Please ensure Javascript is enabled for purposes of website accessibility

SS&C Technologies Gets Back on Track

By Steve Symington - Feb 16, 2018 at 8:39PM

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

After delayed deals muted its third-quarter results, the financial-services software leader ended 2017 strong. Here's what investors need to know.

SS&C Technologies Holdings (SSNC -0.08%) announced fourth-quarter 2017 results on Thursday after the market closed. And though shares of the financial software-and-services leader were down slightly on the news, the company highlighted better-than-expected growth on broad-based demand for its products and services, completed implementations after previously delayed deals, and its massive planned acquisition of industry peer DST Systems (DST).

Let's take a closer look at how SS&C Technologies ended the year, and what investors can expect from the company in the coming quarters.

SS&C financial software running on two iPads.

IMAGE SOURCE: SS&C TECHNOLOGIES.

SS&C Technologies results: The raw numbers

Metric

Q4 2017

Q4 2016

Year-Over-Year Growth

GAAP revenue

$438.4 million

$400.9 million

9.3%

GAAP net income

$165.3 million

$57.0 million

190%

GAAP earnings per share (diluted)

$0.77

$0.28

175%

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 from acquisitions, revenue grew 8.6% year over year, to $439.4 million -- above guidance for a range of $427 million to $437 million.
  • Adjusted net income increased 20.3% year over year, to $114.5 million, and adjusted net income per share rose 17.4%, to $0.54 -- both above SS&C's guidance for adjusted earnings of $110 million to $113.9 million, or $0.52 to $0.53 on a per-share basis.
  • Adjusted recurring revenue grew 11.2%, to $409.6 million, including 9.8% growth in software-enabled services, to $282.9 million, and 15.9% growth in maintenance and term licenses, to $126.7 million.
  • Adjusted non-recurring revenue declined 15.2%, to $29.8 million, including a 1.5% increase from perpetual licenses, to $9.5 million, and a 24.4% decline in professional services.
  • Adjusted consolidated EBITDA increased 14.5%, to $191.3 million.
  • For the full year of 2018, cash from operations grew 12.4%, to $470.4 million.
  • On January 11, 2018, the company announced an agreement to acquire DST Systems for $84 per share in cash -- funded by a combination of debt and equity financing -- for an enterprise value of $5.4 billion including assumption of debt.
    • The acquisition is expected to close in either the second or third quarter of 2018, creating a combined company with pro forma revenue of $3.9 billion and consolidated EBITDA of $1.3 billion.
    • SS&C expects to realize $150 million of annual run-rate cost synergies by 2020.
    • The deal should be immediately accretive to adjusted earnings per share, even before synergies, with mid-teens earnings growth expected in 2019.

What management had to say

SS&C Chairman and CEO Bill Stone stated

SS&C had a strong fourth quarter in both revenue and earnings. Our growth came on the back of robust sales, completed implementations, and large new clients moving to full run-rate revenue. We also continued delivering acquisition synergies. We are pleased with the fourth quarter and now look forward to capitalizing on new products and services, and opportunities at DST.

Looking ahead

SS&C expects first-quarter 2018 adjusted revenue of $427 million to $437 million, adjusted net income of $113 million to $117.5 million, and adjusted earnings per share of roughly $0.53 to $0.54.

Finally, for the full-year 2018, SS&C expects adjusted revenue of $1.755 billion to $1.785 billion, adjusted net income of $480 million to $502 million, and adjusted net income per share of approximately $2.26 to $2.27. For perspective -- and this partly explains today's modest decline -- consensus estimates predicted slightly higher adjusted earnings of $2.30 per share on revenue of $1.78 billion.

All told, there were no big surprises in SS&C's results or outlook. Rather, the market will likely remain focused on the successful completion and subsequent integration of its enormous acquisition of DST in the coming months. In the meantime, I think investors should be pleased with its performance and industry leaderhsip position today.

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.
SSNC
$62.01 (-0.08%) $0.05
DST Systems, Inc. Stock Quote
DST Systems, Inc.
DST

*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 service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/23/2022.

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.