9 million and paid quarterly cash dividends of $0.25 per share, totaling $61.6 million[41][42] - The effective tax rate for Q1 2025 was 18.4%, a significant decrease from 29.7% in Q1 2024, primarily due to increased recognition of windfall tax benefits from stock awards and changes in the jurisdictional mix of income[53] Revenue Disaggregation by Source (in millions) | Revenue Source | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Software-enabled services | $1,269.9 | $1,187.7 | | Maintenance and term licenses | $213.2 | $218.8 | | Professional services | $23.9 | $23.8 | | Perpetual licenses | $6.9 | $4.7 | | Total | $1,513.9 | $1,435.0 | Revenue Disaggregation by Geography (in millions) | Geography | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | United States | $1,036.5 | $992.3 | | United Kingdom | $177.4 | $165.5 | | Europe (ex-UK), MEA | $129.6 | $115.9 | | Asia-Pacific | $85.4 | $73.3 | | Canada | $56.3 | $59.6 | | Americas (ex-US/Canada) | $28.7 | $28.4 | | Total | $1,513.9 | $1,435.0 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 5.5% year-over-year revenue growth in Q1 2025 to $72.8 million in organic growth and a $13.0 million contribution from acquisitions, while operating expenses increased by 4.0%, net interest expense decreased, and the company maintained strong liquidity with $272.2 million in cash from operations and compliance with all debt covenants at a 1.57x consolidated net secured leverage ratio Revenue Change Analysis (Q1 2025 vs Q1 2024) | Component | Change (in millions) | | :--- | :--- | | Organic Revenue Growth | $72.8 | | Acquisition Contribution | $13.0 | | Foreign Currency Impact | $(6.9) | | Total Revenue Increase | $78.9 | - Software-enabled services revenue grew 6.9% YoY, driven by $74.3 million in organic growth and $13.0 million from acquisitions[62] - License, maintenance and related revenues decreased 1.3% YoY, due to a $1.5 million decline in organic revenues and a $1.8 million unfavorable foreign currency impact[62] - Net interest expense decreased to $105.2 million from $116.0 million in the prior year, primarily due to a lower average interest rate (6.09% in Q1 2025 vs. 6.86% in Q1 2024)[68] - The effective tax rate dropped to 18.4% in Q1 2025 from 29.7% in Q1 2024, mainly due to higher windfall tax benefits from stock awards and a favorable change in the geographic mix of income[71] - Net cash from operating activities was $272.2 million for Q1 2025, an increase from $180.5 million in Q1 2024[76] - Investing activities used $63.3 million, primarily for capitalized software ($47.0 million) and business acquisitions ($6.2 million)[77] - Financing activities provided $935.3 million, driven by a $1.2 billion net increase in client fund obligations and $201.8 million from stock option exercises, offset by debt repayments ($155.0 million), stock repurchases ($206.9 million), and dividends ($61.6 million)[78] Debt Structure at March 31, 2025 (in millions) | Debt Instrument | Amount Outstanding | | :--- | :--- | | Term B-8 Loans | $3,350.0 | | Term A-9 Loans | $790.0 | | 5.5% Senior Notes | $2,000.0 | | 6.5% Senior Notes | $750.0 | Consolidated EBITDA Reconciliation (in millions) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income | $213.2 | $158.0 | | EBITDA | $537.3 | $506.2 | | Consolidated EBITDA | $592.9 | $557.9 | - The company was in compliance with its debt covenants, reporting a maximum consolidated net secured leverage ratio of 1.57x, significantly below the required 6.25x[100] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from interest rates, equity prices, and foreign currency exchange rates, with a 100 basis point increase in interest rates potentially increasing annual interest expense by approximately $41.4 million on its variable-rate debt, and a 10% change in equity investments impacting net income by about $3.1 million - A 100 basis point change in interest rates on client cash balances (average $2.38 billion) would impact annual net income by approximately $11.9 million[104] - On its $4.14 billion of variable-rate debt, a 100 basis point increase in interest rates would increase annual interest expense by approximately $41.4 million[105] - The company has $42.0 million in equity investments subject to price risk; a 10% change in their fair value would impact net income by approximately $3.1 million, net of tax[107] - Approximately 21% of revenues in Q1 2025 were from currencies other than the USD, primarily the British pound, exposing the company to foreign currency exchange rate risk[108] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of March 31, 2025, and concluded they were effective at a reasonable assurance level, with no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[110] - No changes occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[111] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal proceedings arising from the normal course of business, and management believes that the final outcome of these proceedings will not have a material adverse effect on the company's financial condition, results of operations, or cash flows - The company states that it is not involved in any litigation or proceedings that would have a material adverse effect on the business[55][115] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors disclosed in the 2024 Form 10-K have occurred as of the filing date of this report[116] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the first quarter of 2025, the company repurchased 2.4 million shares of common stock for approximately $206.9 million under its publicly announced stock repurchase program, with $338.1 million remaining available for future repurchases as of March 31, 2025 Common Stock Repurchases in Q1 2025 | Period | Total Shares Purchased (millions) | Average Price Paid per Share | Value of Shares Remaining for Purchase (millions) | | :--- | :--- | :--- | :--- | | Jan 2025 | — | $— | $545.0 | | Feb 2025 | 1.8 | $88.42 | $386.2 | | Mar 2025 | 0.6 | $83.47 | $338.1 | | Total | 2.4 | | | - The stock repurchase program was authorized in July 2024, allowing for the purchase of up to $1 billion of outstanding common stock[118] Item 6. Exhibits This section lists the exhibits filed as part of the Form 10-Q, including CEO and CFO certifications (pursuant to Sarbanes-Oxley Act Sections 302 and 906) and Inline XBRL documents - The report includes required certifications from the CEO and CFO under the Sarbanes-Oxley Act of 2002[122]