SS&C Technologies Holdings, Inc. Q3 FY2024 earnings call

• Record adjusted revenue of $1,466.8 million, up 7.3%, and adjusted diluted earnings per share of $1.29, up 10.3%.
• Record adjusted consolidated EBITDA of $566.2 million with 38.6% EBITDA margins.
• Organic revenue growth of 6.4% driven by Alternatives, GIDS, WIT, and Intralinks businesses.
• Closed $670 million Battea-Class Action Services acquisition, which is immediately accretive to earnings and synergistic with fund administration business.
• Reorganization in Wealth and Investment Technologies brought development teams together, integrating Aloha solution into Genesis platform.
• Black Diamond Wealth Platform rolled out advanced grouping functionality for client reporting.
• Healthcare business saw strong Q4 start with two large license deals for about $8 million in revenue.
• Blue Prism automation resulted in estimated 1,050 full time equivalents benefit in 2024 year-to-date.

SS&C Technologies reported record adjusted revenue of $1,466.8 million in Q3 2024, up 7.3%. Adjusted diluted earnings per share were $1.29, up 10.3%. Adjusted consolidated EBITDA was $566.2 million with 38.6% EBITDA margins. Organic revenue growth was 6.4%, driven by strength in Alternatives, GIDS, WIT, and Intralinks businesses. The Wealth and Investment Technologies business unit grew 10.9% for the quarter. Recurring revenue growth rate for financial services was 7.2%. The Global Investor Distribution services business drove outperformance, with new business wins and special projects at large clients contributing.

• Q4 2024 revenue expected to be in the range of $1.46 billion to $1.5 billion with 2.4% organic revenue growth at midpoint; adjusted net income range $329 million to $345 million; interest expense range $110 million to $112 million; diluted shares range 254.6 million to 255.6 million; adjusted diluted EPS range $1.29 to $1.35.
• Full year 2024 revenue expected in range $5.815 billion to $5.855 billion with 4.9% organic revenue growth at midpoint; adjusted net income range $1.299 billion to $1.315 billion; diluted shares range 253.6 million to 253.8 million; adjusted diluted EPS range $5.12 to $5.18; cash from operating activities range $1.33 billion to $1.37 billion.

Q: Could you discuss the market opportunity for DomaniRx?

A: Bill Stone said the top three players handle 70%-80% of prescription claims, with 5-6 billion scripts a year in US, leaving significant market opportunity. They think there's run room and potential to license technology to big players or smaller ones.

Q: Any color on the outlook for 4Q in terms of the slowdown in the organic growth rate?

A: Bill Stone said Q4 2024 has a more difficult comp than Q3, but they expect a good quarter. Rahul Kanwar added that Q4 2023 was higher than other quarters in 2023.

Q: Can you provide color on the outlook for 2025 and pipeline?

A: Bill Stone said the salesforce is strong, they have many opportunities, and are bullish on 2025. Rahul Kanwar added they get good feedback from sales and accounts, and have anchor clients for funded development.

Q: Revisit the fourth quarter organic number and contextualize segments?

A: Bill Stone said Q3 was strong for wealth and investment and GIDS, comp is more difficult in Q4. Rahul Kanwar added Q4 2023 was higher than prior quarters.

Q: Thoughts on Blue Prism cost opportunities and further potential?

A: Bill Stone said they are enthusiastic about Blue Prism, leveraging it across infrastructure, integrating AI, and Rahul Kanwar added they get feedback from sales and accounts to build clearer needs.

Q: Thoughts on Battea seasonality and fund shareholder recordkeeping?

A: Bill Stone said Battea has seasonality with Q4 being largest quarter, and Rahul Kanwar said GIDS growth is from expanding product suite and attracting new customers.

Q: Follow up on comp commentary and 2025 organic growth?

A: Rahul Kanwar said business is strengthening, recurring revenue is a leading indicator. Bill Stone said deals are bigger, and they are cautiously optimistic with midterm 4%-8% growth.

Q: Speak to strong growth in alternatives AUM and drivers?

A: Bill Stone said strong growth is due to brilliant management, client success, and ability to handle large-scale systems, making their solution attractive to financial firms.

Q: Strong step-up in organic growth for Wealth and Investment Technologies?

A: Bill Stone said strong growth was driven by large license deals in Q3.