SS&C Technologies Q2 2024 Earnings Call Transcript

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July 25, 2024

There are 11 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the SS and C Technologies Q2 2024 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. I will now hand today's call over to Justine Stone, Head of Investor Relations. Please go ahead.

Speaker 1

Welcome, everybody, and thank you for joining us for our Q2 twenty twenty four earnings call. I'm Justine Stone, Investor Relations for SS and C Technologies. With me today is Bill Stone, Chairman and Chief Executive Officer Vuhul Kanwar, President and Chief Operating Officer and Brian Schell, our Chief Financial Officer. Before we get started, we need to review the Safe Harbor statement. Please note that various remarks we make 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.

Speaker 1

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 also be accessed on our website. These forward looking statements represent our expectations only as today, July 25, 2024. While the company may elect to update these forward looking statements, it specifically disclaims any obligation to do so. 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.ssdtech.com.

Speaker 1

I will now turn the call over to Bill.

Speaker 2

Thanks, Justine, and welcome, everyone. Our second quarter results are record adjusted revenue of $1,452,400,000 up 6.5% and 20,000,000 dollars ahead of our forecast. Our adjusted diluted earnings per share were $1.27 up 17.6 percent. Adjusted consolidated EBITDA was $558,900,000 for the quarter and our EBITDA margin was up 170 basis points to 38.5 percent. Our 2nd quarter adjusted organic revenue growth was 6.4%.

Speaker 2

The revenue acceleration was driven by strength in our alternatives, goods, wealth and investment technology and Intralinks businesses. The surprise upside came largely in our goods business, the outperformance driven by seasonality and some accelerated license revenue. Our recurring revenue growth for financial services was 7.7%, which includes all software enabled services and maintenance revenue. 2nd quarter cash from operations were $385,000,000 up 16.8 percent from Q2 2023. Our cash flow conversion percentage for the quarter was over 120%.

Speaker 2

We paid down $25,200,000 in debt in Q2 2024, bringing our net leverage ratio to 2.84 times consolidated EBITDA. In Q2 2024, we bought back 3,700,000 shares for $227,000,000 at an average price

Operator

of $62.17

Speaker 2

per share. This is the highest share buyback in 1 quarter in SS and C's history. Last week, the Board of Directors renewed a 1 year $1,000,000,000 common stock repurchase program. We continue to believe stock repurchases are a good use of our capital. On the M and A front, valuations are still elevated, but we are seeing an increase in relevant targets coming to market.

Speaker 2

We will continue to look, but our returns need to be as attractive or greater than buying back our own stock. I'll now turn it over to Rahul to discuss the quarter in more detail.

Speaker 3

Thanks, Bill. Our business had a good quarter with the strongest organic revenue growth since 2021. Our alternative fund administration business had strong growth across the board in private markets, hedge funds and retail alternatives, where we provide both fund administration and transfer agency services and support registered alternative and inter gold funds. SS and C is uniquely positioned to serve this growing area with the combination of our transfer agency and fund administration services. We've seen early success in the Wealth and Investment Technology business unit collaborating on client relationship management and sales opportunities.

Speaker 3

TrustSuite momentum continues, the sales pipeline is robust and we're being invited to participate in the largest RFPs in the market. DemaniRx's 2nd release was put in production on July 1 and the platform can now process claims for all lines of business. We have processed over 100,000,000 claims since going live in January and have migrated our first new client onto the platform. Emmani's key strengths include enhanced functionality running on the SS and C private cloud with self-service capabilities and customized reporting. Will now turn the call over to Brian to discuss the financials.

Speaker 4

Thanks, Raul, and good day, everyone. Our Q2 twenty twenty four GAAP results reflect revenues of 1 point $452,000,000,000 net income of $190,000,000 and diluted earnings per share of $0.75 Our adjusted revenues were also $1,452,000,000 an increase of 6.5% over Q2 2023. The increase of $89,000,000 over prior year was primarily driven by incremental revenue contribution from the alternatives with Gids and Intralinks businesses. Acquisitions contributed $4,000,000 and foreign exchange had an unfavorable impact of $2,000,000 As a result, adjusted organic revenue growth on a constant currency basis was 6.4%. Our core expenses increased 3.3% or $29,200,000 excluding acquisitions and on a constant currency basis.

Speaker 4

Adjusted consolidated EBITDA attributable to SS and C was $559,000,000 or 38.5 percent of adjusted revenue, an increase of $57,000,000 or 11.2 percent from Q2 2023. The 38.5 percent EBITDA margin reflects a year over year improvement of 170 basis points driven by the positive impact of both revenue growth and disciplined expense management. Net interest expense this quarter was $113,000,000 a decrease of $5,000,000 from Q2 2023. Adjusted net income was $320,000,000 up 15.7 percent and adjusted diluted EPS was $1.27 an increase of 17.6%. The effective tax rate used for adjusted net income was 26%.

Speaker 4

Increased share repurchases drove the diluted share count down to 252,300,000 from 253,300,000 dollars in Q1 2024. SS and C ended the 2nd quarter with $462,700,000 in cash and cash equivalents and $6,700,000,000 in gross debt. SS and C's net debt as defined in our credit agreement, which excludes cash and cash equivalents of the $88,500,000 held at GimaniRx was 6,300,000,000 dollars Our last 12 months consolidated EBITDA used for covenant complaints was $2,200,000,000 Based on net debt of approximately $6,300,000,000 our total leverage ratio was 2.84 times and our secured leverage ratio was 1.6 times. In May, we refinanced our Term B loans consisting of 5 tranches with a new single $3,900,000,000 Term B loan tranche as well as a $750,000,000 senior note. The refinancing resulted in a $28,000,000 non cash loss on extinguishment of debt and the capitalization of $35,000,000 of new deferred financing fees.

Speaker 4

The refinancing activity resulted in extending our debt maturity by approximately 3.7 years and diversifying our funding sources, but still positioned to benefit from any reduction in short term rates.

Speaker 5

As we look forward to

Speaker 4

the Q3 and the remainder of the year with respect to guidance, note that we will maintain our focus on client service and assume that retention rates will continue to be in the range of our most recent results. We will manage our expenses with a cost disciplined approach by controlling and aligning variable expenses to ensure efficiency, increasing productivity to improve our operating margins to leverage our scale and effectively investing in the business through marketing, sales and R and D to take advantage of future growth opportunities. Specifically, we have assumed foreign currency exchange rates will be at current levels, short term interest rates to remain at current levels, a tax rate of approximately 26% on an adjusted basis, capital expenditures to be 4.1% to 4.5% of revenues, which is a slight reduction from prior guidance and a stronger weighting to share repurchase versus debt reduction subject to changes to market conditions. For the Q3 of 2024, we expect revenue to be in the range of $1,420,000,000 to $1,460,000,000 and 5.3 percent organic revenue growth at the midpoint. Adjusted net income in the range of $304,600,000 to $320,600,000 Interest expense excluding amortization to deferred financing costs and original issue discount in the range of $107,000,000 to $109,000,000 diluted shares in the range of $251,600,000 to 252 point 6,000,000 shares and adjusted diluted EPS in the range of $1.21 to 1.27

Speaker 6

dollars For

Speaker 4

the full year of 2024, we are raising revenue guidance by $12,000,000 and expect revenue to be in the range of 5.706 to $5,866,000,000 and 4.9 percent organic revenue growth at the midpoint. Adjusted net income in the range of $1,246,000,000 to $1,326,000,000 diluted shares in the range of $250,900,000 to 253.9 1,000,000 shares, adjusted diluted EPS in the range of $4.98 to $5.22 and cash from operating activities to be in the range of $1,305,000,000 to $1,385,000,000 Our updated 2024 guidance reflects our strong results in the first half of the year with a continued positive outlook for the remainder of the year. And now back to Bill.

Speaker 2

Thanks, Brian. We obviously had a strong quarter on both the top and bottom line. We continue to be bullish about our business and our updated guidance has us at 4.9 percent organic growth at the midpoint and $5.10 in adjusted diluted earnings per share. I'd also like to announce that on September 18, 2024, we'll hold an Analyst Day at NASDAQ Market Site in New York City. Formal invites will go out in the coming weeks and please reach out to Justine if you have any questions.

Speaker 2

We'll also be hosting our SS and C deliver client conference in New Orleans, Louisiana on October 6 to 8. This premier event is designed for executives and decision makers across SS and C's solution set and features hands on learning, industry insights and many networking opportunities. I'm pleased to announce this year's keynote speaker is my friend David Rubinstein, Co Founder and Co Chairman of the Carlyle Group, which SS and C was a portfolio company from 2,005 until 2014. We look forward to hosting hundreds of our clients and prospects in October. I'd now like to turn it over to

Operator

Your first question is from the line of Dan Perlin with RBC Capital Markets.

Speaker 6

Thanks. Good evening. Great to see the organic trends just continuing to improve here. I just had a quick question on the guidance. It looks like at the midpoint, it seems to suggest if we use kind of the midpoint for Q3 and then take the full year number that the 4th quarter's organic growth kind of steps down a little bit, maybe more meaningfully.

Speaker 6

I'm just trying to understand like is this just tougher comps as we kind of look at the numbers or something structural that we need to be mindful of? Or is this just kind of overall conservatism since we're not we're a little bit away from maybe putting up the numbers on the Q4? Thanks.

Speaker 2

Yes, Dan. I would just say that the Q4 is really a comp issue. Q4 of 2023 was particularly strong. And again as you well know we're in the process of meeting and beating our numbers. So we're still focused hard on making sure we have a strong number, but a number that we expect to hit.

Speaker 6

Yes. Okay. No, that's great. And then just quick follow-up. Your leverage is at 2.8 turns now.

Speaker 6

Obviously, you just re upped a $1,000,000,000 buyback and you just did the biggest buyback in the company's history for the quarter. And you kind of mentioned a little bit, Bill, about the M and A kind of environment in the pipeline.

Speaker 4

I'm just

Speaker 6

wondering, what do you see out there? How is it stacking up in terms of overall capital allocation? I understand you got a hurdle rate for your buyback versus M and A, but it does sound like M and A is picking back up and even in kind of your I guess as your interleagues report that you recently put out, it sounded like within North America, the deal flow was looking pretty good. So I would just love to get your thoughts on where you sit today given your balance sheet is pretty healthy.

Speaker 2

Yes. As you well know, we've really built the company around organic revenue growth and acquisitions. We see a lot of stuff out there. We see things that are on the low end of ridiculously priced. So we are willing to look hard.

Speaker 2

We would like to deploy capital in acquisitions. We would like to further build out our portfolio of products and services. And each of our business units are kind of beating the bushes for opportunities. So I wouldn't be surprised if we are able close a couple of tuck ins and maybe something a little more substantial. I don't see any $5,000,000,000 or $10,000,000,000 acquisitions on the near term horizon, although SS and C will be in the running if any of those things come on the market.

Speaker 6

Excellent. Thank you, Bill.

Operator

Your next question is from the line of Andrew Schmidt with Citi.

Speaker 7

Hey, Bill, Raul, Brian. Thanks for taking my questions. Maybe it's just a higher level question for me. Obviously, the last three quarters we've seen you maintain at least mid single digit organic growth. Maybe talk about the sustainability and visibility of consistently delivering that.

Speaker 7

And if anything, what's changed? I realize that we're at more stable level in terms of the kids performance, healthcare is stable versus 1 to 2 years ago. But if there's anything else deeper in the business that drives that stabilization, that'd be helpful. And I realize I might be jumping on the Analyst Day, but anything there will be helpful. Thanks a lot guys.

Speaker 2

Andrew, I would just say in general that we have a strong focus on organic revenue growth. We have looked at bunch of acquisitions, but the ones that we really like are pricing at 10x revenue. So we don't like them that much at that price. So when you start focusing on organic revenue, you start looking on how you're pricing. We've done a pretty good job of getting a little more discipline there.

Speaker 2

And you also make sure that the pitches that we go out in order to cross sell and up sell as well as new names are crisp and impact. So I think we've done a good job there. And I think Rahul probably has a couple of anecdotes or additions that would also give you some clarity.

Speaker 3

Yes. I think the thing that I would add to that is product development. We've spent a lot of energy over the last really several quarters making sure that what we're selling into a particular type of customer will bring in all of SS and C to bear. And so that's starting to show up in larger deals and better win rates and we expect that to continue.

Speaker 7

Got it. Thank you, Bill and Raul. Yes, certainly shunning through in the product updates that you're putting through to the market. So we see that. Appreciate those comments.

Operator

And then maybe just a question

Speaker 7

on the outlook. Just the raise in the EPS outlook relative to the 2nd quarter result and that in conjunction with higher level share repurchase. I'm wondering if there was some reinvestment that was baked in or if there's some that you're kind of saving for some potential outperformance in the back half. It just looks like the raise was a little bit lighter than the outperformance. So anything there would be helpful.

Speaker 7

Thank you.

Speaker 2

Well, again, as we said, our guest business was particularly strong and we don't expect a repeat of the strength of that business in Q3 or Q4. We have some opportunities, but often they're multi quarter sales cycles. We have a good pipeline, but that certainly could be a little bit of a headwind to us. And then we also are we're very excited about our trust suite that we're bringing out into the marketplace. It's getting a lot of positive reaction.

Speaker 2

And I think we are executing and hopefully we'll surprise you positively.

Speaker 7

Got it. Thank you, Bill. And sorry, just one more housekeeping, since you mentioned that the Gids business, was the accelerated license revenue, that you shed some light on that, was that timing, just any details on that and then I'll jump back in the queue, but thanks a lot for

Speaker 3

your responses. Yes, it is mostly timing. There were some deals that we had forecast that's coming in Q3 and Q4 and we were able to pull them into Q2.

Speaker 7

Perfect. Thank you, Raul.

Operator

Your next question is from the line of Peter Heckmann with D. A. Davidson.

Speaker 8

Hey, good afternoon. Thanks for taking my question. I guess, how would you characterize the overall spending environment? And we hear you in terms of where certain areas are producing a little bit better organic growth. But I guess what do you view in terms of like the next couple of years catalysts that could potentially cause people to look at switching vendors, upgrading?

Speaker 8

And what do you think are the demand drivers there? Is it regulatory? Is it technology? Or is it price?

Speaker 2

Well, I think it's all of those. I think price is probably the least important of the 3. I also think as you see of these cyber attacks and the outages for large scale businesses, they start looking hard at who their vendors are and how much money are their vendors putting into their security walls and their expertise and the number of layers they have in order to kind of stop the bad guys. And similar to things like Madoff and others that caused a real key change and how people did their books whether they did them in house or they did them with an outside administrator. I think technology is going to be one of those things that yes, you saved a few 100,000 and maybe even a few million over a 3 or 4 year deal and then you got burned for about 15 or 20 and they're going to start deciding that playing technology on the cheap is a risky business.

Speaker 2

So I think that's going to be a real driver. I also think how you deploy the newest technologies, whether that's deep learning, machine learning, RPA, AI, ML, all those things, right? I think the key there is it has to work and it has to work better than what you had before. You can't go show them something that's really pretty and it's slow or it doesn't isn't as accurate. So there's a lot of things that go into deploying new technologies.

Speaker 2

It's not just, well, we use large language models. We're really steeped in AI and maybe. So I think those kinds of things are real opportunities for us. And I think as long as we focus and deliver applications that show that, hey, we're here for long term, we're going to give you improvements every quarter, every 6 months, every year and you're going to see that your business improves because you chose the right partner.

Speaker 8

That's helpful. And then just any comments just on wealth specifically, you mentioned it as one driver of organic growth. But I guess how would you characterize there? Is that more on the Advisor Tech side or more on the long only side?

Speaker 2

I think it's on both. You're going to have obviously the wealth and investment technology is a very strong area. Just as you've seen on Envestnet getting sold or at least in the process of being sold And all the number of mergers and private equity buying into different wealth technology companies, I don't see that stopping. There's however many trillions being transferred from generation to generation and the younger people getting this money are not going to wait for a monthly statement or a quarterly statement or something along those lines. They're going to want instantaneous access to their money.

Speaker 2

And I think things like you see on the T plus 1 and other things where the regulators are understanding when you have things like Venmo and other instantaneous money movers, people don't want to wait 24 hours for a trade to settle or the money to be available or anything else. So you're going to have to be nimble enough to handle the people that are the recipients of the current generations, really large scale wealth accumulation.

Speaker 8

Okay. Thank you. I appreciate it.

Operator

Your next question is from the line of Aleksey Gogolov with JPMorgan.

Speaker 9

Hi, Bill. Komalieb Gogolev here. Great to hear from you. Last time we met, you flagged growing confidence that SS and C will be able to achieve high single digit organic revenue growth in the midterm. So sort of following up on some of the questions that my colleagues have asked, are you seeing some sort of signs or pockets of opportunity that could drive the growth acceleration?

Operator

I think we see them Alexia. I think the question is that you

Speaker 2

have to not just see them, you have to act on them and you have to get ink on paper. And I think the large scale things that we think are happening are people to outsource and even for us to take various lift outs where we can give them tremendous expense savings, better technology and a happier client base and we can earn a lot of money in processing that business. So we think there's a number of those that are in the marketplace. We think we're well positioned. So I think those types of things and then things like what we're rolling out as new products and new services as they kick in, I think you'll see increasing organic revenue growth.

Speaker 2

I think the reduction in year over year revenue in Healthcare went from 8.5 to 4.5 or 8.5 to 4.8. I think Q3 will be better than that maybe breakeven or even a little better on a growth basis. And then I think we'll start accelerating in Q4 and throughout 2025 and 2026. So I think there's a number of different catalysts that can drive to mid to high single digits, but it's execution. We got great strategies.

Speaker 9

Understood, Bill. And just to build up on the answer that you just provided, you always positioned having your own data centers and infrastructure as a strong competitive advantage. Could you discuss how your customers reacted to outages last week? And if you've seen any incremental demand on the back of that?

Speaker 2

Well, I think we've had many follow-up calls with customers of ours that in their tech stack, they had some of the companies that had some real difficulties in our own tech stack. We have very little of the companies that have had problems. So knock on probably fake marble here. We believe that we are well served by our technology team that's very disciplined and also has many layers of security around our data processing centers. We run our own private cloud.

Speaker 2

It doesn't mean we don't get attacked. Of course, we get attacked by everybody else. But we're not Amazon, we're not Azure, we're not a Target. The number of people coming after us is a mere fraction of what would go after large scale disruptions of the U. S.

Speaker 2

Economy. So we're confident in what we're doing. We spend tons of money and we believe that we're getting value.

Speaker 9

Understood. Thank you very much,

Operator

Your next question is from the line of Surinder Thind with Jefferies.

Speaker 10

Thank you. Bill, can you maybe talk about the pipeline at the MontneyRx given that you've now had a few successful clients on the platform, what you're seeing, maybe what the conversations are like and just timeframe for any new announcements?

Speaker 2

Well, we have a good pipeline and we have pipeline with very large healthcare insurance claims payers. And I think we have a better bread box. So we have a great opportunity if we can execute in a way that those large scale organizations say you can handle this, not only can you handle it, Domane has very little latency. It's processed up second, a number of our competitors are processing in multi second. And when you're doing millions of claims, that's very unpopular.

Speaker 2

So we think we have some competitive advantage there. Rahul said before we have self-service capabilities, we have pretty strengthened reporting capabilities and a lot of good things for finance. So that they can really understand where they're spending money and on which drugs and in which markets. So we think we have great opportunities. There's vagaries in every market.

Speaker 2

There's vagaries here too. So we have to execute, but we put a 1,500,000 hours into Domayne. And as I tell our prospects and clients, it works and that's a pretty big statement.

Speaker 6

That's helpful. And just as

Speaker 10

a quick is it larger deals, longer sales cycle than the rest of your business or how should we think about that?

Speaker 2

I wouldn't necessarily say longer sales cycles, but most healthcare plans start on long term. So you give me opportunity on January 1, 24. Oh, damn. July 24. So now we get big opportunities on January 1, 25.

Speaker 2

And for the biggest ones, you're really going to have to be planning starting now and hopefully taking them lined on Oneonetwenty 6. But there are enormous type companies that can pay upwards to $100,000,000 a year on some of these claims processing things that they do. And we just need to be ready. The system has to continue to get better and we have to continue to delight our customers.

Speaker 10

Thank you. And then on Blue Prism, just any update there what you're seeing externally? And then just as a follow-up on the earlier comments about obviously doing a lot of continued work in AI, ML and it takes a lot of time to prove those technologies. But just update on the internal efficiency initiatives there and if there's any change that you see coming not necessarily this year, but as you look out over the next 1, 2, 3 years that maybe you can squeeze a bit more from an efficiency perspective?

Speaker 3

Yes. We're continuing to roll out Blue Prism within SS and C. In some ways, we're building momentum because as more people get trained up, we have more capacity to have additional processes be subject to that robotic process automation and AI type enhancements. We're also we just released the next generation of Blue Prism which actually as part of its workflow has Gen AI capabilities. So you can use Gen AI and natural language type interface to design your workflows, which makes it easier for us to roll out internally, but also improves our product differentiation from others in the marketplace.

Speaker 3

So we feel really good about Blue Prism and how it's helping us and we certainly expect it to accelerate from here.

Speaker 2

Yes, I would just add to that, that what we find when people start to embrace it, their jobs get better. And some people we have a lot of green eye shades and a lot of warm bands around SS and C. So you know often you have to bring the horses to water multiple times and it's best if it's really sunny out so they're thirsty. So I think those opportunities is where we have things where, wow, I wish I would have done this a year ago. Because it makes their job better.

Speaker 2

It makes the drudgery parts of their job sort of not drudgery anymore because they're not doing it. They have some digital work are doing it. So I think we're sticking to the knitting. We constantly monitor how many digital workers by business unit and I know they're very happy about all the calls that Rahul and I make to them.

Operator

Your next question is from the line of James Boucetti with Morgan Stanley. Thanks a lot. I had a

Speaker 5

couple of product questions. I want to follow-up on the Blue Prism question and I appreciate your comments there. Just wondering what you see as the competitive landscape right now and love to hear how you're thinking about that opportunity having evolved of late and specifically whether or not you think you maybe can be the beneficiary of some of the hiccups we've seen from some of the public RPA vendors?

Speaker 2

Yes. We think if we keep our hiccups at a very minimum, we will be a big recipient because our business is profitable. So that means it's sustainable. It means we can invest. I know that a lot of these companies that you follow and a bunch of your colleagues follow, it's how much money private equity money can we burn before we have to be profitable.

Speaker 2

And I think a little bit that fuse has kind of played its way out. So now you have to build sustainable businesses. And I think that's what we've done. We also have to accelerate our revenue growth. And I think we've added a new Chief Revenue Officer.

Speaker 2

We have some high expectations there. But it's all proof in the pudding. You can get up to bat, but somebody got to hit the ball. And I think that's the thing we're driving at. And I think we are more than cautiously optimistic, but I wouldn't tell you that we're drunkenly optimistic either.

Speaker 2

So we're going to execute and I think we should begin to see double digit revenue growth in Blue Prism for the foreseeable future.

Speaker 5

Got it. Sober forecasting is always appreciated. As far as the Genesis platform, I'd love to hear the early feedback from your customers on the product and specifically what you're trying to do with the capability set across Advent, EZ and GlobeOp. I guess, I'm trying to get a sense for what portion of your customer base do you think this will be most applicable for? And how do you think that Genesis will impact that segment?

Speaker 3

So when we combined Advent and then subsequently Institutional and Investment Management, that combined business is now maybe a little over $1,500,000,000 in annual revenue and has a lot of the different products that are geared towards wealth, asset managers, financial institutions, particularly on the software side. And it's only been a few months, but we find what we're able to do is start to take a look at product roadmaps for products like Genesis and Aloha and Singularity and others and make sure that the things that we think are worthwhile to build, we're putting the right amount of muscle behind them and we're making sure that we've got a good launch plan and a good customer validation process and that's starting to show up in some of the results. So early days, but it feels like we're on the right track.

Operator

Your next question is from the line of Kevin McVeigh with UBS.

Speaker 7

Great. Thanks so much and congratulations on really just terrific results. Maybe this is for Bill. Bill, given the kind of technology efficiencies that Blue Prism are bringing to bear, is it changing the go to market strategy with your clients? I mean, I know you've spoken a lot about bigger kind of lift and shift opportunities.

Speaker 7

Has it accelerated that process? And does the efficiencies that Blue Prism bring to bear afford you kind of a wider lens in terms of go to market strategy, just given some of the potential returns as a result of the efficiencies. I wanted to start there because it feels like there's a step function change in the business from a revenue growth perspective that just is beyond kind of some of the segmentation. And I just wanted to maybe try to frame that a little bit.

Speaker 2

Well, I think Kevin that was the intent when we bought Blue Prism was to buy something that was horizontal that would act as almost like the floor for all of our different applications and services to kind of hang off on or to improve with and be able to present a technological differentiator that we can train everybody on across the enterprise. Now the enterprise is pretty broad and we've done 75 acquisitions. So there's a lot of teaching and training and implementing of Blue Prism both internally at SS and C. And then as we take people out to pitch externally, they get a lot of confidence because we're using it, right. We're eating our own dog food.

Speaker 2

We're processing on Blue Prism across almost every one of our disciplines inside SS and C. And so that's the whole holy grail of this thing. And I think that it is we think the train is left station. But I think there was a hill to get the train up first, right? You got to get into those places and you had to really start to educate the IT departments of our clients.

Speaker 2

When traditionally we've been functional experts, talk to us about retrospective or prospective accounting rules or how to value a multi step bond or whatever it is, right? But now you got to go in and talk about large language models and how you're going to deploy machine learning or RPA and that's an education. And I think we're doing it and we're doing it pretty well and we have a very talented tech team.

Speaker 7

That makes a lot of sense. And then just does that afford bigger opportunities, Bill, because obviously you're talking to a wider audience. So it almost sounds like it's more transformational opportunities. So should those clients scale and size, I guess, given the complexity of what you're taking?

Speaker 2

It does, but it also brings in every tech focused consulting firm and a horizontal consulting firm and tech firm, right? Now you run into all the what we used to call manpower shops out of India whether that's Poggins and Tertata or Infosys or any of the other ones unless you start bumping into Accenture and the ones here in the States. So it's a different kind of a competitive landscape. We really like that we bring expertise in what our clients are trying to do, so we can kind of help their IT people and try to explain to them that's not how this really works. This is how it works.

Speaker 2

This is what really momentum trading means. This is what how traders and portfolio managers are looking at risk in their portfolios and what is the value of real time near real time and being able to go across what they're doing in technology and show them that you're going to spend $5,000,000 doing it that way. If you spend $500,000 you get the same result, but you'd be a hero because you save the organization 4,500,000 dollars And some of these places have enormous budgets, a couple of $100,000,000 for firms that are a couple of 100 people or 300 people, 400 people. So there's a lot of opportunity in there, but there's a lot of competition.

Speaker 7

Super helpful. Thank you.

Operator

At this time, there are no further questions. I will now hand today's call over to Bill Stone any closing remarks.

Speaker 2

Thank you, Tomika. And thanks everybody for being on the call. We really appreciate it. We're working hard for you as we always have. We like to work hard for you and give you great results.

Speaker 2

So until next time, we'll be out there working on great results. Thanks again.

Operator

This concludes today's call. Thank you for joining. You may now disconnect your lines.

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Key Takeaways

  • Record Q2 results: adjusted revenue of $1.45 billion (+6.5% YoY), adjusted EPS of $1.27 (+17.6%), and a 38.5% EBITDA margin (+170 bps).
  • Organic growth of 6.4% driven by strength in alternatives, GIDS, wealth & investment technology, and Intralinks, with the goods business outperforming due to seasonal and accelerated license revenue.
  • Cash generation reached $385 million (up 16.8%), with >120% cash flow conversion; $25 million in debt was repaid and $227 million used to buy back 3.7 million shares, lowering net leverage to 2.84x.
  • Updated outlook: full-year revenue guidance raised to $5.706–$5.866 billion (4.9% organic growth at midpoint) and adjusted EPS to $4.98–$5.22, with Q3 revenue expected between $1.42 billion and $1.46 billion.
  • Product and technology momentum: TrustSuite sales pipeline is robust, DemaneRx processed over 100 million claims since January, and Blue Prism’s new Gen AI–enabled RPA is boosting internal efficiency and client solutions.
AI Generated. May Contain Errors.
Earnings Conference Call
SS&C Technologies Q2 2024
00:00 / 00:00