SS&C(US:SSNC)2025-10-30 20:06Revenue Growth - Total revenues for the three months ended September 30, 2025, increased by $102.2 million, or 7.0%, to $1,568.0 million, driven by organic revenue growth of $76.4 million and acquisitions contributing $16.6 million[74] - Software-enabled services revenues rose by $103.2 million, or 8.6%, primarily due to organic revenue growth of $79.4 million and acquisitions adding $16.6 million[75] - The company experienced an increase in organic revenue growth of $209.3 million, or 6.1%, for the nine months ended September 30, 2025, compared to the same period in 2024[76] Cost and Expenses - Total cost of revenues for the three months ended September 30, 2025, increased by $58.6 million, or 7.7%, primarily due to organic cost increases of $45.2 million and acquisitions adding $10.3 million[80] - Operating expenses for the three months ended September 30, 2025, increased by $3.0 million, or 0.8%, due to acquisitions adding $3.3 million in expenses and unfavorable foreign currency translation of $2.8 million[86] - Total operating expenses for the nine months ended September 30, 2025, increased by $39.6 million, or 3.5%, primarily due to organic operating expense growth of $28.6 million[87] Profitability - Gross margin percentage for the three months ended September 30, 2025, was 47.7%, compared to 48.0% for the same period in 2024[79] - The company reported a net income of $210.4 million for the three months ended September 30, 2025, compared to $164.6 million for the same period in 2024, representing a year-over-year increase of 27.0%[117] - Consolidated EBITDA for the nine months ended September 30, 2025, was $1,813.7 million, up from $1,704.4 million in the same period of 2024, reflecting a growth of 6.4%[117] Interest and Other Income - Net interest expense decreased to $104.2 million for Q3 2025 from $109.6 million in Q3 2024, primarily due to lower average interest rates of 6.20% compared to 6.78%[88] - Other income, net for Q3 2025 was $5.3 million, down from $9.3 million in Q3 2024, with significant contributions from foreign currency translation gains and dividend income[89] - Equity in earnings of unconsolidated affiliates showed a loss of $(11.6) million for Q3 2025, compared to a gain of $1.1 million in Q3 2024, primarily due to adjustments to decrease the carrying value of investments[90] Taxation - Provision for income taxes for Q3 2025 was $43.5 million with an effective tax rate of 17.1%, down from $60.0 million and 26.7% in Q3 2024[91] Cash Flow and Investments - Cash flows from operating activities increased to $1,101.3 million for the nine months ended September 30, 2025, compared to $902.0 million in the same period of 2024, reflecting a net income of $604.7 million[97] - Investing activities used net cash of $229.6 million in the nine months ended September 30, 2025, primarily for capitalized software development costs of $155.5 million[99] - Financing activities used net cash of $791.9 million for the nine months ended September 30, 2025, mainly due to $717.3 million in stock repurchases and $188.3 million in dividends paid[100] Financial Position - Total client funds obligations amounted to $3,664.6 million as of September 30, 2025[96] - The company held approximately $254.9 million in cash and cash equivalents at non-U.S. subsidiaries where a permanent reinvestment determination was made[101] - As of September 30, 2025, the company was in compliance with all financial and non-financial covenants under its amended senior secured credit facility[105] Leverage and Ratios - The company maintained a consolidated net secured leverage ratio of 1.45 as of September 30, 2025, significantly below the covenant requirement of 6.25x[118] - Average daily cash balances for the nine months ended September 30, 2025, were approximately $2.6 billion, with a potential annual net income increase of $12.6 million from a 100 basis point rise in interest rates[126] - Total variable interest rate debt as of September 30, 2025, was approximately $3,871.9 million, with a projected increase in interest expense of $38.7 million per year from a 100 basis point increase in interest rates[127] Compliance and Accounting - The company has the option to redeem the 6.5% Senior Notes at 103.250% of the principal amount starting June 1, 2027[108] - The company is subject to a 5.25x consolidated net secured leverage ratio requirement starting from the fiscal quarter ending December 31, 2024, which can increase to 5.75x following a material permitted acquisition[111] - Consolidated EBITDA is defined as earnings before interest, taxes, depreciation, and amortization, adjusted for unusual items, and is used to assess compliance with financial covenants[112] - The company plans to adopt new accounting standards related to income tax disclosures effective for fiscal years beginning after December 15, 2024[119] Risk Management - The company does not use derivative financial instruments for trading or speculative purposes, focusing instead on short-term, highly liquid financial instruments[125] - As of September 30, 2025, the fair value of investments subject to equity price risk was approximately $43.3 million, with a potential impact of a 10% change resulting in approximately $3.2 million effect on net income[128] - Approximately 32% of revenues for the nine months ended September 30, 2025, were generated from clients outside the United States, with 25% from currencies other than the U.S. dollar[129] - The British pound is the primary currency for revenues denominated outside the U.S. dollar[129] - Foreign currency transaction gains and losses are reported in other income, net, due to exposure from cross-currency intercompany balances and trade receivables and payables[130] - The company continuously assesses and monitors its exposure to foreign currency exchange rates, which can fluctuate due to acquisitions and other transactions[130] - The company does not engage in market risk sensitive instruments for trading or hedging purposes[130] - Actual future results may differ materially from projected results due to developments in global financial markets[131] - The analytical methods used to assess and minimize risk should not be considered projections of future events or losses[131]