Q3 2025 SS&C Technologies Holdings Inc Earnings Call
Speaker #3: Thank you for standing by . My name is Greg , and I will be your conference operator today . At this time , I would like to welcome everyone to today's snack Technologies Q3 2020 Earnings Call .
Speaker #3: All lines have been placed on mute to prevent any background noise . After the speakers remarks , there will be a question and answer session .
Speaker #3: If And if you'd like to withdraw your question , simply press star one . Again . Thank you . I'd now like to turn the call over to Justine Stone , Head of Investor Relations , Justine .
Speaker #4: Hi everyone . Welcome and thank you for joining us for our Q3 2025 earnings call . I'm Justine Stone Investor Relations for Ssnc .
Speaker #4: With me today is Bill Stone , Chairman and Chief Executive Officer , Rahul Kanwar President and Chief Operating Officer . And Brian Schell , our chief Financial officer .
Speaker #4: Before we get started , we need to review the safe harbor statement . Please note 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 1995 .
Speaker #4: Actual results may differ materially from those indicated by these forward looking statements . Our results of various important factors , including those discussed in our risk Factors section of our most recent Annual Report on Form 10-K , which is on file with the SEC and can also be accessed on our website .
Speaker #4: These forward looking statements represent our expectations only as of today , October 23rd , 2025 . While the company may elect to update these forward looking statements , if specifically disclaims any obligation to do so during today's call , we will be referring to certain non-GAAP financial measures .
Speaker #4: 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.
Speaker #4: I will now turn the call over to Bill .
Speaker #5: Thanks. In Q3, we returned $305 million to shareholders, which included acquiring 2.8 million shares for $240 million at an average price of $86.82, and $65.8 million in common stock dividends.
Speaker #5: Justine , and welcome everyone . Our third quarter results include record adjusted revenue of 1 billion 51.56 $9 billion , up 7% , and adjusted diluted earnings per share of $1.57 .
Speaker #5: This quarter . We raised our common stock dividend to $1 . Eight . An 8% increase . Strong cash flow characteristics allow us to return capital to our shareholders in multiple ways .
Speaker #5: We continue to believe our shares are undervalued and will continue to prioritize share repurchases. High-quality acquisitions that meet our financial criteria are also a key element of SS&C's capital allocation strategy.
Speaker #5: In September, we announced the acquisition of Cairo Fund Services, a South African fund administration business. The acquisition deepens our relationship with two meaningful clients and gives SS&C a local presence in the African market.
Speaker #5: Our acquisition closed on October 14th . The global team of 250 employees will join our goods business , reporting into Nick Wright . We are excited about calcitonin .
Speaker #5: Calcitonin proprietary global funds network and the additional capabilities in money markets, ETFs, and digital assets. They bring to the SAC solution set.
Speaker #5: Tokenization is gaining meaningful traction among our clients, and we are pleased to offer a solution that supports their evolving digital asset strategies.
Speaker #5: I'll now turn it over . Over the call to Rahul to discuss the quarter in more detail . Thanks .
Speaker #4: Bill, we had a strong third quarter with.
Speaker #6: Solid organic growth of 5.2% and improved margins across our business. We remain focused on taking care of our customers and deepening our product set and expertise.
Speaker #6: And we're pleased to see that focus translate into financial results . We continue to pay close attention to our cost structure and view .
Speaker #6: Intelligent automation and AI serve as both a revenue opportunity and a way to reduce repetitive tasks while enhancing career paths for our employees.
Speaker #6: We've seen the results of these efforts reflected in improved EBITDA margins to date , and expect this positive trend to continue globally . Had a good quarter with continued strength within our hedge fund client base .
Speaker #6: International wins and private markets benefit from the ongoing trend toward retail alternatives. Looking ahead, we view global as a key beneficiary of emerging technologies and aim to dramatically enhance user interfaces and client experiences as meaningful competitive differentiators.
Speaker #6: Our global investor and distribution Solutions business had an excellent quarter , driven in part by successful lift outs across the globe . We're encouraged by the potential these mandates unlock , SAC continues to help accelerate the global transformation from traditional automation to AI powered automation .
Speaker #6: Selling purpose-built agents as a managed service with SAC as customer zero, we can leverage millions of daily use cases to build deep and comprehensive solution sets, which provide for both internal efficiency and external revenue opportunities.
Speaker #6: As one example , we sold an AI agent to a UK based healthcare organization to automate MRI , CT and ultrasound . Request processing , saving over 15,000 radiologist hours annually .
Speaker #6: This frees clinical capacity, reduces outsourcing costs, and addresses a global hospital challenge, as well as points to the utility of these AI agents in a wide range of applications.
Speaker #6: With that, I'll turn it over to Brian to walk through the financials.
Speaker #7: Thanks , Roland . Good day everyone . Unless noted otherwise , the quarterly comparisons are Q3 2020 for as disclosed in our press release , our Q3 2025 GAAP results reflect revenues of $1.568 billion , net income of $210 million , and diluted earnings per share of $0.83 .
Speaker #7: Our adjusted non-GAAP results include revenues of $1.569 billion and increase of 7% , and adjusted diluted EPs of $1.57 17.2% increase . The adjusted revenue increase of $102 million was primarily driven by incremental revenue contributions from globe OP of $37 million , gigs of $33 million , acquisitions of $17 million , and a favorable impact from foreign exchange of $9 million .
Speaker #7: As a result , adjusted organic revenue growth on a constant currency basis was 5.2% , and core expenses increased 4.1% , or $37 million .
Speaker #7: Adjusted consolidated EBITDA was $619 million , reflecting an increase of $53 million , or 9.3% , and margin expansion of 90 basis points to 39.5% .
Speaker #7: Note: EBITDA of $619 million is a quarterly record high for SAC. Net interest expense for the third quarter of 2025 was $104 million, a decrease of $6 million, primarily reflecting lower short-term interest rates.
Speaker #7: Adjusted net income was $396 million , up 16.5% , and adjusted diluted EPs was $1.57 , an increase of 17.2% . Our effective non-GAAP tax rate was 21.1% .
Speaker #7: Note for comparison purposes , we have recast the 2024 adjusted net income to reflect the full year effective tax rate of 23.1% . Also note the diluted share count is down year over year to 252.6 million , from 254.1 million , primarily as a result of share repurchases , cash flow from operating activities grew 22% , which was primarily driven by growth in earnings .
Speaker #7: Our quarterly cash flow conversion was 115% , up 99 , up from 99% last year . Our year to date cash flow conversion is 98% versus 89% last year .
Speaker #7: SNK ended the third quarter with $388 million in cash and cash equivalents, and $6.6 billion in gross debt. SNC's net debt was $6.2 billion, and our LTM consolidated EBITDA was $2.4 billion.
Speaker #7: The resulting net leverage ratio is 2.59 times . As we look forward to the fourth quarter and the remainder of the year . With respect to guidance , we will continue to focus on client service and assume that retention rates will be in the range of our most recent results .
Speaker #7: We will continue to manage our business to support long term growth and manage our expenses by controlling and aligning variable expenses , increasing productivity , and improve our operating margins , and effectively investing in the business through marketing , sales and R&D .
Speaker #7: Specifically , we have assumed short term interest rates to remain at current levels and effective tax rate of approximately 23% on an adjusted basis .
Speaker #7: And capital expenditures to be 4.2 to 4.6% of revenues and revenues of approximately $20 million for the Callisto acquisition for the fourth quarter of 25 , we expect revenue to be in the range of 1.59 to $1.63 billion , and 4.5% organic revenue growth at the midpoint .
Speaker #7: Adjusted net income is in the range of $394 to $410 million. Interest expense, excluding amortization of deferred financing costs and original issue discount, is in the range of $106 to $108 million.
Speaker #7: Diluted shares in the range of 251.5 to 252.5 million , and adjusted diluted EPs in the range of $1.56 to $1.62 for the full year 2025 , we are raising our top line guidance by 37 million at the midpoint , and now expect revenue to be in the range of 6.21 to $6.25 billion and 4.6% revenue growth at the midpoint .
Speaker #7: For the full year 2025, we are also raising the midpoint of our earnings guidance. Specifically, we expect adjusted net income in the range of $1.522 billion to $1.538 billion.
Speaker #7: Adjusted diluted EPs in the range of $6.02 to $6.08 , up $0.11 at the midpoint , and cash from operating activities to be in the range of 1.515 to $1.575 billion .
Speaker #7: Our 2025 guidance reflects our record results thus far in 2025, and we look forward to continued execution during Q4. And now, back to Bill.
Speaker #5: Thanks , Brian . As record adjusted revenues and adjusted EBITDA this quarter attest to our strong our strong and long term financial and operating strength , the 22% increase to $1.1 billion in operating cash flow through three quarters gives us a flexibility to pursue growth opportunities as we continue to pay down debt and repurchase shares .
Speaker #5: We also look forward to hosting almost 1000 clients and prospects at our annual deliver conference beginning this Sunday in Phoenix , Arizona . This year's conference will feature the latest and greatest sax offerings , and we'll have our chief Technology officer , there , Anthony Caiafa .
Speaker #5: We'll talk about all of our AI and advancements when within SAC in the market . In our keynote speaker is Victor Jahani , founder and CIO of Elmworth Elm Wealth and a co-founder of Long Term Capital Management .
Speaker #5: So, we appreciate all of you being here on the call, and I'll now open it up to questions.
Speaker #3: Thanks , Bill . And at this time I would like to remind everyone , in order to ask a question , press star .
Speaker #3: Please press the number one on your telephone keypad. Once again, press one. We ask that you please limit your questions to one primary and one follow-up.
Speaker #3: Then if you do have additional questions after that , you can rejoin the queue and we will pause just a moment to compile the Q&A roster .
Speaker #3: All right . Looks like our first question today comes from the line of Dan Perlin with RBC Capital Markets . Dan , please go ahead .
Speaker #8: Thanks . Good evening everyone , and a nice quarter here . I just wanted to try and get a sense around the for Q organic guide .
Speaker #8: Around 4.5% kind of keeping in mind that is contributing into that organic growth . So I'm just wondering can you tell us , you know , at least directionally , what the what the contribution of Batya would be in that 4.5% and or is that just kind of a conservative kind of jumping off point ?
Speaker #8: It felt like it should be contributing, I think, more meaningfully in the fourth quarter.
Speaker #9: Yeah, I think that the.
Speaker #6: You know, the one thing that I would just highlight is Q4 of the year before was by far our strongest quarter.
Speaker #6: So , you know , we think that's a reasonable jumping off point , not overly conservative , but also , you know , something that hopefully we can positively improve on and bethea's contribution .
Speaker #6: You know , I think we did about 16 million in Q4 last year . We expect to do about 25 . Q for this .
Speaker #8: Got it . Okay . That's great . And then just secondly , I mean , Gid's had a very successful organic quarter . I wanted to make sure I understood maybe the mechanics behind that a little bit .
Speaker #8: I think the contribution to organic growth was driven by this lift out , but maybe if you could provide a little more details around that , that would be great .
Speaker #8: Thank you .
Speaker #5: Yeah . That's a that was a big chunk . We had a big lift out in in Sydney , Australia that , that we completed July 1st .
Speaker #5: So we got a half a year from that . And , and we also sold other large lift outs as well . And we have a pipeline .
Speaker #5: So we're pretty confident in Q4 for Gibbs and 26.
Speaker #8: Got it . Thank you very much .
Speaker #3: All right . Thank you Dan . And our next question . Excuse me . Question comes from the line of Jeff Schmidt with William Blair .
Speaker #3: Jeff , please go ahead .
Speaker #10: Hi . Thank you . On the Cura Fund Services deal . Could you discuss what attracted you to that business and how much revenue is that generating ?
Speaker #10: I guess, why is that going to be held under Gid's? If it's a fund administration business?
Speaker #5: That the African market is , is still quite a bit behind the the European and the and the US markets . And in , in fund administration and a lot of where you find us these kinds of companies is in the life and pensions area .
Speaker #5: So the two large clients we have are very large , you know , insurers and they jointly owned Curro . So that's that's why it's going into into Gid's .
Speaker #10: Okay . Yeah . And did you mention how much revenue that's generating .
Speaker #5: It's negligible . It's $15 million or so I think .
Speaker #10: Okay . And then you had talked in recent quarters just about implementing a genetic AI in Blue Prism . I think that had sort of been more bot based automation in the past .
Speaker #10: So could you give us an update on kind of where you stand there and what other businesses are you developing that for ?
Speaker #5: Well , you know , we call ourselves customer zero . So we're doing it across our entire business . You know , as we have been leaders in , in most of the technologies that have come out over the last several years , we're now infusing all of those technologies with AI agents and making them smarter and faster and and again , you know , with the 27,000 people we have and literally thousands of experts , you know , we believe that we bring , you know , the functional expertise to make really smart agents , you know , you can use the greatest technology , but if you don't know what the hell you're talking about , they're not going to be particularly good agents .
Speaker #5: We think we have the largest , most sophisticated clients because we deliver . And I think that's what you're going to find with our delivery of of of AI agents .
Speaker #10: Okay . Thank you .
Speaker #3: Thank you . Jeff . And our next question comes from the line of Alexey Gogolev with J.P. Morgan . Alexei , please go ahead .
Speaker #11: Hi , Bill . It's clearly a competitive market out there . Could you elaborate on the potential impact from the lost business that the State Street Insource , the SPDR will that impact on revenue be felt in 2026 or already in 4K of this year ?
Speaker #5: I mean , we'll have a small impact , but we still believe our business will still grow and and you know , that was kind of an ancillary business anyway .
Speaker #5: And , you know , it's not something that we were investing in to see if we could do more distribution of spider like products .
Speaker #5: So while , you know , we don't ever like to lose revenue , but at the same time , this wasn't our focus .
Speaker #5: It's not really going to hurt us much . And and we look forward to taking those resources that we had there . And , and apply them to things that we think can grow faster .
Speaker #11: Thank you Bill . And then Brian , with Gibbs and Global growth performing quite well this quarter , how much does that revenue mix shift change margin outlook ?
Speaker #11: I think you seem to have suggested that Q3 2024 was strong for SMC, as Intralinks had a strong performance and significant license sales that boosted white business. Both of those have feasibly higher margins than Gibbs and Globe Ops.
Speaker #11: Can you elaborate on margin impact this quarter?
Speaker #7: Yeah , no . I think what you saw is you saw the strength of the margin impact , actually , obviously , with the .
Speaker #7: Globe , obviously already has very strong margins above the consolidated average . And you'd saw it incremental contribution from them . I think that some of the things that kids has been doing is continuing to try and work on their margin as well , but I'd say more broadly , because of the different growth areas , we're continuously positive signs from from the rest of the business .
Speaker #7: So that's why you've been able to continue to see actually a margin uptake right from overall . Right . So we're projecting that , you know , a greater than 50 basis point margin improvement in EBITDA , which was always been our kind of our general target .
Speaker #7: And so that mix shift has an effect on our overall plans on a consolidated level .
Speaker #5: And at 39.5% , you can compare us to any of our our peers . We we we perform admirably , relatively .
Speaker #11: Thank you, Bill. Thanks, Brian.
Speaker #3: Thank you, Alexi. And our next question comes from the line of Peter Heckmann with DA Davidson. Peter, please go ahead.
Speaker #12: Hey, good afternoon, everyone. I wanted to follow up on Calisto a little bit. Two things there: Talk a little bit about how their existing operations complement your existing UK operations.
Speaker #12: For for advisory firms . And then in wealth management firms . And then number two is remind us is there any significant seasonality of Callisto revenue .
Speaker #12: I seem to remember there was some seasonality to the first quarter for year-end statements, but I can't remember if that was correct.
Speaker #5: So, we're excited about Callisto. Jason Hammerson has built a great business, has 250 people, and I believe has about 4,600 clients.
Speaker #5: Fun , fun companies and other asset managers and and wealth managers around the world . And it really has , you know , a powerful tokenization process .
Speaker #5: It has very powerful ETFs . And many of , you know that it looks like dual share class ETFs has been approved . And that's going to be another boon to the ETF market , which is pretty strong in the United States .
Speaker #5: And the mutual fund industry where Callisto is also real strong , is still strong in Asia and in Europe . So we really like the synergies we get with Callisto acquisition , and we look forward to building on our distribution networks together .
Speaker #12: Okay. And then on the seasonality, revenue, is there anything significant there to call out?
Speaker #5: I don't think so . I think , you know , Pete , it's you know , it's a it's a great company . But relative size is not going to impact our growth rates or , and there's no seasonality in any one quarter that's going to make much of a difference .
Speaker #12: Really going to stand out, okay. That's all I have for now. I'll get back in the queue. I appreciate it.
Speaker #3: All right . Thank you Peter . And our next question comes from the line of Patrick O'Shaughnessy with Raymond James . Patrick , please go ahead .
Speaker #13: Hey good afternoon . So it sounds like at least anecdotally , the M&A pipeline is starting to pick up . But obviously that really hasn't translated to improved growth for Intralinks quite yet .
Speaker #13: What are you seeing out there in terms of the pipeline for Interlinks and the competitive landscape ?
Speaker #9: Yeah , I .
Speaker #6: Think it's , you know , a little bit like you just pointed out , we are seeing the early indicators of the pipeline .
Speaker #6: So the opportunities that we're talking about, and, you know, the data rooms that are getting opened, we're seeing those numbers improve.
Speaker #6: Generally revenue lags , you know , several weeks to maybe a few months from there . But what we are starting to see some positive signs .
Speaker #13: Got it . Appreciate that . And then healthcare business two consecutive quarters of positive year over year growth . What's your confidence level that that business has positively inflected in a sustainable way .
Speaker #5: Well you know I think , Patrick , that , you know , one of the things people should keep in mind is , you know , we we built our , you know , while we ran this healthcare business .
Speaker #5: And we had 1,000,000 hours in that development . So , you know , the the domain runs at a or our healthcare business runs at 30 , 35% margins .
Speaker #5: You know , we it's lumpy . You know , you get ten , $20 million deals sometimes way bigger than that . And we have a great a great client in Humana that we continue to to build out further .
Speaker #5: And we have another great client in Centene . And so we have opportunities . And it's just , you know , selling into large banks , large insurance companies , large asset managers .
Speaker #5: Sometimes I think they're nimble when I sell into large healthcare organizations.
Speaker #13: All right . Understood . Thank you .
Speaker #3: Thanks , Patrick . And our next question comes from the line of Kevin McVeigh with UBS . Kevin , please go ahead .
Speaker #14: Great. Thanks so much. And congratulations on a terrific result. I think you came in $0.07 above the high end of the range.
Speaker #14: You know , including kind of just some seems like obviously implementation work . I guess where where , where was the source of the upside just relative to where expectations were on .
Speaker #14: The EPs .
Speaker #5: Well , again , we we talked a little bit about about lift out . We did in in Australia that that lifted the goods business .
Speaker #5: And and then we also have had very strong performance out of globe op . And even though we had some weaker revenue performance on Intralinks , you know , they're still very profitable .
Speaker #5: So you know , all of our businesses are doing well with , with opportunities and , you know , in Q3 , we had most of them hitting a pretty good stride .
Speaker #5: And we think in Q4 we have we're pretty good at out of the gates , right ? It's you know , it's certainly towards the end of October , which is , you know , one third of of the quarter .
Speaker #5: And it's also got Thanksgiving and Christmas in the fourth quarter . So , you know , we're we're reasonably optimistic , as you can tell .
Speaker #14: Oh , you sound really encouraged . I guess you mentioned tokenization a couple times with Callisto . Is there an opportunity kind of implement that technology across the other business lines similar to what you've done with Blue Prism ?
Speaker #5: There's opportunity . And , you know , one of the great things we always talk about is , is that you have to get right .
Speaker #5: So a lot of people dabbled in things like machine learning and and natural language processing or process automation and , and that , you know , but , you know , you buy a few licenses to UiPath or automation anywhere .
Speaker #5: And you don't have any substance . SNK spent a billion , 6,000,000,007 to buy Blue Prism so that we had 1400 people that are steeped in these technologies .
Speaker #5: And now with with what we're doing with , with , with AI agents and being customer zero , you know , we get to add all kinds of capabilities .
Speaker #5: You know , in a very controlled manner . So that we become your trusted source for AI . You know , at a at a in a regulated and , and , and highly complex industries .
Speaker #14: Thank you .
Speaker #3: Thank you , Kevin . And our next question comes from the line of James Faucette with Morgan Stanley . James , please go ahead .
Speaker #15: Thank you very much . Just wanted to ask a question on the general environment . Bill , you've had great insight previously into private credit flows , and there's been a lot of chatter about that market .
Speaker #15: Maybe beginning to show a little squishiness. Are you seeing anything from a flow perspective, or do you consider that a bit of noise right now?
Speaker #5: I think, as more people get into it, James, that people need to learn and understand the vagaries of the private markets versus the public markets.
Speaker #5: But, you know, the smartest people in the industry are all over private credit and other new ways in which to develop returns that sometimes are not there in the public markets.
Speaker #5: So , you know , we've had , you know , a bunch of the biggest players in the industry or our clients , and we've had talks by a number of them .
Speaker #5: And , you know , they are talking 100 , 200 basis points more in the private markets than what they can get in the in the public markets .
Speaker #5: And so I, as long as that's true and there's nothing showing that it's not, I don't think it's going to slow down.
Speaker #15: I appreciate that . And then I wanted to ask on on go to market . You've been more focused on selling some enterprise solutions that combine multiple products and services .
Speaker #15: The organic results are still really strong, but is there anything you can share qualitatively or quantitatively on the impact of that initiative and how it may be impacting things like average deal size or even customer retention?
Speaker #5: Well , you know , obviously you work for a big a big investment bank and and understand that that , you know , you guys moving real quickly is kind of an oxymoron , right ?
Speaker #5: You know , and so I think what we see is , is that these larger and larger institutions that the top management wants to move fast , you know , and what they find is , is that , you know , that that , that really is , is out of character for , for these large , you know , commercial and investment banks and what they like about us is , is that , you know , we're still a pretty big place .
Speaker #5: We've got 27,000 people . We have 120 offices or 130 offices around the world . And so we can bring you scale and we still move pretty quickly relative to the , you know , gigantic banks .
Speaker #5: We move very quickly .
Speaker #15: Appreciate that color . Thanks , Bill .
Speaker #3: Thank you, James. It looks like there are no further questions, so I will now turn the call back over to Bill Stone for closing remarks.
Speaker #3: Bill .
Speaker #5: Dan , thank you . So I think from a standpoint of of our third quarter , we're we're happy to have performed well .
Speaker #5: We look forward to talking to you after the New Year and hopefully we will surprise you positively . So have a good quarter .