SS&C(US:SSNC)2023-02-08 03:14Financial Data and Key Metrics Changes - Adjusted revenue for Q4 2022 was $1.339 billion, an increase of 3.3% year-over-year, while adjusted diluted earnings per share were $1.16, down 9.4% [4][48] - Adjusted consolidated EBITDA was $518.6 million, representing an EBITDA margin of 38.7%, which is an increase of 330 basis points from the low point in Q2 2022 [8][25] - For the full year 2022, net cash from operating activities was $1.134 billion, with a consolidated net leverage ratio of 3.4 times [17][32] Business Line Data and Key Metrics Changes - Adjusted organic revenue was flat, with total organic growth for the year at 2%, and Financial Services organic growth at 3.7% [16][49] - The strength in software businesses, particularly in Alternatives, Institutional, and Investment Management, was noted, while the GIDS transfer agency and Healthcare businesses faced challenges [5][49] - Acquisitions contributed $72.5 million to revenue, but foreign exchange had an unfavorable impact of $28.7 million [23] Market Data and Key Metrics Changes - The private credit market is seen as a significant opportunity, with the company investing in scalable offerings that integrate multiple technologies [20] - The hedge fund business is expected to see slight growth, while private markets are projected to grow in the high teens [90][92] Company Strategy and Development Direction - The company remains methodically opportunistic in its acquisition strategy, evaluating several opportunities as valuations have come down [7] - There is a focus on enhancing productivity through digital workers, with plans to deploy between 1,350 to 2,700 digital workers in 2023 [37][64] - The company aims to improve operating margins by managing expenses and controlling variable costs [33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the improved operating environment in 2023, anticipating growth opportunities [35][100] - The company expects adjusted organic growth for 2023 to be between 2% and 6%, with Q1 guidance indicating a range of negative 0.5% to positive 2.5% [58][60] - Management acknowledged challenges such as inflation and geopolitical issues but remains cautiously optimistic about future performance [100] Other Important Information - The company paid down $166 million in debt during Q4 2022 and has a stock buyback program authorized for up to $1 billion [6][30] - Capital expenditures totaled $208 million, primarily for capitalized software and IT infrastructure [57] Q&A Session Summary Question: Can you discuss the efficiencies from digital workers? - Management indicated that digital workers take over repetitive tasks, allowing employees to focus on more interesting work, with an expected average savings of $50,000 per digital worker deployed [37][64] Question: What is the outlook for organic growth? - Management expects organic growth to accelerate in 2023, with contributions from price increases, new business, and clearing backlogs [122] Question: How is the Healthcare business performing? - The Healthcare business is expected to see a reduction in revenue, with a projected decline of about 10% in 2023, but management is cautiously optimistic about future growth [86][94] Question: What are the expectations for the hedge fund and private markets? - The hedge fund business is anticipated to grow slightly, while private markets are expected to grow in the high teens, contributing positively to overall growth [90][92] Question: Can you elaborate on the acquisition strategy? - Management stated that they are looking for opportunities in the fintech space, focusing on companies that can enhance productivity and align with their operational capabilities [81][141]