SS&C Technologies - Q4 2025

Transcript

Operator (participant)

Ladies and gentlemen, thank you for standing by. My name is Colby, and I'll be your conference operator today. At this time, I would like to welcome you to the SS&C Technologies Q4 and Full Year 2025 Earnings. All lines have been placed on mute to prevent any background noise, and after the speakers' remarks, there will be a question-and-answer session. If you'd like to ask a question at that time, please press star then the number one on your telephone keypad to raise your hand and enter the queue. If you'd like to withdraw your question, simply press star one again. We please ask that you limit yourself to one question and one follow-up. Thank you. I'll now turn the call over to Justine Stone, Head of Investor Relations. You may begin.

Justine Stone (Head of Investor Relations)

Hi, everyone. Welcome, and thank you for joining us for our Q4 and full year 2025 earnings call. I'm Justine Stone, Investor Relations for SS&C. 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. 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.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the risk factor section of our most recent annual report on Form 10-K, which is on file at the SEC and can be accessed on our website. These forward-looking statements represent our expectations only as of today, February 5, 2026. While the company may elect to update these forward-looking statements, it specifically disclaims any obligation to do so. During today's call, we'll be referring to certain non-GAAP financial measures. 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 at www.ssctech.com. I will now turn the call over to Bill.

Bill Stone (Chairman and CEO)

Thanks, Justine, and welcome, everyone. We are all well aware of the sell-off in software company shares following the recent release of the AI-driven automation tools across legal, sales, and marketing, and accounting functions. We take all competitors seriously, but we strongly believe we have a wide and deep moat, not easily navigated. For decades, we've built deep expertise across sophisticated assets and strategies, and that capability remains a trademark and a key driver of our long-term success. We are functional experts, and our software is mission-critical. We believe the AI, AI boom will be a tailwind and are deploying rapidly and with conviction. As we accelerate adoption of these solutions, we see a clear advantage. We're uniquely positioned and structurally protected through the ownership of our software and code, enabling us to leverage AI in ways that only we can for our customers.

Fourth quarter results demonstrate SS&C's strength with record adjusted revenue of $1.655 billion, up 8%, and adjusted diluted earnings per share of $1.69, an 18% increase. We delivered record adjusted consolidated EBITDA of $651 million, up 9%, and an adjusted consolidated EBITDA margin of 39.3%. Fourth quarter adjusted organic revenue growth was 5.3%, with performance driven by continued strength in GIDS, with 13.2% revenue growth and GlobeOp with 9.6% revenue growth. We continue to focus on international growth opportunities and on execution for our clients. GlobeOp is seeing new opportunities in Australia, leveraging our recent superannuation mandates. Prospects include local Australian firms and global firms.

Intralinks displayed signs of improvement, with modest growth in Q4, and we are seeing momentum in 2026. For the twelve-month end of December 31, 2025, cash from operating activities was $1.745 billion, up 26% year-over-year. On a weighted average diluted per share basis, it was $6.89, up $1.42 from 2024. In Q4, we returned $384 million to shareholders, which included 3.7 million shares repurchased for $319 million at an average price of $85.81, and $66 million in common stock dividends. We allocated over $1 billion in share repurchases in 2025, purchasing 12.3 million shares at an average price of $84.12.

Our strong cash flow characteristics allow us to return capital to our shareholders in multiple ways. At current levels, our conviction around share repurchase has strengthened, and we will prioritize repurchases, absent high-quality, accretive acquisitions. We are pleased with the early progress of the Calastone acquisition. Since closing, we've partnered with key leadership and operational talent and deepened client relationships. We are seeing strong engagement and collaboration opportunities with our clients and are able to go live with projects strategically meaningful to them. We expect momentum to continue as we move through the year. I'll now turn the call over to Rahul to discuss the quarter in more detail.

Rahul Kanwar (President and COO)

Thanks, Bill. We delivered a strong quarter with solid organic growth and continued margin expansion. We are optimistic about the future as we look at the durability of what's driving that growth. Across the business, we're seeing a consistent trend of clients making long-term decisions to outsource, simplify, and scale their accounting models on our platform. These are multi-year partnerships that create recurring revenue, expand over time, and provide clear visibility into future growth. Lift-outs are a good example of this dynamic. Mandates such as Insignia and Humana reflect a repeatable process where clients entrust us with complex mission-critical operations at scale. These engagements ramp in a disciplined way and often lead to broader adoption of additional services across our platform.

The fact that we continue to see similar opportunities emerge across regions and business lines, whether in GlobeOp, GIDS, or health, reinforces our confidence that this is a sustainable growth engine. We see the continued advancement of AI as a positive for our business. We're well-positioned, given our large data sets, deep processing technology, long-standing client relationships, and our ability to deploy solutions at scale in regulated environments. The work we do is highly expertise-driven, requires a deep understanding of complex instruments, global regulation, and how information is used by tax authorities, institutional investors, and other sophisticated counterparties. AI, working alongside with the teams we've built, enhances efficiency, accuracy, and scalability over time, strengthening our competitive position and supporting sustainable organic growth. With that, I'll turn it over to Brian to walk through the financials.

Brian Schell (CFO)

Thanks, Rahul, and good day, everyone. Unless noted otherwise, the quarterly comparisons are Q4 2023 to Q4 2024. As disclosed in our press release, our Q4 2024 GAAP results reflect revenues of $1.654 billion, net income of $193 million, and diluted earnings per share of $0.77. Our adjusted non-GAAP results include revenues of $1.655 billion, an increase of 8%, and adjusted diluted EPS of $1.69, an 18% increase. The adjusted revenue increase of $124 million was primarily driven by incremental revenue contributions from GIDS of $49 million, GlobeOp of $40 million, and acquisitions of $27 million, offset by a favorable impact from foreign exchange of $16 million.

As a result, adjusted organic revenue growth on a constant currency basis was 5.3%, and our core expenses increased 4.6%, or $44 million, which also excludes acquisitions and is on a constant currency basis. Adjusted consolidated EBITDA was a record $651 million, reflecting an increase of $52 million, or 8.7%, and a margin of 39.3%, a 20 basis point expansion. Net interest expense for the fourth quarter of 2025 was $111 million, a decrease of $2 million, primarily reflecting lower short-term rates. Adjusted net income was a record $425 million, up 16.8%, and adjusted diluted EPS was $1.69, an increase of 18.2%.

Our effective non-GAAP tax rate was 19.2% for the fourth quarter of 2025. Our resulting 2025 full year effective non-GAAP tax rate is 22%. Note, for comparison purposes, we have recast the 2024 adjusted net income to reflect the full year effective tax rate of 23.1%. The diluted share count is down to 251.5 million from 254.5 million year-over-year, primarily as a result of share repurchases. Cash flow from operating activities grew 26%, and our operating cash flow per share was $6.89, driven by growth in earnings, improved working capital utilization, and lower cash taxes paid. Our full-year cash flow conversion has been above 100% for the past three years.

SS&C ended the fourth quarter with $462 million in cash and cash equivalents and $7.5 billion in gross debt. Our net debt was $7 billion, and our last twelve months consolidated EBITDA was $2.5 billion. Resulting net leverage ratio is 2.8 times. As we look forward to the first quarter and full year of 2026 prospective guidance, we will continue to focus on client service and assume that retention rates will be in the range of our most recent results. We will continue to manage our business to support our long-term growth and manage our expenses by controlling and aligning variable expenses, increasing productivity, and leveraging technology to improve our operating margins, and effectively investing in the business through marketing, sales, and R&D.

Specifically, we have assumed short-term interest rates to remain at current levels, an effective tax rate of approximately 22.5% on an adjusted basis, capital expenditures to be 4.4%-4.8% of revenues, and share buybacks and debt reduction levels remain similar to 2025, but subject to changes based on market conditions, as Bill noted in his earlier comments. The first quarter of 2026, we expect revenue to be in the range of $1.608 billion-$1.648 billion and 5% organic growth at the midpoint. Adjusted net income in the range of $404 million-$420 million. Interest expense, excluding amortization of deferred financing costs and original issue discount, in the range of $102 million-$104 million.

Diluted shares in the range of 249.2-250.2 million, and adjusted diluted EPS in the range of $1.62-$1.68. For the full year 2026, we expect revenue to be in the range of $6.65-$6.74 billion and 5.1% organic revenue growth at the midpoint. Targeted annual EBITDA expansion of 50 basis points. The goal of a 40% margin in Q4. Adjusted net income in the range of $1.662-$1.762 billion.

Adjusted diluted EPS in the range of $6.70-$7.02, reflecting approximately 12% growth at the midpoint, and cash from operating activities to be in the range of $1.713 billion-$1.813 billion, again, translating to over 100% cash conversion. Now, back to Bill.

Bill Stone (Chairman and CEO)

Brian, I'd like to summarize our key takeaways from today's call. Record fourth quarter revenues, earnings, cash flows, and over $1 billion worth of share repurchases in 2025. We're excited about the early execution with the Calastone acquisition and other lift-out wins, and the opportunities they present for growth and geographic expansions. Our investments in artificial intelligence and automation are paying off, and we're confident in our ability to drive margin expansion. As we look to 2026, we believe we are set up for success, and we'll drive long-term growth and profitability for our shareholders. With that, I would now open it up to questions.

Operator (participant)

Thank you. We will now begin the question and answer session. Again, we please ask that you limit yourself to one question and one follow-up. Thank you. If you'd like to ask a question, please press star, then the number one on your telephone keypad to raise your hand and enter the queue. If you'd like to withdraw your question at any time, simply press star one again. We'll pause just for a moment to compile the roster. Your first question comes from Jeff Schmitt with William Blair. Your line is open.

Jeff Schmitt (Research Analyst)

Hi, good afternoon. Question on the healthcare business. That had a tough quarter from an organic perspective and what is its seasonally strongest quarter. So could you maybe talk about what drove that weakness and, you know, why do you think that business hasn't seen maybe better momentum yet, just given how much effort you've put into it?

Bill Stone (Chairman and CEO)

Well, I think that healthcare is a long-term play and, you know, trying to go quarter to quarter or even a year to year is a tough comp. I think last fourth quarter, we had large license sales. We've had some large license sales in the fourth quarter this year, but a notable multimillion-dollar license closed in the first 10 days of January of 2026. So, yeah, you know, it's lumpy. You know, they're highly regulated, even when you've been in highly regulated businesses like financial services. And so although there are headwinds in healthcare, it's still an enormous market. There. We have new technology.

We're bringing out Amisys, which has been, you know, rewritten to a very large degree, and we're gonna have a, you know, a OneHealth with Amisys and, and DomaniRx, and we're excited about offering that for both medical as well as pharmacy. And so we have some optimism, but certainly, you know, we would prefer to have more growth than what we're having. But we're still running at pretty healthy EBITDA margins, and we're managing the business in a way where it's adding to our cash flow, it's not really detracting from our earnings. And, and obviously not, it's not accelerating our growth rate, but, but at the same time, it's a $260-$270 million business, and, and, and we like its opportunities for the long haul.

Jeff Schmitt (Research Analyst)

Okay. And then could you provide an update on the Elevance relationship? Where does that stand? Is there still, you know, a chance they could onboard some of their business onto DomaniRx?

Bill Stone (Chairman and CEO)

DomaniRx is certainly ready and waiting. You know, at the same time, Elevance is a very large healthcare organization, and their relationships with other very large healthcare organizations are longstanding, and they're difficult to break. And, you know, the original sponsor at Elevance has moved on several years ago, and so, you know, often when you lose the sponsor, it's hard to find another one. So, you know, it's not unexpected, but we think we have a lot of things that entice Elevance, and they've made a big investment, so we think there's still, you know, still, you know, rays of sunshine at the end of the tunnel.

Jeff Schmitt (Research Analyst)

Okay, that makes sense. Thank you.

Operator (participant)

Your next question comes from the line of Kevin McVeigh with UBS. Your line is open. Your next question comes from the line of Peter Heckmann with D.A. Davidson. Your line is open.

Peter Heckmann (Managing Director)

Good afternoon, everyone. Great to see the encouraging 2026 guidance. I wanted to ask a question on within alternative fund administration. It looked like the fourth quarter had exceptional growth in assets under administration.

Can you talk a little bit about that? Does that maybe indicate that the alternative fund administration business can grow maybe faster in 2026 than it did in 2025?

Rahul Kanwar (President and COO)

Peter, there's a couple things going on there. One, you know, it did have a very good organic growth, both quarter and year, and similarly, we've got high expectations for 2026. Included in the fourth quarter change, in particular, is our acquisition of Curo Fund Services. So I think the breakdown is about $92 billion of that change is organic, and the rest is the acquisition.

Peter Heckmann (Managing Director)

Okay, that's helpful. Okay, that makes sense. And then just in terms of the intelligent automation business, which includes the Blue Prism business, just remind us that that business seemed to be struggling a little bit from just delays in decision making. I guess, how are you feeling about that business going into 2026? Do you think that can, you know, approximate the overall corporate organic growth rate?

Rahul Kanwar (President and COO)

You know, we do. We actually feel really good about that business going into 2026. You know, similar to kind of the comment we just made about healthcare, that business, in particular, had a really large license in Q4 the year before. So, you know, part of when you look, kind of look at this quarter-over-quarter, those are some of the changes that, you know, that kind of have an impact. But in general, many of our comments around AI are, you know, centered at least in part on that business. So that's where we're doing the bulk of our innovation relating to, whether that's AI agents, use of large language models, use of our orchestration platforms, you know, governance around AI. Really, a lot of the things that we're rolling out across the business come out of there.

We perfect them in different other areas of our businesses and then sell them out. So we're, we're really pretty optimistic about the growth prospects for that in 2026.

Peter Heckmann (Managing Director)

All right. That's good to hear. I'll get back in the queue.

Operator (participant)

Your next question comes from the line of Alexei Gogolev with JPMorgan. Your line is open.

Alexei Gogolev (Executive Director)

Good evening. This is Ella Smith on for Alexei. Thanks so much for taking our questions. First, I was hoping to ask about the organic growth guide. Your Q1 and full-year 2026 guide is basically the same. Do you have anything to call out regarding the cadence of organic growth throughout the rest of the year?

Rahul Kanwar (President and COO)

Look, I think what it really reflects is that our business is getting stronger, right? And as our business gets stronger, we have more predictability, and the recurring revenue is stronger, right? So we're able to, in effect, forecast and maintain the... You know, whereas traditionally you might have some more in the back end of the back half of the year, you know, we're basically all year gonna be pretty strong. And hopefully, by the time we get to Q3 and Q4, we've got an opportunity to get even better than this.

Alexei Gogolev (Executive Director)

Got it. Very clear. Thank you. As a follow-up, given the breadth of your business, I'm sure you've seen AI fintechs emerging in the landscape. How are you maintaining your competitive advantage?

Bill Stone (Chairman and CEO)

Well, I think that, you know, we see fintechs. It's not very difficult to start a fintech, right? Have an idea, get a programmer, build a little app. You know, now toss in a little AI, and you've got an entrée with some spice in it. But to build an organization that has 29,000 people, 23,000 products or 23,000 customers, several hundred products and services, you know, I think it is a little more daunting. And what we see with AI, and people sometimes forget that, you know, our clients are SEC-regulated organizations or CMS-regulated organizations. You know, large language models sometimes have hallucinations. You know, those regulators, they don't really quite understand us telling them, "Well, it's a problem, a hallucination." You know, it's like a bad dream.

We'll get over it. You know, that—I don't think that flies. So, you know, we're, we're very control conscious. Our, our clients are, our clients are conservative by nature, right? And, you know, they're managing other people's money or, or the health of other people. So we, we think that we're well-positioned, and how we conduct ourselves is the right way to do it. And, and I think that we have the financial wherewithal to invest very, very wisely. You know, we've spent hundreds of millions of dollars on our, on our development that we've done, and, and we're still maintaining in excess of 39% margins, and we think, you know, we'll close out 2026 at 40% margin. So, you know, we're, we're optimistic, and we think we have good reasons for being.

Alexei Gogolev (Executive Director)

Great. Thanks very much.

Operator (participant)

Again, if you'd like to ask a question, please press star, then the number 1 on your telephone keypad to raise your hand and enter the queue. Your next question comes from Dan Perlin with RBC Capital Markets. Your line is open.

Dan Perlin (Managing Director)

Good afternoon. It's Matt Roswell on for Dan. I guess two questions, if I could. Firstly, wealth and investment management, I mean, it seems like organic growth ticked up a little bit this quarter. As we think about kind of that business over the next, say, medium term, where do you think the organic growth could be and should be?

Bill Stone (Chairman and CEO)

You know, again, I think, you know, we're very optimistic about our wealth management business. Our Black Diamond platform is, we think, the best in the industry. We have other platforms, like our trust accounting, that we have integrated with Black Diamond. Black Diamond has, you know, approaching $3.5 trillion that it's administrating for its various RIAs. I think we have something close to 4,000 RIAs that are using that platform. You know, we have integrated a bunch of the Morningstar that we had, we bought their wealth management platform, and we've already moved over 500-600 Morningstar clients onto Black Diamond. So we're very optimistic about that business.

I think that we have a lot of expertise and a lot of capability. I think that that's gonna be one of is and will continue to be one of our crown jewels.

Dan Perlin (Managing Director)

Thanks. And can you talk a little bit about the M&A environment? I mean, you all have done some smaller pieces this year. I guess, what are you seeing out there in terms of asking prices, availability, et cetera?

Bill Stone (Chairman and CEO)

Well, you know, when you've been doing this for four decades and they start calling a billion-dollar acquisition like Calastone, saying small pieces, that's a little bit bigger. You know what? We're constantly looking. We would—we think we have the leverage down to a point where we could do a large acquisition, and if we could find the right one, we would. And we might find some of our competitors under different pressures than we're under. You know, we run our own data centers, right? We have our own private cloud. We have our clients really secured. You know, plus we have a large-scale services business that we get to really test out our software before we, you know, send it into our client base. So we think that we're well-positioned.

We think as far as all the fintechs out there, that we're very well-positioned, and that our earnings, our cash flow, can really give us a lot of flexibility.

Dan Perlin (Managing Director)

Excellent. Congratulations on the nice numbers.

Bill Stone (Chairman and CEO)

Thanks.

Operator (participant)

Thank you. With no further questions in the queue, I'd like to turn the conference back over to Bill for closing remarks.

Bill Stone (Chairman and CEO)

You know, there's always a lot of things that happen in the market. You know, when I first started in this business, we were selling to broker-dealers. That was in 1986 and early 1987. And then October of 1987 happened, and the market went down 25% in one day, and that was the end of that. So, you know, you learn to be a little bit nimble, right? And that's what SS&C has been for 40 years. And I think we have the talent and capability to continue, and that's what we're gonna do. So we appreciate you listening in, and we look forward to talking to you next quarter.

Operator (participant)

This concludes today's conference call. You may now disconnect.