Q1 2021 SS&C Technologies Holdings Inc Earnings Call
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Good day, and thank you for standing by and welcome to the FMC technologies first quarter 2021 earnings call.
At this time, all participants on a listen only mode. After the speaker's presentation. There will be a question and answer session fast quick question on the session you will need the press star one on your telephone. Please note that today's call is being recorded if you require any further assistance. Please press star zero I would now moving on the <unk>.
Obviously, the Macy's Justine stone. Thank you. Please go ahead.
Hi, everyone welcome and thank you for joining us for our Q1 2021 earnings call I'm Justine Stone Investor Relations for FMC with me today is Bill Stone, Chairman and Chief Executive Officer of Rahul Kanwar, President and Chief operating Officer, and Patrick Mcglinchey, Our Chief Financial Officer before we get started the need for them you review the Safe Harbor statement.
Is that the 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 the 1995 actual results may differ materially from those indicated by these forward looking statements as a result of various important factors.
Adding those discussed on our risk factors section of our most recent annual report on form 10-K, which.
Which is on file with the SEC and can also be accessed on our website. These forward looking statements represent our expectations only as of today April 26, 2021, while the company may have lacked to update these forward looking statements Inc.
Physically disclaims any obligation to do so during today's call, we'll be referring to certain non-GAAP financial records.
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 Dot SSC Tech Dot Com I will now turn the call over to Bill.
Yeah.
Thanks, everyone for joining our results for the first quarter of one point to three $5 billion of adjusted revenue up four 9%.
Salary and adjusted earnings per share up 14, 6%.
Our adjusted consolidated EBITDA was $491 9 million for the quarter.
Adjusted consolidated EBITDA margin was 39, 8%.
Our first quarter adjusted organic revenue was up 2.9% strength of our alternatives business Central link some of our software businesses contributed to this growth.
The passing of our own expectations GST, Inc. TST came in at one.
1% growth for both financial services and health care.
Operating cash flow was the $185 7 million for three months ended March 31 2021.
Up 25, 7%, we bought back two 7 million shares of common stock in Q1, 2021 at an average price of 67 60 per share for $181 4 million or secured net leverage ratio now stands at 2.29 times on her.
Total net leverage ratio is at 335 times.
We continued our focus on organic revenue growth and we're beginning to see some positive trends. We are growing our sales force of building new revenue generating products and services, we continue to make product improvements of new technologies across our business and that's just an see helps our capabilities does it grow on partnership for customers.
An expert user experience design team.
The efficiency of digital experience platform of launch in early Q2, 2021.
Of the platform expanding to over 2 million members by early Q4, 2021 of.
This represents an exciting opportunity for our customers to unify the digital solutions for five of the single member experience of wanting to remember market expectations.
We continue to integrate with auto of crosstalk various business lines in half one.
Mandates using this technology.
The ESG investing is the come increasingly more important to our investors and our clients, while we are working to expand and improve.
Our own disclosures and policies. We're also building solutions to help our clients dress their ESG needs.
Our learning Institute of drought and the introduction of GST online course to be released in Q2 'twenty 'twenty. One this of course, you're one of the issues are.
It's the environmental social and government sectors used by investors and lenders for making the investment decisions of course will equivalent of learners with basic school into the core ESG concepts explore risks and outlines ongoing debates in the field.
We completed the capital life and pension services, Ireland the acquisition in the first quarter, adding 380 employees the.
The acquisition makes us and see the largest technology and service providers in the international life and pensions market in Ireland and prices for the excellent opportunity to expand in Ireland the across Europe.
We also are continuing our efforts to acquire mainstream group the board unanimously recommending hospitals.
Thanks for you as a provider of investment administration middle of funded the accounting Superannuation administration share registry of unit registry.
Services to leading fund managers and superannuation funds family offices and dealer groups earlier.
Earlier this month, we announced the reduction in force of two 2% of our global employee base.
These are always difficult we have the laid our plans.
Since the first quarter of 2020.
And we have and will continue to treat everyone clearly provides severance and transition assistance the <unk>.
Markets, we serve and our customers demand generation on overall productivity increases the expressions pressures often dictate cost containment efforts our ability to continue to get pay raises bonuses and other career development opportunities require us to manage the cost carefully and fairly.
I'll now turn the call over to the who'll discuss quarter in more detail.
Thanks Bill.
We had a strong quarter with the broad based lift in revenue growth year over year and sequentially.
The Interlink said robust growth as the M&A market is off to a brisk start an economic stimulus continues.
Increased carve outs and restructuring and overall economic activity driving acquisition contributed to our dealer an opportunity counts and win rates remain high.
In our alternatives business. The number of qualified prospects has returned to pre COVID-19 levels and there is increased fundraising momentum across strategies, our existing clients for growing organically through new fund launches and performance and we continue to win new clients at healthy levels.
We ended the quarter with over two trillion in assets under administration for the first time a significant milestone.
Our software business performed well outsource technology trends across wealth asset management and alternatives remained strong customers increasingly demand the ability to select and can figure of their operating model, including both software applications and outsource services.
Our capabilities are proving to be of valuable differentiator is one indicator over 90% of assets since the advent of Q1, new sales included hosting or other operational services managed service offerings for our Geneva, and <unk> applications continue to get traction in the marketplace.
Now I will mention some key deals for Q1.
The top alternatives fund administrator and existing Geneva client extended their Geneva license to 40 Act funds.
The new hedge fund launch chose a suite of licensing fee products, including as the one that's EMS Global Fund services, and then outsource services and fixed link.
A large Canadian asset manager expanded vision and based on the licensing to support its business plan. This client chose the essence since he's real assets Fund services Investor services and financial statement preparation for their real estate funds.
Our new the launch retail brokerage and wealth management business in Southeast Asia chose GW P for it.
<unk> and capabilities one of Asia's leading investment firms chose S&P Global fund services for bank loan servicing.
The Swiss based asset manager chose <unk> fund services on regulatory solutions for valuation capabilities around complex derivatives.
An existing mutual fund customer.
The <unk> digital investor experience of large multinational asset manager and existing transfer agency client expanded their relationship with us to include their Luxembourg business.
I will now turn it over to Patrick to run through the financials.
Results for the first quarter of 2021 were GAAP revenues of 1 billion on $233 4 million.
GAAP net income of $174 9 billion.
And diluted EPS of <unk> 65 cents.
Adjusted revenues were $1 $235 4 million.
Including the impact of the adoption of revenue assurance of 606 and for the acquired deferred revenue adjustment for acquisitions.
Revenue was up four 9%.
Adjusted operating income increased seven 1% and adjusted EPS was $1 18, a 14, 6% increase over Q1 2020.
Adjusted revenue increased 57, 4 million, our acquisitions contributed $18 6 million in the quarter for.
Foreign exchange had a favorable impact of $16 1 million for one 4%.
Adjusted organic revenue increased on a constant currency basis by two 9%.
Driven by strength of the alternatives Fund administration.
Advent interlinked products.
Were offset by weakness in the institutional asset management.
Health care is.
Of the as products.
Adjusted operating income for the first quarter.
It was $475 8 million of an increase of $31.6 million for seven 1%.
From the first quarter of 2020.
Foreign exchange had a negative impact of $13 2 million on expenses in the quarter.
Adjusted operating margins increased from 37.7 and the <unk>.
First quarter of 2020 to $38 five in the first quarter of 2021.
Driven by cost controls.
Expenses increased three 5% on a constant currency basis acquisitions.
Acquisitions added $6 3 million.
And foreign currency increased costs by $13 2 million.
Adjusted consolidated EBITDA was 491 9 million of 38 39, 8% of adjusted revenue increase of $28 4 million for.
Q1 2020.
Net interest expense for the first quarter was 51.4 million includes $3 3 million.
Of noncash amortized financing costs and OID.
Average interest rate in the quarter for the amount of credit agreements, including our senior notes.
Was three point or 1%.
Compared to 4.18% in the first quarter of 2020 and resulted in an interest expense decrease of 26 million for.
For the 33% in the quarter.
We report we recorded a GAAP tax provision of the quarter of $68 million or 25, 8% of pretax income.
Adjusted net income as defined in note four of the earnings release was 300 of $16 5 million and <unk>.
Adjusted diluted EPS of $1 18 in.
And the effective tax rate for adjusted net income was 26%.
Diluted shares remain unchanged in Q4 at 200 of six to $8 1 million.
The impact of an increase in the average share price and option exercises was on.
Offset by the share repurchases.
On.
On cash flow on our balance sheet as of March 31st weight of approximately $253 7 million of cash on cash equivalents.
And approximately $6 6 billion of gross debt for a net debt position of approximately $6 3 billion.
Operating cash flow for the three months ended March was $185 7 million of.
$38 million.
For $25 seven per.
The increase compared to the same period of 2020.
For the three months ended at March 31st.
We purchased Treasury stock buybacks of 181 4 million for purchase of the $2 7 million shares.
On an average price of $67 15 per share.
Compared to no treasury buybacks in the first quarter of 2020.
Yeah.
Program of date pressure stock buybacks.
Total of $469 5 million for purchases of seven 8 million shares at an average price of $60.38.
With $288 5 million remaining.
On the current program, which was initially $750 million that the board approved.
Net debt borrowings for the quarter was $70 6 million compared to net borrowings for $150 1 million in 2020.
We declared an issue of the unpaid AR.
Dividend of $41 2 million.
As compared to $31 9 billion last year, an increase of 29%.
We paid interest in the quarter of $76 6 million compared to $102 5 million.
Last year.
For the quarter, we paid $42 5 million and income taxes compared to $17 seven in 2020.
Our accounts receivable DSO was $48 nine days.
As of March 31, compared to <unk> 48 for as of December 2020, and 52.4 days as of March 2020.
Capital expenditures of capitalized software totaled 31 4 million of 2.5% of adjusted revenue.
Spending was predominantly for capitalized software and it infrastructure.
Our LTM EBITDA of that we use for covenant compliance was $1 billion $886 4 million as of March 2021.
It includes $4 million of acquired every day on cost savings related for acquisitions.
Based on net debt of approximately $6 3 billion.
Our total gross leverage ratio was 335 times.
And our secured ratio was two 2 million tonnes.
For outlook for the remainder of year.
The following assumptions.
Are included in the outlook for 2021.
We'll continue to focusing on client service and our retention rates.
We'll continue the debris range of most recent results.
We've assumed foreign currency exchange will be at current levels for the remainder of the year.
We expect the impact on DST health unit pre acquisition client terminations to impact revenue.
By approximately $17 million for the remainder of the year.
Adjusted organic growth for the year will be in the range of 1.7% to for 0.7%.
The organic growth for Q2 will be in the range of two 4%.
Five 9%.
The interest rate on our term loan facility will partially be one month LIBOR plus.
Most of the current spread which is 175 deaths.
We will continue to manage expenses during this period of controlled variable expenses and staff here.
And we will continue on the continuing to invest on our business long term.
With capital expenditures of about two eight per cent of revenue.
And we expect the of tax rate to be approximately 26% for the for the full year.
For the second quarter of 2021, we expect revenue in the range of $1 billion.
$190 million to $1 billion $230 million for.
Adjusted net income in the range of $294 million the $310 million.
And diluted shares to be in the range of 267.8.
$268 3 billion.
For the full year of 2021, we expect revenue in the range of 4 billion of $825 million.
The 4 billion 900 of 65 billion adjusted net income in the range of $1 $213 million for.
The 1 billion of $279 million.
And diluted shares for the range of 267 point for to $268 9 million.
Yeah.
And for the full year, we expect cash from operating activities to be in the range of 1 billion of $280 million.
The $1 $340 million.
And I'll turn it over to Bill for final comments.
Thanks, Patrick with almost $500 million and adjusted consolidated EBITDA for the quarter exceeding two trillion in assets under administrations of our alternatives business.
Adjusted revenue growth of almost 3%.
<unk> are secured and total leverage ratios of $2 to 90 335 times, we have built the powerful franchise.
The franchise continue to add talent opportunities as we parked on the new post COVID-19 world.
I will now open for questions.
We will now take questions to ask a question press star followed on the number one on your telephone keypad.
As a reminder, please ask one question and one follow up question and then get back into the queue.
And our first question comes from Dan Perlin with RBC.
Everyone and the great start to the year. So bill I, just wanted to drill down a little bit it sounds like maybe client budgets are starting to come back into growth mode, you called out alternatives.
Maybe being back to pre COVID-19 levels of new fund raising of interlinked. So I'm just wondering as you're having those conversations today with clients.
You know, where where do we stand in terms of of the real demand environment Whats. The current pipeline look like for you guys. I mean, obviously, we see your guidance, which seems pretty reasonable, but I'm. Just also wondering kind of the total difference.
You know that you're having with clients today versus maybe a quarter or two ago.
Well all day, and I think what youre seeing across the world is that the world opening up and knock on wood that we can continue to do that.
You know the different governments, whether it's the.
You are the United States are.
All of North America and Asia.
The money into the economies.
And thats, giving.
Best of the manager's confidence as the funds flow starts.
So their coffers.
Thanks for them.
So either launch new funds get into new <unk>.
Investment types of new strategies.
And that reflects.
The increased demand we're seeing in and also we've increased.
The size of our sales force.
Continue the training.
And that is proving to be pretty effective so we're.
So the optimistic.
No one can really predict.
But the.
Pandemic is going to do the next hopefully.
See the off into the Sunset, but we don't have.
A perfect Crystal ball on that for I would say that's the <unk>.
The drivers of margin.
Of our demand.
Yeah no that's good on the on the follow up is on this new.
Kind of division that you guys launched intelligent automation solutions.
Where it sounds like Youre trying to help clients with their digital transformations debt I guess I'm wondering that sounds like.
Not so much of a deviation from your historical like product forward business, but it does sound like it might be broader.
In and around consulting and maybe some other it kind of functions. So I'm wondering two things one do you think that thats opening up the the funnel for new opportunities that you guys are going to able to bring in and then secondly, there of product roadmap that needs to go along with that.
In order to be successful day. Thanks.
Well, we're pretty excited about adding cash them in and his experience and expertise and then and then being able to you know.
Make our bundles.
Increasingly more.
User friendly and and.
And more powerful.
So we're excited about the opportunities we think we have lots of.
Exciting technology, and we think that we're in.
Increasingly.
It kind of more depth.
On the.
Are different for different products, together, which gives our clients.
No more comfort as they grow and expand and one of them.
Fewer suppliers.
On a heavily on that.
Who would you agree with that comment.
Plywood and and I would just add to the second part of the question debt.
<unk> already has a fair amount of IP within SSN fee that relates to intelligent automation, whether it's on AWD product or Gary youth initiatives, we have across the company on natural language processing and artificial intelligence and Gulf of him and his team are charged with.
Pulling those together as Bill said to make sure that they are made it together in the right way for a particular use case or a particular application in a given industry as well as build new product, but for people we have a pretty good foundation.
Great. Thank you guys.
And our next question comes from from surrender band with Jefferies.
Good afternoon, and congratulations on the quarter.
My first question is regarding the guidance can you break down the outlook for organic growth amongst the various segments.
For the full year.
Meaning as intra links.
S T and then assess the C Corp.
Yes, I think.
In general, we expect our our alternatives business to growth to grow.
In the in the four to seven range, we expect <unk> to be a little bit better than that in our software businesses. The.
One of 2% and and.
We're striving hard to make to.
To keep DST and positive so zero to one.
And we think we have.
The pipelines and capabilities too.
To hit those numbers and and.
Now that's what we're striving for.
As does a lot better when there's more volatility in the market and obviously <unk>.
Recently, <unk> picked up which will help to you on this business.
Do you have other points you'd like to me.
Okay.
I think you've covered it and.
I would just say and we saw this in Q1, we are seeing pretty good lift across our business right. So it is pretty broad based so we're pretty optimistic about what happens for Q2 to Q4.
That's helpful.
And then as a quick follow up.
On.
Can you maybe is there any color that you can provide on the the schwab transaction and they're switching away from DST to be and why Mellon.
For the transfer agency business.
Who what kind of an impact that might have on the on you guys.
Yeah, we don't expect that to have much of an impact on on on our overall business the.
The revenue side of that was not was not.
Not particularly large and and.
Sometimes.
Some of these.
Some of the Big peak.
Custodians are bringing on are under tremendous pressure.
So we are.
We're holding our own in.
And bringing out new technology and moving on a lot faster than you know, we're not going to always win.
That's true.
The acquisitions and they're going to bring in new.
New technologies that were used by the acquisition of candidates a day okay.
So, yes, I mean, that's going to happen occasionally and kind.
The swaps till the great customers of ours and the amount we have our respect for them and.
And no.
We're not going anywhere.
And we were pretty optimistic about.
What we're building and how we're delivering it.
Thank you Bill.
And our next question comes from Alex Kramm with of UBS.
Yeah, Hey, good evening everyone.
Can you maybe just talk about pricing in the quarter, maybe across the board. But then also on the hedge fund administration sites and you've been talking about the for couple of years now that you're trying to get a little bit more so anything you can share on the quarter will be helpful.
Rahul you want to take that.
Sure Alex.
I think as we've said previously the.
We developed a pretty good process now where once a year.
We go back to these customers and we talk to them about the contracts, particularly ones that are coming up on the renewal.
And.
And to see generally a modest increase thats in line with what happens to our cost. So we're in that process and have been in that process for three of four months now and there really hasn't been.
Much to report other than Hey, Nobody is happy to get approached about a price increase but we have we've had good construction, yes, good constructive dialogue and it really has not been any fall out of out of that process and we think that our mission, which was to be able to have that conversation in and deliver a lot of value to go with that.
We're doing that so it has gone well.
Like I said, it's pretty modest overall.
But we expect to be able to keep doing it on an annual basis over the long term.
Okay Fair enough and then maybe just turning back to the quarter I think you mentioned D. S T.
Can you break out of maybe some of the the.
The other businesses.
The alternatives business growth for the quarter, but then also you know interesting some as I don't think you mentioned debt. So I need anything you can share in terms of how the growth came together for the quarter, sorry, if I missed it.
Yeah, the pay alternatives as Patrick the alternative business for a 6.7% on the quarter.
And for lengths was up 10%.
And as Bill mentioned, the US business has lower volume was down 3% for the quarter.
And in the BSG business combined health and financial services was essentially flat on the adjusted basis.
Alright, thank you.
And our next question comes from Andrew Schmidt with Citi.
Hey, Bill rail Patrick Hope, you're doing well thanks for taking my questions.
So question on DST I think you mentioned last quarter financial services for the year on an organic basis that could be low single healthcare may be flat to down.
Any update to the growth trajectory of DST. This year and then any commentary on how the pipeline of specifically shaping up for DST for.
The other parts of the business would be helpful. Thank you.
Well again, we've done lots of changes in DST, and we're pretty focused on it and we have some some of them.
Some really good pipeline business in there and and I think of it.
You know, it's the execution part of it you have to win.
And then you have to you have to convert so we won a number of large mandates.
No in the third and fourth quarter last year on our retirement services business and that revenue as well.
The build throughout 'twenty.
21, and that will give the sir.
Significant lift.
DST in and then we got a winner.
Tomorrow.
On that.
The challenge for this.
But we do think we're bringing out some of it.
Really exciting new digital technologies and capabilities and I think it.
Ultimately.
You have to have superior products and superior services.
When you have that in the.
Ability to.
To train your sales force and when the deal so I think of this.
The becomes increasingly.
Possibly.
Sure.
Take it for a whole.
It is bill and the DSP financial business.
Our thinking is planned for the year.
Low low single digits, probably two 5% of so organic growth on the health business. One of three so the average of those two things is kind of on a little over 2% that's what's in our plan right now.
Got it that's super helpful and I appreciate the technology commentary that debt.
That's great to hear.
I guess just as a follow up just switching gears to institutional asset management market. Obviously, we saw the.
The announcement of large asset manager of switching to the front to back investment servicing platform.
Are the scheme more demand for more conversation amongst the larger traditional asset managers just to overhaul the right. Their tech infrastructure, obviously been talking about this for a number of years, but it does seem like.
Some things are starting to break of instantly.
I'm just curious on your commentary there on that market.
Well, we are bringing on a number of new products and services and.
Focused in that area you know the law.
Large scale of asset managers.
It's a.
The multi year process for them and.
And the new technologies shrank the RPI either.
The ml of that.
The natural language processing for those things.
The increasingly sophisticated.
Increasingly powerful.
Speaking of the managers are looking at what they have today and then half of the transition.
Two new technologies, Inc.
Two.
Three months of their operation.
Yeah.
And in infrastructure costs. So we think increasingly that will get adopted.
Yeah.
COVID-19 kind of put out.
It was difficult.
True.
Two.
Without share your infrastructure and bring new.
At the same time.
Yes.
Pretty awful lot.
Okay.
Review and analysis now on.
Thanks.
Kind of two.
Change.
And.
We're planning on being at the forefront.
Makes sense until for getting to that stage. Thanks, a lot Bill I appreciate the comments.
Okay.
And our next question comes from the <unk> Kumar with Evercore ISI.
Hi, good evening, Thanks for taking my question.
Can you give us the art.
Your thoughts on the current outlook for a large license deal. So now that of vaccine is becoming more prevalent in the U S.
Are you do you think youre going to attracting even more face to face meetings to close some of these larger deals that on.
You spoke about on the fourth quarter earnings call.
Well.
For a whole spoke.
Early arena.
The thing Youre seeing now is increasingly infrastructure bundles with.
Large licenses so of the technology aspects of.
Of maintaining.
Current code right. So releases have to go in and it has to be handled and that has to be done on a very professional way.
That's all of our expertise.
Often it's not.
Sure.
These large curved managers that are.
Very expert of using applications, but not necessarily.
This expertise.
Maintaining them upgrading them planning for those things and so we think that underlying capability is giving us.
You know a little more of a little more running room.
Think of that.
But the.
Large license sales I think are not going to be as the.
As robust as they were 10 years ago, because there's more options for people and I think they will adopt some of those options that make their entire infrastructure easier to manage.
<unk> grew at the hole.
I do and we've seen.
As Bill just mentioned, we've seen that strength in our advent business and we're starting to see more of those conversations and our institutional and investment management business.
That's extremely helpful and just on the DST business. The clarification question did you say DST for the full year it could be up the yard of 1% organically or up 2%.
What gives you confidence that the S. T will continue to improve in 2021 vs.
What's the thought on 2020, thank you.
Yes, I think I said the zero to one.
For the whole correct for you and I think I think we're shooting at.
The combined around 2% and and we have we have opportunities.
Tremendous opportunities.
Oh Wow.
Opportunities only translate into financial statements when contracts get signed.
Right. So we are executing on art skilled deals.
Hopefully over the next.
A couple of quarters, it will come to fruition and won't be able to share with you.
You know what.
Partially optimistic that the big things are going to happen for us.
We've been working hard to make sure that happens and.
At the same time, continuing to drive earnings drive cash flow.
And.
You know.
Increase shareholder value of that that's sort.
John.
Do you have any more on that.
So I don't we are we're also we've got reasonably good visibility at least in the current quarter and all that out. So that's also part of where the confidence comes from.
Thank you.
And our next question comes from James Faucette with the Morgan Stanley.
Thank you very much.
Wanted to touch on quickly acquisitions.
During the course of the core ROE on kind of mentioned.
The you might be looking a little bit more tweaking.
Tweaking your M&A strategy, a little bit and it seems like Maine. The mainstream may fit the criteria you outlined then.
Should we expect the acquisitions similar to this going forward in terms of price you are willing to pay growth rates et cetera.
Well I think I think the answer is that yes.
Why.
Hi.
No change for you can tell us about what's the high end of this.
Alright. Thanks.
Theres not a lot of money chasing things in.
We have a lot of confidence in our development teams.
And our sales organization.
We believe we can build.
The most anything.
The other question becomes is where do you allocate.
Capital and we want to allocate it will give our shareholders the best for risk.
The risk adjusted return.
So.
Maybe these things that are some of them at 20 times revenue.
You know, maybe maybe they aren't going to be.
<unk>.
Moon shots.
Right.
You've been at this long enough 20 times revenue man, that's the big number.
Once the <unk>.
You guys do your due diligence you kind of know how youre going to make make that pay off it so no.
I'd say, yes of course of what we have to raise our prices.
Good day, good assets because of good assets are selling for higher price.
But we're still disciplined.
Like I said we.
We did almost $500 million and adjusted consolidated EBITDA.
And that gives us a lot of flexibility and as Patrick said.
We expect somewhere around a billion three of free cash flow.
So we can use that to do lots of things and we plan on doing lots of things and so on.
I think.
Here's the good question and there is no specific answer other.
Other than certainly.
If youre going to be the M&A game youre going to pay for now.
Good.
Years ago.
Yeah for sure and I think the tweaks or certainly makes sense I wish I could tell you, though bill.
How high or how long it goes on.
But I guess associated with that it seems like there's been some recent focus on Australia given link group in mainstream is that of coincidence or is there something attractive about the Australian market that youre looking to gain exposure to and just trying to get a little bit of of insight into if theres anything specific there that we should be paying attention.
Attention to in that region of the world.
Well I think Australia has a strong economy and and they have of their superannuation fund concepts and in distribution to the cause there.
Talk to us is the.
The call it the wall of money I think in.
When you have that you have you all.
Upwards of 30 million people that are.
Certainly.
Talk to us that one of the.
Of the world.
Wealth.
As far as for populations go I think it's an attractive market right and they have.
No it's English speaking of.
Yes.
The Commonwealth practices.
Contractual price similar to.
The UK and the U S and Canada done and so that makes it pretty attractive.
It makes what we do pretty transparent to them.
I think that's why you see.
Yes.
Interesting.
Plus there were things that were for sale.
So it's something that.
We try to take advantage of.
No matter, where it is more.
Yep Yep good.
Good thanks for that Bill.
Yes.
And our next question comes from Chris <unk> with Piper Sandler.
Hi, good afternoon of ground, Chris down yet.
In terms of your second quarter guidance, just wondering about the it looks like about a 2% decrease from the first quarter in terms of adjusted revenue.
Should we think about that does that.
With that sort of coming off a strong quarter for intra lengths or were other was the other revenue pulled forward and other sources or or just help us understand whats the quarter on quarter change in revenue.
Who do you want to take that.
Sure.
I think the biggest thing there is we do have some seasonality in our business.
A couple of couple of of the areas for example in our alternatives business, we do a lot of year end financial.
<unk> financial statements and tax work.
And our transfer agency and <unk> businesses, we do some some regulatory filings and reporting to investors that occur around the year end process and so there's pockets like that where there is just more work that gets concentrated in Q1 than Q2 and thats primarily the difference.
Okay got it that makes sense and then.
Okay.
You already touched on this a little bit, but I just want to make sure im understanding of what's going on with the the.
The new intelligent automation solutions group is that the separate from singularity or is there some overlap or where are we with singularity and theres a lot of themes here with.
On.
The machine learning and robotic process automation that seem like they overlap between the two.
Well I think they do right I mean singularity.
This is an investment.
Analytics, and the accounting and reporting solution and then are you doing.
Intelligent automation and workflow product AWD would be integrated with that in order to be able to use all of the singularity capabilities.
And be able to put in a very sort of skewed workflow process. So it is all on.
The related then.
But it's the bundling of those things I think that gives us the power.
No.
Mark.
Okay. Thanks Bill.
And our next question comes from Jackson Ader with the Jpmorgan.
Oh, great. Thanks for taking our questions.
First one is on win rates and I was just curious.
Yes.
On either the.
As the business or fund administration.
Whether you were seeing any kind of different win rate for maybe new standard launches versus your win rates with existing funds that are just.
On putting out for an RFP.
I think.
Our historical win rates on our current win rates are pretty similar we might have a little momentum now.
But we were.
Pretty powerful force.
We added 74 billion.
And of our funds business.
Okay.
Have consistently been up.
Big Force of New fund launches.
And I think that will continue.
Yep.
Color Russell.
I agree I think it is pretty consistent with the past and we are as our business gets stronger and we continue to build products and services. It is strengthening.
And that part of the market the New fund launch market has always been really attractive to us.
Any of our long term clients and big clients started out in that process and debt continues to be a place where we have a good number of wins.
Okay.
And then my follow up is on just two quick ones on on the mainstream acquisition.
First.
Is there anything structural about that business that would kind of.
Keep it from being able to get to that.
On the.
The operating margin kind of target level and then also.
If memory serves the add debt when you acquired them had.
Thank you.
The team there may be 20 percentage of the business came from the international market.
So I'm just curious if there is any kind of.
Either retailer.
The potential cross sell with Amazon moving into a new market.
Well, we don't think theres anything structural mainstream and we can just good business. We think we can.
Ed.
A lot of Houston sales marketing and then obviously, we're going to save some on.
On overhead costs.
The margins.
And as far as advent of concern.
Well internationally.
Diamond, we acquired with that because thats the big Alright.
<unk> thousand 200 or so.
Yes.
And black on them and that continues to be a nice growth area for us and we like that space for us.
<unk>.
The bright lights that space so.
So finding tuck.
Tuck in acquisitions.
It's expensive.
You gotta be.
Cognizant of that expense.
And then also what's the time to market, if we decided to build on what you have to make sure that we are.
We're wise about which which of course.
Okay. Thank you.
And there are no further questions at this time I will turn the conference back over to Bill Stone for final remarks.
Well again, we appreciate all of you in and hopefully.
We're off to the races on here Alright, the Kentucky Derby is coming up.
And then a week or two in and.
I look forward to talking to you at the end of the second quarter. Thanks.
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Eric.
Okay.
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Yes.
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