SS&C(US:SSNC)2024-02-28 21:12Financial Performance and Revenue - The company's operating results, including profit margins and profitability, are expected to fluctuate over time due to various factors such as the timing and nature of license and service transactions [106]. - In 2023, international revenues accounted for 31% of total revenues, up from 29% in 2022 and 28% in 2021 [126]. - Revenue generated from the U.K. was approximately $638.6 million in 2023, compared to $573.1 million in 2022 and $596.0 million in 2021 [127]. - The lengthy and unpredictable sales cycles of large client engagements may impact revenue recognition and operational results [107]. Regulatory and Compliance Risks - The company is subject to evolving regulations and increased scrutiny from regulators, which could adversely affect business operations [137]. - The company is subject to the U.K. version of the GDPR, which could lead to additional compliance costs and regulatory challenges [149]. - The company faces potential fines under the GDPR of up to €20 million or 4% of the noncompliant company's annual global turnover, whichever is higher [150]. - Legal and regulatory risks could significantly damage the company's reputation and business prospects [135]. - Changes in applicable laws and regulations could diminish clients' business or financial condition, impacting demand for the company's products and services [144]. Financial Condition and Debt - As of December 31, 2023, the company had total indebtedness of $6,755.1 million and an additional $598.7 million available for borrowings under its revolving credit facility [152]. - The company estimates that its current levels of indebtedness will result in annual interest payments of approximately $463.7 million [154]. - The company’s ability to pay dividends is limited by its status as a holding company and the terms of its indebtedness agreements [167]. - The company’s financial health may be adversely affected by increased interest rates and restrictive covenants in its credit agreements [153]. - Total debt as of December 31, 2023, was $6,755.1 million, including $4,755.1 million of variable interest rate debt; a 100 basis point increase in interest rates would result in an additional interest expense of approximately $47.6 million per year [280]. Operational Risks - The company relies on third-party service providers for IT infrastructure, and disruptions to their systems could harm business operations [110]. - The company faces risks related to undetected software design defects, which could lead to client data loss and litigation, adversely affecting its reputation and financial condition [124]. - The potential for catastrophic events, such as natural disasters or pandemics, could disrupt operations and negatively impact financial performance [113]. - The company may face challenges in adapting to rapidly changing technology and evolving industry standards, which could affect its ability to meet client needs [122]. Currency and Investment Risks - The company is exposed to fluctuations in currency exchange rates, which could negatively impact operating results and financial condition [128]. - The company does not currently engage in material hedging activities, increasing exposure to exchange rate movements [129]. - Investment decisions regarding cash balances could expose the company to losses, adversely affecting revenues from client fund cash balances [125]. - Investments in funds and joint ventures may decline in value, potentially adversely affecting financial condition or operating results [130]. - The fair value of investments subject to equity price risk as of December 31, 2023, was approximately $49.0 million, with a 10% change in fair value impacting net income by approximately $3.6 million [281]. Management and Shareholder Interests - The company has significant control exerted by its Chairman and CEO, who beneficially owns approximately 14.1% of the outstanding shares [166]. - The company’s management has broad discretion in the use of existing cash resources, which may not align with shareholder interests [168]. - Average daily cash balances maintained in bank accounts for 2023 were approximately $1.7 billion, with a 100 basis point change in interest rates equating to approximately $9.4 million of net income annually [279].