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01/10 19:13
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reflects strong financial performance with increased revenue, net income, and cash flow. Shareholder returns are up, with a dividend increase. Positive organic growth and effective cost management are highlighted. The Q&A reveals optimism about future growth, particularly in international markets and AI integration. While some concerns exist (e.g., vague responses on seasonality), the overall sentiment is positive, supported by raised guidance and strategic initiatives, likely resulting in a stock price increase of 2% to 8%.
Adjusted Revenue $1.569 billion, up 7% year-over-year. The increase was driven by incremental revenue contributions from GlobeOp ($37 million), GIDS ($33 million), acquisitions ($17 million), and a favorable impact from foreign exchange ($9 million).
Adjusted Diluted Earnings Per Share (EPS) $1.57, a 17.2% increase year-over-year. The growth was attributed to improved margins and revenue growth.
Adjusted Consolidated EBITDA $619 million, up 9.3% year-over-year. This resulted in a quarterly adjusted consolidated EBITDA margin of 39.5%, reflecting margin expansion of 90 basis points. The increase was driven by revenue growth and cost management.
Adjusted Organic Revenue Growth 5.2% year-over-year. Performance was driven by GlobeOp with 9.6% revenue growth and GIDS business with 9% revenue growth, supported by strength across alternative markets and international opportunities.
Cash from Operating Activities (9 months ended September 30, 2025) $1.101 billion, up 22% year-over-year. The increase was primarily driven by growth in earnings.
Shareholder Returns (Q3 2025) $305 million returned to shareholders, including $240 million for acquiring 2.8 million shares at an average price of $86.82 and $65.8 million in common stock dividends. The common stock dividend was raised to $1.08, an 8% increase.
Net Interest Expense $104 million, a decrease of $6 million year-over-year. The reduction was primarily due to lower short-term interest rates.
Adjusted Net Income $396 million, up 16.5% year-over-year. The increase was driven by revenue growth and cost management.
Cash Flow Conversion (Q3 2025) 115%, up from 99% in the prior year. The improvement was driven by growth in earnings.
Net Debt $6.2 billion, with a net leverage ratio of 2.59x. The company ended the quarter with $388 million in cash and cash equivalents and $6.6 billion in gross debt.
AI-powered automation: SS&C is accelerating the global transformation from traditional automation to AI-powered automation, selling purpose-built agents as a managed service. An example includes selling an AI agent to a U.K.-based healthcare organization to automate MRI, CT, and ultrasound request processing, saving over 15,000 radiologist hours annually.
Tokenization solutions: SS&C is offering solutions to support clients' evolving digital asset strategies, with tokenization gaining meaningful traction.
Acquisition of Curo Fund Services: SS&C acquired Curo Fund Services, a South African fund administration business, deepening relationships with two meaningful clients and establishing a local presence in the African market.
Acquisition of Calastone: SS&C completed the acquisition of Calastone, a global funds network provider, adding capabilities in money markets, ETFs, and digital assets, and integrating 250 employees into its GIDS business.
Operational efficiencies through AI: SS&C is leveraging AI and intelligent automation to reduce repetitive tasks, enhance employee career paths, and improve EBITDA margins. This includes internal efficiency improvements and external revenue opportunities.
Cost structure management: The company is focusing on controlling and aligning variable expenses, increasing productivity, and investing in marketing, sales, and R&D to improve operating margins.
Capital allocation strategy: SS&C is prioritizing share repurchases and high-quality acquisitions that meet financial criteria, supported by strong cash flow characteristics.
Focus on emerging technologies: SS&C is enhancing user interfaces and client experiences in its GlobeOp business to leverage emerging technologies as competitive differentiators.
Market Conditions: Potential risks from fluctuating short-term interest rates, which could impact net interest expenses and financial performance.
Regulatory Hurdles: The company operates in a heavily regulated industry, and any changes in regulations could impact operations and compliance costs.
Economic Uncertainties: Global economic conditions and foreign exchange fluctuations could adversely affect revenue and profitability.
Strategic Execution Risks: Challenges in integrating recent acquisitions like Curo Fund Services and Calastone could impact operational efficiency and expected synergies.
Competitive Pressures: The need to continuously innovate and enhance product offerings to maintain competitive advantage, especially in emerging technologies like AI and digital assets.
Supply Chain Disruptions: Although not explicitly mentioned, reliance on global operations and technology infrastructure could pose risks in case of disruptions.
Revenue Projections: For Q4 2025, revenue is expected to be in the range of $1.59 billion to $1.63 billion, with 4.5% organic revenue growth at the midpoint. For the full year 2025, revenue guidance has been raised to $6.21 billion to $6.25 billion, reflecting 4.6% revenue growth at the midpoint.
Earnings Projections: For Q4 2025, adjusted net income is expected to be in the range of $394 million to $410 million, with adjusted diluted EPS in the range of $1.56 to $1.62. For the full year 2025, adjusted net income is projected to be between $1.522 billion and $1.538 billion, with adjusted diluted EPS in the range of $6.02 to $6.08, up $0.11 at the midpoint.
Capital Expenditures: Capital expenditures are expected to be 4.2% to 4.6% of revenues for the remainder of 2025.
Interest Rates and Tax Rate Assumptions: Short-term interest rates are assumed to remain at current levels, and the effective tax rate is expected to be approximately 23% on an adjusted basis.
Calastone Acquisition Impact: The Calastone acquisition is expected to contribute approximately $20 million in revenue for Q4 2025.
Operational Focus: The company will continue to focus on client service, retention rates, managing expenses, and aligning variable expenses to improve operating margins. Investments will be made in marketing, sales, and R&D to support long-term growth.
Dividend Payment: $65.8 million in common stock dividends paid in Q3 2025.
Dividend Increase: Common stock dividend raised to $1.08, an 8% increase.
Share Repurchase: Acquired 2.8 million shares for $240 million at an average price of $86.82 in Q3 2025.
Share Repurchase Priority: Company continues to prioritize share repurchase, citing undervaluation of shares.
The earnings call reflects strong financial performance with increased revenue, net income, and cash flow. Shareholder returns are up, with a dividend increase. Positive organic growth and effective cost management are highlighted. The Q&A reveals optimism about future growth, particularly in international markets and AI integration. While some concerns exist (e.g., vague responses on seasonality), the overall sentiment is positive, supported by raised guidance and strategic initiatives, likely resulting in a stock price increase of 2% to 8%.
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