SS&C(SSNC) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported record adjusted revenue of $1.569 billion, an increase of 7% year-over-year, and adjusted diluted earnings per share of $1.57, reflecting a 17.2% increase [4][10] - Adjusted consolidated EBITDA reached $619 million, up 9.3%, resulting in a quarterly adjusted consolidated EBITDA margin of 39.5% [4][11] - Cash from operating activities for the nine months ended September 30, 2025, was $1.101 billion, a 22% increase over the prior year [5][12] - The effective non-GAAP tax rate was 21.1%, with adjusted net income of $396 million, up 16.5% [11][12] Business Line Data and Key Metrics Changes - The GIDS business experienced a 9% revenue growth, driven by successful liftouts, including a significant one in Australia [4][10] - GlobeOp reported a 9.6% revenue growth, benefiting from strength within the hedge fund client base and international wins in private markets [4][8] - Financial services recurring revenue growth was 6.7% in Q3 [4] Market Data and Key Metrics Changes - The company noted strength across all alternative markets and capitalized on international opportunities [4] - The acquisition of Curo Fund Services, a South African fund administration business, was aimed at deepening relationships with significant clients and establishing a local presence in Africa [5][6] Company Strategy and Development Direction - The company is focused on enhancing user interfaces and client experiences as competitive differentiators, particularly in the GlobeOp business [8] - SS&C aims to accelerate the transition from traditional automation to AI-powered automation, leveraging its position as "customer zero" to build comprehensive solution sets [9] - The company continues to prioritize share repurchases and high-quality acquisitions as part of its capital allocation strategy [5][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the fourth quarter, expecting revenue in the range of $1.59 to $1.63 billion and 4.5% organic revenue growth at the midpoint [13][15] - The company anticipates continued strong performance in its core businesses, despite some competitive pressures [26][40] - Management highlighted the importance of intelligent automation and AI in improving operational efficiency and enhancing employee career paths [8][9] Other Important Information - The company raised its common stock dividend to $1.08, an 8% increase [5] - The acquisition of Calastone is expected to enhance capabilities in money markets, ETFs, and digital assets [6][31] - The company hosted its annual Deliver Conference, showcasing its latest offerings and advancements in AI [16] Q&A Session Summary Question: Contribution of Pathea to Q4 organic growth - Management expects Pathea to contribute approximately $25 million in Q4, up from $16 million in the previous year [19] Question: Details on the liftout contributing to organic growth - A significant liftout in Sydney, Australia, completed on July 1, contributed to organic growth, with additional large liftouts in the pipeline [21] Question: Insights on the Curo Fund Services deal - The African market is behind in fund administration, and the acquisition is expected to generate negligible revenue of around $15 million [22][23] Question: Update on agentic AI implementation - The company is infusing AI agents across its business, enhancing existing technologies with functional expertise [24] Question: Impact of lost business from State Street - Management anticipates a small impact from lost business but believes overall growth will continue [26] Question: Margin outlook with GIDS and GlobeOp growth - The company expects continued margin improvement, with GlobeOp contributing positively to overall margins [27] Question: Seasonality of Calastone's revenue - Management indicated that there is no significant seasonality in Calastone's revenue that would impact growth rates [32] Question: M&A pipeline and Intralinks growth - Early indicators show improvement in the M&A pipeline, although revenue growth for Intralinks may lag behind [38] Question: Confidence in healthcare business growth - The healthcare business has had positive growth, with significant clients and opportunities, though it remains lumpy [40]