Q2 2023 SS&C Technologies Holdings Inc Earnings Call
Okay.
Thank you for standing by my name is daily and I will be your conference operator today at this time I would like to welcome everyone to the S F.
And C technologies Q2, 2023 earnings call.
Lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session.
If you would like to ask a question. During this time press star followed by the number one on your telephone keypad.
If you would like to withdraw your question again press star and the number one.
I would now like to hand, the call over to head of Investor Relations Justine Stone you may begin.
Okay.
Welcome and thank you for joining us for our Q2 2023 earnings call I'm seeing stone Investor Relations for epilepsy with me today is Bill Stone, Chairman and Chief Executive Officer.
Rahul Kanwar, President and Chief operating Officer, and Patrick Mccarthy, Our Chief Financial Officer before we get started we 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.
The format of 1995.
Actual 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-K, 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 27th 2023, while the company may elect to update these forward looking statements.
Specifically disclaims any obligation to do so.
During today's call, we'll 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 Dot speed test Dot Com I will now turn the call over to Bill.
Thanks, Justin and thanks to everyone for joining.
Results for the second quarter of $1 $6 billion in adjusted revenue up two 5% and our adjusted diluted earnings per share were $1 eight.
An increase in interest expense, which was $118 million in Q2 2003 compared to $68 million in Q2, 'twenty, two and general expenses that put some pressure on our bottom line. Adjusted consolidated EBITDA was 500 key point $4 million and our EBITDA margin was 36, 8% up 104.
The basis points from Q2, good morning too.
Our second quarter adjusted organic revenue was up two 5% driven by strength in our alternatives business.
Particularly private markets, which was up over 20% and drawings and the retirement businesses.
<unk> generated cash from operating activities for $584 2 million.
For the six months ended June 30 up $137 million or 35% over the same period last year.
We paid down $125 million of debt in Q2.
Bringing our consolidated net leverage ratio to three seven times and our net secured leverage ratio to two eight times consolidated EBITDA.
In Q2, we bought back 2 million shares for 111.900 million at an average price of $56 17 per share.
We will continue to target, 50% of our cash flow to stock buybacks.
50% to debt Paydown.
Our M&A M&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, our internal deployment of both print and digital workers is well underway and we are.
On track to achieve our full year targets.
We currently have over 500 digital workers supported across all business units.
We believe this is one of the fastest deployments of digital workers and Blue Prism history.
Currently the largest usage of blue prism.
Our Gibson Fund administration businesses, but we see significant opportunity in retirement.
Regulatory and tax reporting.
Operational functions and production with digital workers include reconcile.
A reconciliation breaks investigation and resolution statement downloads daily price file investor contract notes and statements and reporting.
We expect the FTE savings to accelerate in the back half of the year as these wide processes are embedded.
And the business and the full benefits are realized.
I'll now turn it over to Rahul.
Thanks Bill.
Our business continues to strengthen as we prioritize innovation and new product rollout across the company.
Neutral links rebounded with 9% growth in Q2 average deal sizes up price increases have been implemented.
Neil services, which offers a reduction in NDA services has become interlinked fastest growing product.
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.
Make data driven decisions.
Initial client feedback has been positive.
Bill mentioned private markets until the unions to accelerate but 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 <unk> private cloud environment.
<unk> integration loan platform integration a robust data platform are all key functionalities to manage complex fund structures retirement, which grew 7% in Q2 as several multimillion dollar opportunities in the pipeline, we recently surpassed $1 billion 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 PON services advent and gets.
Some key attributes that our prospect cited was strong functionality the 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 on boarding experience.
As one example, we recently announced Blue Prism has partnered with the National Health services business services team to provide additional services to the NHS in England.
Blue Prism 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 mirrored the needs of our pharmacy and healthcare customers in essence a health.
And we view the combination of our healthcare products and services, including the Omani Rx along with Blue prism to be a powerful solution.
I will now turn it over to Patrick to run through the financials.
Thanks.
For the second quarter were GAAP revenues of $1 billion $362 6 million.
GAAP net income of $130 7 million.
Ed.
GAAP EPS of <unk> 51.
Adjusted revenues were $1 billion $363 4 million.
Adjusted revenues were up two 5%.
Adjusted operating income increased six 7% and adjusted diluted EPS was $1 eight a one 8% decrease from Q2 'twenty two.
Due to the impact of higher interest rates on our debt.
Adjusted organic revenue increase on a constant currency basis was two 5%.
Acquisitions contributed $5 8 million.
Foreign exchange had an unfavorable impact of $3 4 million.
We had strength across several product lines, including alternatives.
Gibbs transfer agency services Blue Prism and the interlinked businesses.
Adjusted operating margins expanded in Q2 2000.
Okay.
'twenty three as we managed expense growth adjusted operating income for the second quarter of 'twenty, three increased $35 million or six 7% from the second quarter of 2022.
Adjusted operating margins were 35, 6% in the second quarter.
There's a 34, 2% in the second quarter of 2022.
Excluding acquisitions expenses increased.
6% on a constant currency basis.
Acquisitions added $3 8 million of expenses and foreign currency decreased cost by $6 2 million.
Net interest expense in the second quarter was $118 million.
An increase of $15 3 million or 74%.
Q2 2022.
Q2, 2023 net interest expense includes $3 4 million of noncash amortized financing costs and OID.
<unk>.
The average interest rate in the quarter was 6.59% compared to 345% in the second quarter of 2022.
Adjusted net income as defined in note four.
With 270, $474 6 million and adjusted EPS was $1 eight.
The effective tax rate was 26%.
Diluted shares decreased to $255 million.
$257 million in Q1.
Higher share repurchases during the first and second quarter led to the increase decrease.
On the balance sheet and cash flow, we ended the second quarter.
$439 7 million of cash and cash equivalents and $7 billion of gross debt.
Essence is net debt, which excludes cash and cash equivalents of $114 4 million.
<unk> was $6 6 billion as of June 30th Apo.
Operating cash flow for the six months was <unk>.
$584 2 million and $136 7 million.
35% increase.
Compared to the same period in 2022.
And for the six months ended June 30th we purchase.
Purchased.
Treasury stock for a total of $246 6 million.
For $4 3 million shares at an average price of $57 78.
We declared and paid a dividend of a 101 million common stock compared to $102 million.
Last year.
Net debt payments for the <unk>.
Six months was $169 8 million.
So for the six months, we paid $226 9 million of interest compared to $112 6 million in 2022.
And the six months, we paid income taxes of 159 billion comparable.
Comparable to $156 5 million in 2022.
And our accounts receivable DSO was 53, one days compared to 55 nine days as of June 2022.
Capital expenditures and capitalized software was totaled $121 4 million or four 5%.
Our revenue on a year to date basis.
Our LTM consolidated EBITDA, which we use for covenant compliance was.
$2 billion.
$31 6 million as of June 30th.
Based on net debt of $6 6 billion, our total leverage ratio was 327.
And our secured leverage ratio was two 8%.
On outlook for the remainder of the year I'll cover a few assumptions first we.
We will continue to focus on client services.
Retention rates will continue to be in the range of our most recent results.
We are assuming foreign currency exchange will be at current levels.
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% and 4%.
Adjusted organic growth for Q3 will be in the range of one five.
To four 5%.
We have assume 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.
We'll continue to invest in our business long term with capital expenditures in the range of 4% of revenues.
Yes.
And I would expect our GAAP tax rate to continue to be approximately 26%.
So for the third quarter of 2023, we expect revenues in the range of $1.355 billion.
The $1 $395 million adjusted net income in the range of $287 million.
$309 million.
And diluted shares in the range of $254 million to $256 million.
For the full year, we expect revenues in the range of $5 469 million.
The $5 575.
Adjusted.
Adjusted net income in a range of $1 billion $160 million.
The $1 billion $225 million.
And diluted shares in the range of $254 million to 257 months.
For the full year, we expect cash from operating activities to be in the range of $1 $265 million.
The $1 $335 million.
The DST I rest up 401, K settlement, which we recently announced.
Excluded from this cash flow estimates.
If the court approves the settlement in 2023, we expect.
The impact on cash flow to be approximately $40 million net of taxes.
And I'll turn it over bill for final comments.
When Scott and I want to congratulate you on your retirement, Patrick has been with US since 1999 you've.
You've seen us through over 60 acquisitions, a go private transaction and our 2010 IPO.
Thank you for your accomplishments and your dedication.
I also want to welcome Brian now certainty.
He is our newly appointed CFO .
<unk> will join us.
Seven.
Listen as CFO of Chicago Board options exchange.
Brian has an MBA from George Washington University.
His undergraduate degree from the University of Notre Dame.
Finally.
He has spent the past 37 years, developing and acquiring a broad range of market leading technology.
We have that and world class services around these products multi.
Multiple times, we are aggressively and extensively defended our intellectual property against misappropriation.
We have done it successfully.
Okay.
On occasion, our professional fees will tick up.
We have.
As we hire expensive legal challenge.
And now I will open it up for questions.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
Please limit yourself to one initial and one follow up question and we'll pause for just a moment to compile the Q&A roster.
And your first question comes from Kevin Mcveigh with Credit Suisse.
Thanks, So much and let me add my congratulations to Patrick as well.
Welcome to Brian .
Hey, it looks like you continue to see real nice momentum in the organic growth came in at about two 5% and the guide for Q3.
And the full year is 3%, but I do the math I think that implies 5% for Q4 I just wanted to confirm that number one and then it's a really nice acceleration from the beginning of the year, maybe if I'm right on that five could you maybe just help bridge maybe from the one to five or maybe the two and a half that you just put up to the five maybe start there.
Yes.
Well I think that we did two and a half in Q.
In Q2.
Two six maybe Ed I think in Q Q3, we're expecting somewhere between.
One five.
Good morning.
And for Q4.
I think where we have four for Q4 on revenue growth.
Yes, Q4 at the at the midpoint in Q4, it's about four 8% so close to five.
Yes.
Thank you Andrew.
Kevin.
It does bill and then just any sense it.
Professional fees on the IP.
Any 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 there was professional services that you just alluded to is that right.
So I'll add medical claims obviously interest expenses by Florida.
The biggest thing to impact Etfs, but.
But on an operating basis.
The medical claims.
And professional fees.
We're.
We're more than expected in Q2.
And.
We.
Have no choice.
Do you think sort of the yen, but you don't protect your IP.
We're not protecting the shareholders' assets.
And so we will continue to do that.
We've been successful.
A number of times.
Makes sense. Thanks, so much.
Your next question comes from Dan Perlin with RBC capital markets.
Thanks, Doug.
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 are going to drive.
Incremental revenue growth. The obviously just talking about the organic growth.
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.
No it's been a little stronger than last quarter.
But.
You can see on our R. R.
Hey that that's ticked up about $15 billion.
Q2.
That's a good harbinger of some of the things that we've done for our clients.
That separates us.
From our competitors.
And I think what what we've done with the technology and our services businesses to make it.
Selling offerings for our for our clients and our prospects and we continue to take business from our from our <unk>.
Competitors.
Hey.
It's still a lumpy, though right, particularly with the biggest the biggest funds.
We have deals we think we would have.
It's.
Months ago.
That literally Greg.
And there is there is really at least as far as leasing.
There is nothing we can do that.
To make the biggest funds.
So so that's one thing and then.
On the technology.
The Aloha product has been pretty strong we've done pretty well with singularity, we've got some real momentum.
And all the additional products that we've done with black Diamond.
Combined black Diamond with our trust accounting, so that <unk> can continue to keep.
Keep the assets that they've gathered win when it goes to generational.
I would note and generation puts it didn't trust the kids oftentimes they lose that business.
They don't have trust accounting capabilities, so thats been pretty popular for us in Geneva continues to.
The dominate in the in the large scale hedge fund business.
And I think we have a number of the private markets.
As we've said it was up over 20% in Q2.
Any number of pockets of.
<unk> strength, just getting all of the pockets to be in the same quarter.
So so I think it is.
Sure.
It's just the cost of it.
It's making sure we're executing at a very high level.
And that debt.
Yes.
We go through the wins.
That's where we're at we're still a very profitable company, we generate tremendous amounts of cash we're not going anywhere.
Still very competitive and.
And it's just a question of.
Of.
Really getting the entire orchestra.
Perfectly tuned.
Yes.
We still on.
Yes.
Dan do you have a follow up.
It sounds like maybe we lost the operator, let me.
I think we lost the operator.
Well done.
I mean I thought it was a really good answer.
[laughter].
Excellent.
Yeah.
Okay.
I believe we have Andrew Schmidt from Citi has our next question.
Operator should be joining again.
Yes.
Go ahead Andrew.
Justine, we must not be connecting with the.
No David we feel here.
They can still hear us.
Sure.
So can Andrew here.
I think so I just can't open to wine from where I am yeah.
Okay.
Thank you Scott.
Andrew Your line should be open.
You can hear us.
Okay.
Okay.
Sure.
Okay.
Sure.
Okay.
Well some other things that we're working on as we have this.
Lola.
In our.
Conference call.
We.
We're excited about bringing Brian snow on it.
He brings a lot of experience and expertise.
Obviously has big shoes to fill with Patrick, but but I think our opportunity too.
We can continue to grow it's going to be tied to continuing to develop our talented and go out and execute against that we have we have full pipelines.
Leading positions in lots of things.
Segments of financial services.
We have a real opportunity in Demonte Rx.
And it's really bringing all of that to fruition I think that's the best.
That's the challenge that we have and I think we're up for that challenge.
Generating 500.
Nice try.
It kind of gives you a feeling that you have enough resources to get it done.
Your next question comes from the line of Peter Heckmann with D. A Davidson. Please go ahead.
Okay glad to have it back on line here.
Bill can you talk a little bit.
This trade settlement shorting, the trade settlement cycle to one day be plus one and then eventually duty bus that's been talked about for a very long period of time do you view that as a catalyst at all for some of your clients.
Consider upgrading older systems.
I think that that if they have to then they will.
And if they can continue to.
Bandaid 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.
I don't foresee that.
But there will be some that want to.
I want to take advantage of.
Bob.
Of the increase.
Capability of the newer systems the security.
The speed and then also done.
Yes.
Yeah.
Reconciliation parts of that stuff and making sure there's everything gifts.
It gets processed.
Timely fashion, so that there'll be some disruption.
Don't think there'll be a tremendous amount of.
Of incremental revenue for you, Mike I don't think of them.
A few hundred million or something like that right now to.
To move the bar on FX and say you got it.
$102 million.
Right, Okay, Okay and then.
Intra links.
Up 9% is particularly impressive given that M&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&A, where <unk> is outperforming and allowing that business to continue to grow.
Okay.
Do you want to take that role.
Sure I think the.
The biggest area outside of M&A is D. The alternatives area.
So that's the <unk> portal that I mentioned in my comments, it's the LP communication capital call distributions 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 NLP communication system to our fund administration clients and going to market is sort of a joint package and thats been attractive. So that's another area where that alternate store business is growing even faster than the <unk>.
<unk> business right now.
And I think we have like redaction services and other enhancements to the <unk>.
Core offerings have also been pretty attractive.
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 from software license fees on an annual basis I don't believe Youre still disclosing this is a separate line item.
Software license fees or are we kind of talking around $65 million to $80 million a year is that about the right level. If we just isolate the perpetual licenses.
I don't really have that off the top of my head.
I would I would guess that we sell.
Yes, probably something 20 $25 million a quarter.
Okay, Alright, I appreciate it I will get back in the queue.
Okay.
Your next question comes from the line of Andrew Schmidt of Citi. Please go ahead.
Hey, guys. Thanks for taking my questions and let me extend my congratulations to Patrick in the portable towards Brian when it come sport.
I wanted to ask on the <unk> the operating expense base.
Obviously, it's been a volatile couple of years and just.
There has been.
More variability there than historically.
Maybe just talk about just your visibility when it comes to the expense space.
In terms of just.
Yes.
What do we expect any.
On one hand, you need to add a few things labor cost with cash year now you have these legal fees.
Picking up a little bit on the other side of this we also have blue prism benefits.
I was wondering just how this balances out in terms of your overall margin structure of visibility going forward. Thanks, a lot guys.
Okay.
Well I think.
If you look at our expenses on a constant currency basis, excluding acquisitions in Q2.
Was up <unk>, 6% so.
Is that.
As an overall marker.
Keep keep your expense growth.
Less than 1% this is.
Think pretty impressive and and as much as we've been deploying.
And getting some of the benefits of Blue prism.
It's like it's 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.
But a lot of opportunities to.
Further our our cost management our expense management.
With the deployment of digital workers and we think we can just give our workers current human workers better jobs with more interesting work and leopard, let the digital workers.
Do the repetitive stuff that that computers are great.
So we think we have a tremendous opportunity there.
<unk>.
You'll have.
A situation where.
Where you think your IP spin.
Appropriated and then you got to go.
And that Thats not a cheap process.
But it's up.
The necessary process.
And so that happens and we had some.
Some excess medical claims in the second quarter and that's going to happen you know we have a big population.
And we want to make sure they have great great health, Gary and.
So whatever that is we're happy to pay it.
Got it thank you for that it could be clear youre still it looks like correct, if I'm wrong, you're still expecting operating margin in the back half is that correct.
We are.
Okay Fantastic and then Thats correct, maybe just.
Thanks, Patrick.
Just just lastly, it sounds like you saw on the organic growth.
Yes.
Sort of expected some slowness in terms of license revenues.
Whats the expectation for just license revenue pull through in the back half just given and that can be more variable relative to kind of the other.
Other.
Sources of revenue just curious to get your visibility around that thanks, a lot guys.
Well.
License revenues are kind of capital expenditures for our customers.
And more and more.
Theyre going for outsourced services.
Longer term contracts.
And and less.
Less large scale capital commitment so I would I would.
Sure Jeff.
The license business will continue to evolve.
More term licenses probably.
Perhaps longer terms, which Mike.
Offset.
Some of them move towards outsourcing, but yeah, because on longer term licenses.
You get 606 recognition.
So there's a lot of moving parts and.
Some of this stuff with.
With the accounting and reporting.
GAAP and adjusted GAAP and all that.
It gets a little up a little RFP.
So for me I watch cash.
How much cash do we get coming in here.
Now in cash.
Cash doesn't lie.
I think thats.
That's kind of my focus city.
And how people interpret accounting rules.
It is a difficult process.
Got it thank you bill.
Your next question comes from the line of James Faucette with Morgan Stanley . Please go ahead.
Hi, It's Michael Lynn Fontanne for James Thanks for taking our question.
No I think at a conference in late May you were talking to buyback potential on that $700 million range and then we have the buyback announcement for roughly a 1 billion is there anything we should be reading into here in terms of the higher quantum there and just in terms of your use of free cash flow.
I mean, I don't think so I think if we find acquisitions that that we want to buy that we can get.
At a price where we feel like we can.
We can make some money then I think we will go after.
After acquisitions first but.
After that we're going to pretty much split it between.
Between stock buybacks spin.
And debt repayment.
If interest rates alleviate.
Accordingly.
Allocate more to stock buybacks that we would get.
To debt pay down, but we're not going to.
So 100% either way.
And we view it as or more than we view it.
As science, and we're going to try to.
Try to be wise.
Makes sense I appreciate that maybe just a follow up on the organic Rev cadence throughout the rest of the year.
It seems like you are gradually scaling on the organic revenue side with exit rates close to 5% in <unk>, 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 <unk>.
Okay.
It's a whole combination of things right.
Right, including price increases, including.
Okay.
Getting getting the large scale deals that are in.
Already in that.
Revenue have that revenue flushed through in Q4, and then it's so new to selling new business. So I think it's a combination of things.
And.
Yes.
Work to be done of course, but.
It's still July we got a lot of time and we have a lot of really talented people in and.
And.
We expect results in.
So on balance they deliver them.
Thanks Bill.
Okay.
Once again, ladies and gentlemen, if you have a question it is star one.
Next question comes from the line of Terry Tillman with <unk>. Please go ahead.
Hey, guys. This is Joe Meares on for Terry.
Let me extend my congrats Patrik again, Brian its always nice to see.
Delmar climbing the corporate ladder I have a question about blue prism.
I think at the end.
Last year, you had expected about a 100 digital workers you have 500 now.
Do you still expect to get to 1000 by the end of 2023.
I think the.
Numbers, we gave.
The last.
Conference call was between <unk> hundred 50 <unk>.
2700.
And I think.
We're hoping.
Correct me, if I'm wrong, but.
We would expect to have close to 2000 by the end of the year.
So I think thats right.
Thanks, and just as a follow up I think in the past you'd noted about a $50000 savings per roll. That's migrating your blue prism is that still accurate or are you seeing.
Better or worse savings as you've implemented more of these workers.
Yeah.
I would say that that's still that.
Kind of a rough estimate of where where we are.
As we as.
As we automate different processes.
There is more about it.
Might be a little bit wider range.
What we say like digital worker, but I think we would still say the averages.
Somewhere around 50.
Plus or minus 10%.
Great. Thanks, so much guys.
Your next question comes from the line of Patrick O'shaughnessy with Raymond James. Please go ahead.
Hey, good evening can you speak to which part of the company, where your intellectual property litigation is targeted and has the potential theft of your IP had any impact on that business at this point.
Yes.
Primarily in our fund services business.
And I would say that we think it has an impact on our.
On our business been in.
Also.
That's.
That's why we fight these things Patrick is that.
There.
You don't want to compete against people that are competing against you with your technology.
Yes.
What's been particularly fair.
Got it makes sense.
And then what are you seeing up there in terms of deal multiples, Obviously Sim Corp sold recently at a pretty lofty multiple as did a Denver are there pockets where multiples are starting to come in or is it all still pretty frothy.
Alright.
Yes.
I don't quite understand either one of those deals frankly.
But obviously your older smart people to do those things and so they do.
I just look at it.
We make a whole lot of money.
And if we keep our eye on the ball.
We're going to get some nice pictures don't we're going to knock them out of the park.
And Theres no reason.
I understand right I mean, we want total shareholder value and we always want our stock to go up rather than go down but.
But we live in a 90 day world on that stuff, but.
But technology and big time customers and all that.
Really live on a 90 day world.
Sometimes they wait six months before the baseline.
Sign a contract and the contract doesn't change at all.
In those six months.
It is getting in the cadence of your customers and making sure that you have enough pipeline that when people delay you guys are the ones that you can accelerate.
I think thats, our real challenges.
Five $5 billion.
If you want to grow 10%.
Albeit that any attrition.
We still have to sell $550 million, we have 4% attrition, but we have to sell $750 million.
That's a lot that's a lot bigger than most of the people that we get compared to.
Understood. Thank you.
Your next question comes from the line of Alex Kramm with UBS. Please go ahead.
Yes, Hey, good evening, everyone just wanted to come back to organic growth for a second here because I don't think thats been asked.
On the on the actually the guide down I mean, your words I think the midpoint was 3% before I'm sorry three.
3% before now.
4% before thank you three now you talked about the software licenses so that makes sense, but it is it 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.
Well I think that this is.
Right.
Yeah go ahead Patrick.
Yes, I think I think that's all I mean, when you compare that.
The outlook, we provided a quarter ago and this outlook is pretty much the software business.
Right.
Advent and.
In institutional asset management, and we're seeing improvements in some of the other outsourcing business.
Ill targets interlinked and our health business from where we expect it to date.
So.
It's mostly mostly in the software business.
It is also growing up in the back half of the year, it's still growing in the back half of the year, but not as much as we expected.
Okay no. Thanks for clarifying and then maybe on <unk>.
On a more positive notes the gets business I don't think kind of on this call at all to pretty solid back to back quarters solid in the context of the normal growth in that business three 5%, but seems stable. So just wondering if there's any incremental color.
That's a good growth rate for the time being we feel are hopeful that it has not only stabilized, but we can actually accelerate from here.
Well I think 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.
To close big deals but.
Thanks for agency business, they're very large.
Tens of millions annually.
Annually, so it's up.
It's up.
Long sales process.
And so.
It is.
It is fraught with delays so while we have some optimism I would say that.
We're watching that very closely we're holding more.
Color.
Well I think I think.
We agree with 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.
Alright, so 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 growing a lot faster than.
Kind of low single digits that it is right now.
Alright, very good thanks, guys.
There are no further questions at this time I will turn the call to Bill stone.
Thank you Brian again, thanks, everybody for being on the call I can assure you that we are up.
Pretty focused and we look forward to talking to you.
At the end.
At the end of October .
Patrick Thanks again.
Thank you.
Yeah.
This concludes today's conference call. Thank you for joining you may now disconnect your lines.
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Okay.
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