Please ensure Javascript is enabled for purposes of website accessibility

SS&C Weathers Delayed Deals En Route to a Mixed Quarter

By Steve Symington - Oct 26, 2017 at 5:33PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The investment and financial software services company fell after posting light third-quarter revenue. Here's what investors need to know.

SS&C Technologies Holdings (SSNC -2.05%) announced slightly weaker-than-expected third-quarter 2017 results on Wednesday after the market closed, highlighting significant margin expansion and its 22nd straight quarter of top-line growth despite a number of perpetual license deals being pushed back.

With shares down modestly on Thursday, let's dig deeper to understand how the financial software services company kicked off the second half of the year, and what to expect in the months ahead.

Businessman using a tablet computer


SS&C Technologies results: The raw numbers


Q3 2017

Q3 2016

Year-Over-Year Growth

GAAP revenue

$418.3 million

$383.3 million


GAAP net income

$64.2 million

$38.7 million


GAAP earnings per share (diluted)




Data source: SS&C Technologies.  

What happened with SS&C this quarter?

  • On an adjusted (non-GAAP) basis, which excludes purchase accounting adjustments to deferred revenue related to acquisitions, revenue increased 7.1% to $419.6 million -- below SS&C's latest guidance for a range of $420 million to $428 million.
  • Adjusted net income increased 20.6% to $105.5 million, and adjusted net income per diluted share grew 19% to $0.50. Both figures were within SS&C's guidance ranges for earnings of $103.5 million to $108 million, or $0.49 to $0.51 per share.
  • Adjusted recurring revenue climbed 9.6% year over year to $395 million, including 13.4% growth in software-enabled services recurring revenue to $282.1 million, and 1.2% growth from maintenance and term licenses to $112.9 million.
  • Adjusted non-recurring revenue declined 1.6% to $23.3 million, including an 18.5% decline in perpetual licenses to $3.6 million, and a 15% decline in professional services revenue to $19.7 million.
  • Adjusted consolidated EBITDA grew 14.2% to $178.8 million.
  • Through the first three quarters of the year, SS&C has generated cash from operations of $307.1 million (up 29.6% year over year) and paid off $292.8 million of debt, bringing its net debt to consolidated EBITDA leverage ratio to 3.19.
  • Subsequent to the end of the quarter, SS&C closed on its acquisition of CommonWealth Fund Services, a Toronto-based fund administrator with $8 billion in assets under its administration and relationships with over 100 funds.

What management had to say

SS&C Chairman and CEO Bill Stone added in a prepared statement:

We are pleased with our ability to report adjusted diluted earnings per share up 19.0 percent on a 7.1 percent increase in adjusted revenue. We had many deals push to Q4; nevertheless we ramped up our margins with 42.6 percent adjusted consolidated EBITDA margin across the entire business. We expect a solid Q4.

During the subsequent conference call, Stone elaborated that there were more than 30 deals pushed to the fourth quarter, most of which are perpetual or term license deals. But he also insisted that the company is "actively managing those deals." In addition, Stone says synergies from SS&C's acquisitions of Citi's Alternative Investor Services business, Wells Fargo's Global Fund Services business, and Conifer Financial services "were a big driver to our Q3 earnings margin increases."

Looking ahead

For the fourth quarter, SS&C anticipates adjusted revenue of $427 million to $437 million and adjusted net income of $110 million to $113.9 million. Based on the midpoint of its expected diluted share count, that should translate to adjusted net income per share in the range of roughly $0.52 to $0.53.

As such, SS&C now expects full-year 2017 revenue of $1.670 billion to $1.680 billion (narrowed from $1.669 billion to $1.689 billion previously), and adjusted net income of $404.7 million to $408.6 million (narrowed from $403 million to $413 million previously). SS&C also reiterated its expectation for full-year cash from operations of $485 million to $500 million.

Apart from those perpetual license deals slipping into the fourth quarter -- a large number of which SS&C is likely to close by the end of the year -- this was as solid a performance as SS&C investors could have asked for. So while shares fell around 3.6% when all was said and done today, it appears SS&C's long-term thesis remains firmly intact.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

SS&C Technologies Holdings, Inc. Stock Quote
SS&C Technologies Holdings, Inc.
$59.18 (-2.05%) $-1.24
Citigroup Inc. Stock Quote
Citigroup Inc.
$47.21 (-1.30%) $0.62
Wells Fargo & Company Stock Quote
Wells Fargo & Company
$40.18 (-0.15%) $0.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.