SS&C(US:SSNC)2024-02-14 03:34Financial Data and Key Metrics Changes - The company reported record adjusted revenue of $1.412 billion, an increase of 5.5% year-over-year, with adjusted diluted earnings per share rising by 8.6% to $1.26 [7][12][37] - Adjusted consolidated EBITDA reached $563 million, marking the highest in the company's history, with an EBITDA margin of 39.8%, a 300 basis point increase from Q2 2023 [7][14][35] - Net cash from operating activities for 2023 was $1.215 billion, with a net leverage ratio of 3.05 times and a net secured leverage ratio of 2.1 times [8][15] Business Line Data and Key Metrics Changes - The alternatives business grew by 7.8%, Intralinks by 18.6%, and Retirement by 12.8% in Q4 [35] - The adjusted organic revenue growth for Q4 was 4.5%, driven by strength in alternatives, retirement, and Intralinks businesses [31][35] - Recurring revenue growth rate for financial services was 6.9%, up from 5.9% in Q3 [31] Market Data and Key Metrics Changes - The company processed 15 million claims in January, exceeding expectations by over 10%, and anticipates processing 45 million claims by the end of Q1 [33] - The financial services revenue retention rate remains above 97% over the last 12 months [31] Company Strategy and Development Direction - The company is focused on product innovation and enhancements, as well as client service, with a continued emphasis on managing expenses and improving operating margins [40] - The digital worker initiative is expected to yield $100 million in annual savings, with plans to increase productivity through automation strategies [35][40] - The company aims to capitalize on regulatory changes driving activity in retirement income solutions and rollovers [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about opportunities in the financial services industry as firms seek to reduce costs and improve technology [11] - The company anticipates a similar focus on share repurchases in 2024, with guidance for adjusted organic revenue growth in the range of 2.7% to 6.3% [8][16][41] - Management noted that the rise in short-term interest rates has impacted earnings per share, contributing to a slight decline compared to the previous year [39] Other Important Information - The company plans to roll out the second release of DomaniRx, which will include full commercial Medicare and Medicaid functionality, in June 2024 [9] - The company has appointed Debra Walton-Ruskin as a new Director on the Board, bringing extensive experience in fintech and financial data [43] Q&A Session Summary Question: What is embedded in guidance for organic growth? - Management highlighted accomplishments in Q4 2023, including large insurance company implementations, which provide confidence for 2024 [45] Question: Can you contextualize the growth in Alternatives? - Management indicated that private markets are a significant contributor, with approximately 35% to 40% of revenue coming from private equity and private credit [66] Question: What is the target for digital workers? - Management expects opportunities to increase margins by 100 to 200 basis points through digital worker processes [72] Question: What does the deal pipeline look like for M&A? - Management is focused on expanding fund administration and targeting existing businesses that can enhance current client services [86] Question: How much of the incremental revenue in 2024 is expected from price increases? - Management anticipates a similar amount of price lift in 2024 as seen in 2023, with a more predictable view on revenue [87]