SS&C Technologies Holdings (SSNC -1.28%) released third-quarter 2019 results on Thursday after the markets closed, detailing better-than-expected revenue and earnings, some notable executive turnover, and a pair of strategic acquisitions.
The financial services software company also followed by modestly increasing its full-year outlook, leaving shares up around 2% in after-hours trading as of this writing.
For perspective, here's how SS&C's latest quarter shaped up -- at least, as measured by generally accepted accounting principles (GAAP) -- relative to the same year-ago period:
| Metric | Q3 2019 | Q3 2018 | Change |
|---|---|---|---|
|
GAAP revenue |
$1.114 billion |
$992.4 million |
15.3% |
|
GAAP net income |
$95 million |
$57 million |
66.7% |
|
GAAP earnings per diluted share |
$0.36 |
$0.23 |
56.5% |
Data source: SS&C Technologies.
"An eventful third quarter ... "
For perspective, after adjusting for the impact of new accounting standards early last year, SS&C's non-GAAP revenue climbed 14.7% year over year, to $1.151 billion -- near the high end of guidance provided in July of $1.123 billion to $1.153 billion.
Adjusted consolidated EBITDA increased 21.8% to $445.8 million, or 38.7% of adjusted revenue. And after excluding the impact of one-time items like stock-based compensation, non-GAAP (adjusted) net income was up 22.8% to $245.3 million, and grew 17.7% on a per-share basis to $0.93 -- also well above guidance for a range of $0.85 to $0.91.
Breaking the top line down further, we can see that adjusted revenue from software-enabled services grew 15.9% year over year to $962.8 million, while license and maintenance revenue climbed 9% to $188 million.
"We had an eventful third quarter, including several management changes, instituting a share repurchase program, and announcing two acquisitions," CEO Bill Stone said. "We are encouraged by the intensity of the newly appointed sales, relationship, and business unit managers, and look forward to closing 2019 strong."
Image source: Getty Images.
Just last week, SS&C appointed a new general manager/COO and a new head of North American application sales for its Eze software business. As a reminder, last quarter Stone singled out attrition at last year's acquired businesses (including Eze) as a headwind stifling efforts to reaccelerate growth.
Meanwhile, the board approved a new $500 million stock repurchase program in early August, under which the company bought back 1.3 million shares of common stock at an average price of $45 per share during the quarter.
And finally, the company announced a pair of acquisitions in September. It bought the investment interface specialist Investrack from Globacom Technologies, followed by a deal to buy risk-analytic products and services company Algorithmics from IBM later in the month. These deals were on the smaller side, as SS&C did not reveal specific financial terms for either acquisition.
Raising the stakes
For the fourth quarter, SS&C anticipates adjusted revenue of $1.154 billion to $1.184 billion -- the midpoint of which is slightly above consensus estimates for revenue of $1.16 billion -- with adjusted net income of $247 million to $264 million. Based on its estimated diluted share count, the latter range should translate to adjusted earnings per share of roughly $0.95 to $0.97, again above consensus estimates for $0.94 per share.
As a result, SS&C increased its full-year 2019 outlook to call for revenue of $4.611 billion to $4.641 billion (up from $4.571 billion to $4.631 billion before), and adjusted net income of $973.3 million to $990.3 million (up from $947.5 million to $988.5 million).
That full-year guidance raise is still modest. But it's certainly a step in the right direction considering SS&C works to combat lower trading volumes and slowing M&A activity that have stemmed the growth of its core businesses. If SS&C can keep building on this success in the coming quarters, I suspect the moderate post-earnings gains we're seeing right now could mark the start of a longer-term trend for its stock.
