SS&C Technologies Q2 2023 Earnings Call Transcript

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July 27, 2023

There are 13 speakers on the call.

Operator

Thank you for standing by. My name is Bailey and I will be your conference operator today. At this time, I would like to welcome everyone to the SS and C Technologies Q2 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

Followed by the number 1 on your telephone keypad. I would now like to hand the call over to Head of Investor Relations, Justine Stone. You may begin.

Speaker 1

Welcome and thank you for joining us for our Q2 2023 earnings call. I'm Justine Stone, Investor Relations for SS and C. With me today is Bill Stone, Chairman and Chief Executive Officer Rahul Kanwar, President and Chief Operating today about future expectations, plans and prospects, including the financial outlook we provide, constitute forward looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent annual report on Form 10 ks, which is on file with the SEC and can be accessed on our website. These forward looking statements represent our expectations only as of today, July 27, 2023.

Speaker 1

While the company may elect to update these forward looking statements, it specifically disclaims any obligation to do so. Conference call. During today's call, we will be referring to certain non GAAP financial measures. A reconciliation of these non GAAP financial measures to comparable GAAP financial measures is included in today's earnings release, which is located in the Investor Relations section of our website at www.ssctech.com. I will now turn the call over to Bill.

Speaker 2

Thanks, Justine, and thanks, everyone, for joining. Results for the Q2 are 1.36 $3,000,000,000 in adjusted revenue, up 2.5% and our adjusted diluted earnings per share for 1.08 An increase in interest expense, which was $118,000,000 in Q2 2023 compared to $68,000,000 in Q2 2022 and general expenses have put some pressure on our bottom line. Adjusted consolidated EBITDA was $502,400,000 and our EBITDA margin was 36.8%, up 140 basis points from Q2 2022. Our 2nd quarter adjusted organic revenue was up 2.5%, driven by strength in our alternatives business, particularly private markets which was up over 20%, Intralinks and the retirement businesses. SS and C generated cash from operating activities of $584,200,000 for the 6 months ended June 30, up $137,000,000 or 30.5 percent over the same period last year.

Speaker 2

We paid down $125,000,000 in debt in Q2, bringing our consolidated net leverage ratio to 3.27 times and our net secured leverage ratio to 2.28 times consolidated EBITDA. In Q2, we bought back 2,000,000 shares for $112,000,000 at an average price of $56.17 per share and we will continue to target 50% of our cash flow to stock buybacks and 50% to debt pay down. Our M and A strategy remains disciplined and we have yet to see movement on any large assets. We do think that there will be opportunity to do some tuck in acquisitions in the near term. Expense management will be a priority for the remainder of the year.

Speaker 2

Our internal deployment of Blue Prism Digital Workers is well underway and we are on track to achieve our full year targets. We currently have over 500 digital workers deployed across all business units. We believe this is one of the fastest deployments of digital workers in Blue

Speaker 3

Prism's history.

Speaker 2

Currently, the largest usage of Blue Prism is in our Gids and Fund Administration businesses, but we see significant opportunity in retirement, Health Regulatory and Tax Reporting. Operational functions in production with digital workers include reconciliation break investigation and resolution statement downloads, daily price files, investor contract notes and statements and reporting. We expect the FTE savings to accelerate in the back half of the year as these live processes are embedded in the business and the full benefits are realized. I'll now turn it over to Rahul.

Speaker 4

Thanks, Bill. Our business continues to strengthen as we prioritize innovation and new product rollout across the company. Intralinks rebounded with 9% growth in Q2. Average deal size is up, price increases have been implemented. Deal services, which offers redaction and NDA services has become Intralink's fastest growing product.

Speaker 4

In our investor portal business, we launched in view, a purpose built portal designed for investors to aggregate all of their fund reports into a single view and make data driven decisions. Initial client feedback has been positive. As Bill mentioned, private markets continues to accelerate with strong growth in Q2. Private credit, in particular is a big opportunity for us and our offering has made significant advancements as we go live on the SS and C private cloud environment. GoCheck integration, loan platform integration, a robust data platform are all key functionalities to manage complex fund structures.

Speaker 4

Retirement, which grew 7% in Q2, has several multimillion dollar opportunities in the pipeline. We recently surpassed $1,000,000,000 on our retirement income clearing and calculation platform and have grown the number of participants 42% since January. Sales remained strong in Q2 with headline wins in fund services, Advent and Gids. Some key attributes that our prospects cited were strong functionality, ability to purchase both software and services from a single vendor and our commitment to innovation. Sales priorities remain disciplined execution, offering holistic and comprehensive solutions for customers and paying close attention to their onboarding experience.

Speaker 4

As one example, we recently announced Blue Prism has partnered with the National Health Services shared business services team to provide additional services to the NHS in England. Using Blue Prism's intelligent automation platform, NHS organizations can improve patient care, expedite patient processing and transform standardized services, contact center communications, HR, finance and other corporate functions. These new capabilities mirror the needs of our pharmacy and healthcare customers in SS and C Health and we view the combination of our healthcare products and services including DomaneRx, along with Blue Prism to be a powerful solution. I will now turn it over to Patrick to run through the financials.

Speaker 5

Thanks. Results for the Q2 were GAAP revenues of 1,362,600,000 GAAP net income of $130,700,000 and GAAP EPS of $0.51 Adjusted revenues were $1,363,400,000 Adjusted revenues were up 2.5%. Adjusted operating income increased 6 0.7% adjusted diluted EPS was $1.08 a 1.8% decrease from Q2 2022 due to the impact of higher interest rates on our debt. Adjusted organic revenue increase on a constant currency basis was 2.5%. Acquisitions contributed $5,800,000 Foreign exchange had unfavorable impact of $3,400,000 We had strength across several product lines, including alternatives, kids transfer agency services, Blue Prism and the Intralinks Businesses.

Speaker 5

Adjusted operating margins expanded in Q2 'twenty three as we managed expense growth. Adjusted operating income for the Q2 of 'twenty three increased $30,500,000 or 6.7 percent from the Q2 of 2022. Adjusted operating margins were 35.6 0.6% on a constant currency basis. Acquisitions added $3,800,000 of expenses and foreign currency decreased costs by $6,200,000 Net interest expense in the second quarter was $118,000,000 an increase of $50,300,000 or 74 percent from Q2 2022. Q2 2023 net interest expense includes $3,400,000 of non cash amortized financing costs, NOID.

Speaker 5

The average interest rate in the quarter was 6.59% compared to 3.45% in the Q2 2022. Adjusted net income as defined in Note 4 was $274,600,000 and adjusted EPS was $1.08 and effective tax rate was 26%. Diluted shares decreased to $255,000,000 from $257,000,000 in Q1. Higher share repurchases during the 1st and second quarter led to the increase decrease.

Speaker 6

On the balance sheet

Speaker 5

and cash flow, we ended the 2nd quarter with $439,700,000 in cash and cash equivalents and $7,000,000,000 of gross debt. SS and C's net debt, which excludes cash and cash equivalents of 114,400,000 held at DemaniRx was $6,600,000,000 as of June 30. Operating cash flow for the 6 months was $584,200,000 $136,700,000 or a $30,500,000 increase compared to the same period in 2022. And for the 6 months ended June 30, we purchased Treasury stock for a total of $246,600,000 or 4,300,000 shares at an average price of $57.78 We declared and paid a dividend of $101,000,000 common stock compared to 102,000,000 last year. Net debt payments for the 6 months was 169,800,000 And for the 6 months, we paid $226,900,000 of interest compared to $112,600,000 in 2022.

Speaker 5

In the 6 months, we paid income taxes of $159,000,000 comparable to $156,500,000 in 2022. And our accounts receivable DSO was 53.1 days compared to 55.9 days as of June 2022. Capital expenditures and capitalized software totaled $121,400,000 or 4.5 percent of revenue on year to date basis. Our LTM consolidated EBITDA, which we use for covenant compliance, was 2,000,000,000, dollars 31,600,000 as of June 30. Based on net debt of $6,600,000,000 our Total leverage ratio was 3.27 percent and our secured leverage ratio was 2.28%.

Speaker 5

On outlook for the remainder of the year, I'll cover a few assumptions. First, we'll continue to focus on client services. Retention rates will continue to be in the range of our most recent results. We have assumed foreign currency exchange will be at current levels. Segment.

Speaker 5

Our outlook assumes software license business will have slower lower growth in the second half of the year compared to previous expectations. Adjusted organic growth for the year will be between 2% 4%. Adjusted organic growth for Q3 will be in the range of 1.5% to 4.5%. We have assumed interest rates will stay consistent with current rates for the remainder of the year. And we will manage expenses and personnel costs to improve our operating margins.

Speaker 5

And we'll continue to invest in our business long term with capital expenditures in the range of 4% of revenues. And I would expect our GAAP tax rate to continue to be approximately 26%. So for the Q3 of 2023, we expect revenues in the range of $1,355,000,000 to $1,395,000,000 adjusted net income in the range of $287,000,000 to $309,000,000 and diluted shares in the range of $254,000,000 to 256,000,000 For the full year, we expect revenues in the range of $5,469,000,000 to 5.575 million. Adjusted net income in the range of $1,160,000,000

Speaker 7

to 1,225,000,000

Speaker 5

and diluted shares in the range of $254,000,000 to $257,000,000 For the full year, we expect cash from operating activities The DST Arysta 401 settlement, which we recently announced, is excluded from these cash flow estimates. If the court approves the settlement in 2023, we expect the impact on cash flow to be approximately $40,000,000 net of taxes. And I'll turn it over to Bill for final comments.

Speaker 2

Thanks, Patrick. And I want to congratulate you on your retirement. Patrick has been with SS and C since 1999. He has seen us through over 60 acquisitions, the go private transaction and our 2010 IPO. Thank you for your accomplishments and your dedication.

Speaker 2

I also want to welcome Brian Schnell to SS and C as our newly appointed CFO. Brian will join SS and C on August 7 from his position as CFO of Chicago Board Options Exchange. Brian has an MBA from George Washington University and his undergraduate degree from the University of Notre Dame. Finally, SS and C has spent the past 37 years developing and acquiring a broad range of market leading technology. We have added world class services around these products.

Speaker 2

Multiple times we have aggressively and extensively defended our intellectual property against misappropriation. We have done it successfully multiple times. On occasion, our professional fees will pick up as we have as we hire expensive legal talent. And now I will open it up for questions.

Operator

Please limit yourself to one initial and one follow-up question. And we'll pause for just a moment to compile the Q and A roster. And your first question comes from Kevin McVeigh with Credit Suisse.

Speaker 3

Thanks so much. And let me add my congratulations to Patrick as well and welcome to Brian. Hey, it looks like you continue to see real nice momentum in the organic growth came in at about 2.5% and the guide for Q3 In the

Speaker 8

full year, it's 3%.

Speaker 3

If I do the math, I think that implies 5% for Q4. I just want to confirm that number 1. And That's a really nice acceleration from the beginning of the year. Maybe if I'm right on that 5, could maybe just help bridge Maybe from the 1 to the 5 or maybe the 2 and a half that you just put up to the 5. Maybe start there.

Speaker 2

I think that we did 2.5 In Q2 to $2,600,000 maybe. I think in Q3, we're expecting somewhere between 1.5 and 4.5. And for Q4, I think What do we have for Q4 on organic revenue growth?

Speaker 5

Yes. Q4 at the midpoint in Q4, it's Does that

Speaker 2

answer your question, Kevin?

Speaker 3

It does, Bill. And then just any sense of The professional fees on the IP, just any additional just thoughts around that? Because it seems like The delta on the EPS was interest. It sounded like some medical and then I think those professional services that you just alluded to. Is that right?

Speaker 2

That's right. Medical claims are obviously interest expenses by far the biggest thing to impact EPS. But on an operating basis, the medical claims and professional fees We're more than expected in Q2 and we you have no choice but to See these things through to the end, but if you don't protect your IP, then we're not protecting the shareholders' assets. And so we will continue to do that. And like I said, we've been successful a number of times.

Speaker 3

Makes sense. Thanks so much.

Operator

Your next question comes from Dan Perlin with RBC Capital Markets.

Speaker 9

Thanks. Bill, maybe you could just spend a moment talking about some of the prioritization you've got for these investments that you mentioned in the release. You sound pretty adamant that they're going to drive incremental revenue growth. The obviously, just talking about the organic growth.

Speaker 2

Well, I think, Dan, what we've done is we've spent a lot of money building out a number of new systems And even in what has been a pretty tough financial market, Even though it's got a little stronger than last quarter, but you can see on our AUA that ticked up about $15,000,000,000 in Q2. That's a good harbinger Some of the things that we've done for our clients that separates us from our competitors. And I think What we've done with the technology in our services business is to make it that it's a compelling offering for our clients and our prospects. And we continue to take business from our competitors. And they it's still lumpy though, right, particularly with the biggest funds.

Speaker 2

We have deals we think we would have closed months ago that literally drag. And there's really at least as far as we think, there's nothing we could do to make the biggest funds go faster. So that's one thing. And then on the technology, the Aloha product has been pretty strong. We've done pretty well with Singularity.

Speaker 2

We've got some real momentum in all the additional products that we've done with Black Diamond. We've combined Black Diamond with our trust accounting so that RIAs can continue to keep the assets that they've gathered when it goes generational And the generation puts it in trust for the kids. Oftentimes, they lose that business because they don't have trust accounting capabilities. So that's been pretty popular for us and Geneva continues to dominate in the large scale hedge fund business. And I think we have a number of those private markets.

Speaker 2

As we've said, it was up over 20% in Q2. So So there's any number of pockets of strength. It's just getting all the pockets to be at strength in the same quarter, Right. So I think it is it's just a constant. It's making sure we're executing at a very high level and that we go for the wins and That's where we're at.

Speaker 2

We're still a very profitable company. We generate tremendous amounts of cash. We're not going anywhere. We're still very competitive. And it's just a question of really getting the entire orchestra Yes.

Speaker 2

Dan, you have a follow-up?

Speaker 1

Sounds like maybe we lost the operator. Let me,

Speaker 5

I think we lost the operator. Yeah.

Speaker 1

I believe we have Andrew Schmidt from Citi as our next question. The operator should be joining again soon.

Speaker 2

Go ahead, Andrew. Can Andrew hear

Speaker 1

I think so. I just can't open his line from where I

Speaker 8

am. Yeah. Yeah.

Speaker 2

Well, some other things that we're working on as we have this Lowell in our conference call. We're excited about bringing Brian Snow on And he brings a lot of experience and expertise. He obviously has big shoes to fill with Patrick, But I think our opportunity to continue to grow is going to be tied to continuing to develop our talent and execute against that. We have full pipelines. We have leading positions in lots of segments of financial services.

Speaker 2

We have a real opportunity in Domayne Rx And it's really bringing all that to fruition. I think that's the challenge that we have and I think we're up for that challenge. And we're generating $502,000,000 in need of that kind of gives you a feeling that you have enough resources to get it done.

Speaker 10

Your next question comes from the line of Peter Heckmann with D. A. Davidson. Please go ahead.

Speaker 9

Okay. Glad to have us back online here. Bill, can you talk a little bit, this trade settlement, shorting the trade settlement cycle to one day T plus 1 and then eventually to T plus 0. That's been talked about for a very long period of time. You view that as a catalyst at all for some of your clients to consider upgrading older systems?

Speaker 2

I think that if they have to, then they will. And if they can continue to band aid it like a lot of them have done so far, I think they'll continue to do that. So for it to be a mad dash to get new technologies in, I don't foresee that. But there will be some that want to take advantage of the increased capability of the newer systems, the security, the speed and then also The reconciliation parts of that stuff and making sure that everything It's processed in a very timely fashion. So there'll be some disruption, but I don't think there'll be a tremendous amount of Of incremental revenue.

Speaker 2

Like I don't think there's a few $100,000,000 or something like that, right? And To move the bar on SS and C, you got to do $100,000,000 or $200,000,000

Speaker 9

Right. Okay. Okay. And Intralinks up 9% is particularly impressive given that M and A continues to be down 25%, 30% year over year. I know you mentioned one area, I didn't quite catch it, but can you talk about some of the areas outside of M and A where Intralinks It's outperforming and allowing that business to continue to grow.

Speaker 2

Do you want to take that, Rahul?

Speaker 4

Sure. I think the biggest area outside of M and A is the alternatives area. So that's the in view portal that I mentioned in my comments. It's the LP communication, capital call Statement distribution, those kinds of things. And as we continue to bring our businesses closer together and develop joint solutions, We're finding lots of opportunities to sell that web and LP communication system to our fund administration clients and going to market it sort of a joint package and that's been attractive.

Speaker 4

So that's another area where that alternative business is growing even faster than the M and A business right now.

Speaker 2

And I think we have like redaction services and other enhancements core offerings that have also been pretty attractive.

Speaker 9

Okay. That's helpful. And then just last question, just in terms of The way you report in this quarter you talked about a couple tough comps from software license fees. On an annual basis, I don't believe you're still disclosing this as a separate light item, but software licensees, are we kind of talking around $65,000,000 to $80,000,000 a year. Is that about the right level if we just isolate the provincial licenses?

Speaker 2

I don't really have that off the top of my head, Pete. I would guess that we sell, yes, probably something $20,000,000 $25,000,000 a quarter.

Speaker 9

Okay. All right. I appreciate it. I will get back in the queue.

Speaker 10

Your next question comes from the line of Andrew Schmidt of Citi. Please go ahead.

Speaker 8

Hey, guys. Thanks for taking my questions and let me extend my congratulations to Patrick and the portal to working with Brian when he comes aboard. I wanted to ask on the operating expense base. Obviously, it's been a volatile couple of years and There's been more variability there than historically. Maybe you can just talk about just your visibility when comes to the expense space in terms of just what to expect.

Speaker 8

On one hand, you maybe had a few things, labor costs for the past year. Now you have these legal fees picking up a little bit. On the other side of this, we also have Blue Prism benefits. Just wondering just how this balances out in terms of your overall margin structure and visibility going forward? Thanks a lot, guys.

Speaker 2

Well, I think our if you look at our expenses on a constant currency basis, excluding acquisitions in Q2, I It was up 0.6%. So as an overall marker to keep your expense growth You know, at less than 1% is, I think, pretty impressive. And as much as we've been deploying Getting some of the benefits of Blue Prism, it's like a little bit like we're in spring training. For baseball, we're not going to get really hit our stride maybe until the middle of summer. So I think we have A lot of opportunities to further our cost management, our expense management with the deployment of digital workers.

Speaker 2

And we think we can just give our workers, current human workers better jobs with more interesting work And let the digital workers do the repetitive stuff that computers are great at. So we think we have a tremendous opportunity there. Occasionally, you'll have a situation Where you think your IP has been misappropriated and then you got to go defend And that's not a cheap process, but it's a necessary process. And so that happens and we had Some excess medical claims in the Q2 and that's going to happen. We have a big population and we want to make sure they have great healthcare.

Speaker 2

And so whatever that is, we're happy to pay it.

Speaker 8

Got it. Thank you for that. And to be clear, you're still it looks like correct me if I'm wrong, you're still expecting operating marginal in the back half. Is that correct?

Speaker 2

We are.

Speaker 8

Okay, fantastic. And then maybe just lastly, it sounds like Growth. Sort of expected some slowness in terms of license revenues. What's the expectation for just license revenue pull through in the back half, just given that that can be more variable relative to kind of The other sources of revenue. Just curious to get your visibility around that.

Speaker 8

Thanks a lot, guys.

Speaker 2

Well, license revenues are kind of capital expenditures for our customers. And more and more, they're going for outsourced services, longer term contracts and less large scale capital commitments. So I would suggest that the license business will continue to evolve More term licenses, probably perhaps longer term, which might offset some of them move towards outsourcing, but because on longer term licenses, you get 606 recognition. So there's a lot of moving parts and some of this stuff with the accounting and the reporting, GAAP and then adjusted GAAP and all that, it gets a little arcane. So for me, I watch cash.

Speaker 2

How much cash do we get coming in here? And Cash doesn't lie. So I think that's kind of my focus And how people interpret accounting rules is a difficult process.

Speaker 8

Got it. Thank you, Phil.

Speaker 10

Your next question comes from the line of James Faucette with Morgan Stanley. Please go ahead.

Speaker 11

Hi, it's Michael in Fontaine for James. Thanks for taking our question. Bill, I think at a conference in late May, you were talking to buyback potential in that $700,000,000 range and then we have The buyback announcement for roughly $1,000,000,000 Is there anything we should be reading into in terms of the higher quantum there, just in terms of your use of free cash flow? I

Speaker 2

mean, I don't think so. I think if we find acquisitions that we want to buy that we can get At a price where we feel like we can make some money, then I think we will go After acquisitions first, but after that, we're going to pretty much split it between stock buybacks and Debt Repayment. If interest rates alleviate, we'll probably allocate more to Stop by accident. We would do debt pay down, but we're not going to go 100% either way. And we view it as art more than we view it as science and we're going to try to be wise.

Speaker 11

Makes sense. Appreciate that. Maybe just a follow-up on the organic rev cadence throughout the rest of the year. Seems like you're gradually scaling on the organic revenue side with exit rates close to 5% in 4Q. But Is there anything in the pipeline and or what you guys are planning on doing from a pricing perspective that gives you the visibility into that 5% number in 4Q?

Speaker 2

It's a whole combination of things, right, including price increases, including Getting the large scale deals that are already in that have revenue have that revenue flush through in Q4 and then it's sell a new business. So I think it's a combination of things and there's Work to be done, of course, but it's still July. We've got a lot of time and we have a lot of really talented people And we expect results and on balance they deliver them.

Speaker 9

Thanks, Bill.

Speaker 10

Your next question comes from the line of Terry Tillman with Truist. Please go ahead.

Speaker 7

Hey guys, this is Joe Mears on for Terry. I want to extend my congrats to Patrick and to Brian. It's always nice to see Hello, Donor, Klein and McArthur Lider. I have a question about Blue Prism. I think at the end Last year, you'd expected about 100 digital workers.

Speaker 7

You're at 500 now. Do you still expect to get to 1,000 by the end of 2023?

Speaker 2

I think the numbers we gave at the last conference call was between 13.50,021,700. And I think Rahul can Correct me if I'm wrong, but we would expect to have close to 2,000 by the end of the year.

Speaker 7

That's right. Thanks. And just as a follow-up, I think in the past, you've noted About a $50,000 savings per role that's migrated to the prison. Is that still accurate? Or are you seeing Better or worse savings as you've implemented more of these workers.

Speaker 2

I would say that that's still The kind of rough estimate of where we are. As we automate different processes, There's more of a it might be a little bit wider range of what we say by digital worker. But I think we would still say the average is somewhere around 50 plus or minus 10%.

Speaker 7

Great. Thanks so much guys.

Speaker 10

Your next question comes from the line of Patrick O'Shaughnessy with Raymond James. Please go ahead.

Speaker 6

Hey, good evening. Can you speak to which part of the company where your intellectual

Speaker 2

Yes, it's primarily in our fund services business. And I would say that we think it has that impact on our business. And So that's why we fight these things, Patrick, is that You don't want to compete against people that are competing against you with your technology. That doesn't seem particularly fair.

Speaker 6

Got it. Makes sense. And then what are you seeing out there in terms of deal multiples? Obviously, Symcorp sold recently at a pretty lofty multiple as did Adenza. Are there pockets where multiples are starting to come in or is it all still pretty frothy?

Speaker 2

I don't quite understand either one of those deals, frankly. But obviously, those are smart people that do those things and so they do. I just look at it that we make a whole lot of money And if we keep our eye on the ball, we're going to get some nice pitches and we're going to knock them out of the park. And there's no reason to I understand, right? I mean, we want total shareholder value and We always want our stock to go up rather than go down.

Speaker 2

But we live in a 90 day world on that stuff. But technology and big time customers and all that. They don't really live on a 90 day world. Sometimes they wait 6 months before They signed a contract and the contract doesn't change at all in those 6 months. So it's getting in the cadence of your customers and making sure that you have enough pipeline that when people delay, you got other ones that you can accelerate.

Speaker 2

And so I think that's our real challenge is, dollars 5,500,000,000 if you want to grow 10%, We didn't have any attrition. We still have to sell $550,000,000 We have 4% attrition, We have to sell $750,000,000 That's a lot of revenue. That's a lot bigger than most of the people that we get compared to.

Speaker 6

Understood. Thank you.

Speaker 10

Your next question comes from the line of Alex Kramm with UBS. Please go ahead.

Speaker 12

Yes. Hey, good evening, everyone. Just wanted to come back to organic growth for a second here because I don't think that's been asked On the actually the guide down, I mean you were at I think the midpoint was 3% before sorry, yes, 3% before, no, it's 4% before, thank you. 3% now. You talked about the software licenses, so that makes sense.

Speaker 12

But is that all? Or is there something else that you would highlight Why the reduction? I mean, you did come in better in the second quarter here as well.

Speaker 5

Well, I would just add to that.

Speaker 2

Go ahead, Patrick.

Speaker 5

Yes. I think it's all I mean, when you compare the outlook we provided a quarter ago to this outlook, it's Pretty much the software business, advent and as an institution Asset Management and we're seeing improvements in some of the other outsourcing business like alternatives, Intralinks and our health business from where we expect it to be. So it's mostly the software business. It's still growing in the back half of the year. It's still growing in the back

Speaker 12

Okay. No, thanks for clarifying. And then maybe on a more positive note, The GITS business, I don't think it's kind of up on this call at all, 2 pretty solid back to back quarters. I mean, solid in the context of The normal growth in that business 3.5%, but seems stable. So just wondering if there's any incremental color, If that's a good growth rate for the time being or if you're hopeful that it's not only stabilized, but we can actually accelerate from here.

Speaker 2

Well, I think we've done a pretty good job Repositioning that entire business. And I think that we have some optimism about being able To close big deals, but in the transfer agency business, they're very large, tens of 1,000,000 annually. So it's a long sales process. And so it is fraught with delays. So while we have some optimism, I would say We're watching that very closely.

Speaker 2

Rahul, do you have more color?

Speaker 4

Bill, I think agree with everything you said. I think the other thing that I would highlight is some of our largest opportunities in the company globally are in this business, right. So to Bill's point, their sales cycle are a little bit longer. We have to Keep our eye on it at all times. But in terms of a medium term outlook, if you kind of look out even a couple of years, We do think that this business is capable of going a lot faster than kind of low single digits that it is right now.

Speaker 12

All right. Very good. Thanks, guys.

Speaker 10

There are no further questions at this time. I will turn call to Bill Stone.

Speaker 2

Thank you, Bailey. Again, thanks everybody for being on the call. I can assure you that we are pretty focused and we look forward to talking to you at the end of October. And Patrick, thanks again. See you.

Speaker 5

Thank you.

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SS&C Technologies Q2 2023
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