Company Reports

SS&C Technologies is off to a steady start in 2024. Organic revenues grew 4.7% in the first quarter of 2024, which compares with 4.5% in the fourth quarter and the firm's outlook of 2%-5%. In addition, revenue retention continues to hold steady in the 96%-97% range. SS&C's full-year 2024 revenue outlook was essentially unchanged at the midpoint, and the firm raised its adjusted EPS outlook by 1% at the midpoint. Overall, there was little in the firm's financial results that would alter our long-term view of the firm, and we will maintain our narrow moat rating and $82 fair value estimate. We regard shares as undervalued.

Founded in 1986, SS&C Technologies provides software products and software-enabled services to mostly financial-services firms. SS&C, which stands for Securities Software and Consultants, introduced CAMRA, or complete asset management, reporting, and accounting, in 1989. Since inception, SS&C has acquired more than 50 companies, and acquisitions have been a big part of the firm’s growth strategy.

SS&C reported a solid finish to 2023 and a decent revenue outlook for 2024. Revenue of $1.41 billion was in line with the FactSet consensus estimate, while adjusted EBITDA of $563 million and adjusted EPS of $1.26 beat by 2%. Revenue retention continues to be steady. Overall, there was little in the firm’s financial results that would alter our long-term view of the firm. We will maintain our narrow moat rating and $81 fair value estimate and regard shares as undervalued.

Founded in 1986, SS&C Technologies provides software products and software-enabled services to mostly financial-services firms. SS&C, which stands for Securities Software and Consultants, introduced CAMRA, or complete asset management, reporting, and accounting, in 1989. Since inception, SS&C has acquired more than 50 companies, and acquisitions have been a big part of the firm’s growth strategy.

SS&C reported a third quarter that was a tad soft on revenue. Revenues, adjusted EBITDA, and adjusted EPS of $1.37 billion, $534 million, $1.17, respectively, compared with the FactSet consensus estimates of $1.38 billion, $532 million, and $1.18. Overall, there was little in the firm's third-quarter earnings release that would alter our long-term view of the firm, and we will maintain our narrow moat rating and fair value estimate of $75 per share.

Similar to the first quarter of 2023, narrow-moat-rated SS&C's second-quarter revenue was in line with expectations, but operating margins were showing some softness. Revenue of $1.36 billion (with 2.5% organic growth) was in line with the FactSet consensus estimate, while adjusted EBITDA of $502 million was 2% below the consensus estimate of $513 million. Looking ahead, while SS&C expects organic growth to accelerate to about 5% by the fourth quarter, management reduced its full-year estimate by 1% to 3% at the midpoint. After increasing our expense forecasts, we have lowered our fair value estimate to $75 per share from $78.

Founded in 1986, SS&C Technologies provides software products and software-enabled services to mostly financial-services firms. SS&C, which stands for Securities Software and Consultants, introduced CAMRA, or complete asset management, reporting, and accounting, in 1989. Since inception, SS&C has acquired more than 50 companies, and acquisitions have been a big part of the firm’s growth strategy.

Founded in 1986, SS&C Technologies provides software products and software-enabled services to mostly financial-services firms. SS&C, which stands for Securities Software and Consultants, introduced CAMRA, or complete asset management, reporting, and accounting, in 1989. Since inception, SS&C has acquired more than 50 companies, and acquisitions have been a big part of the firm’s growth strategy.

SS&C Technologies started 2023 on decent footing. First-quarter revenue of $1.36 billion, adjusted EBITDA of $509 million, and adjusted EPS of $1.11 compared with the FactSet consensus estimates of $1.35 billion, $518 million, and $1.14, respectively. Overall, there was little that would alter our long-term view of the firm, and we will maintain our $77 fair value estimate. We regard the shares as undervalued.

Narrow-moat SS&C finished 2022 with an okay fourth quarter. Organic constant currency revenue growth was flat, consistent with management’s guidance and consensus expectations amid a deteriorating macroenvironment and weakness in the healthcare business. Importantly, revenue retention finished the year at 96.3%, up from 95.6%. We view SS&C’s high retention as evidence that its solutions have meaningful switching costs. As we update our model, we are increasing our fair value estimate to $77 from $75 primarily due to time value of money. Based on SS&C’s closing price of about $62, shares are trading at 13 times our 2023 adjusted EPS estimate or 15 times our adjusted EPS estimate, which removes exclusions such as stock-based compensation and organic amortization that we do not agree with. SS&C’s business has many positive attributes, such as moderate cyclical exposure and high retention. We note that this is considerably less than the S&P 500 index forward multiple of 18.7 times and regard shares as undervalued.

Founded in 1986, SS&C Technologies provides software products and software-enabled services to mostly financial-services firms. SS&C, which stands for Securities Software and Consultants, introduced CAMRA, or complete asset management, reporting, and accounting, in 1989. Since inception, SS&C has acquired more than 50 companies, and acquisitions have been a big part of the firm’s growth strategy.

SS&C Technologies reported third-quarter results a bit below expectations. Revenue of $1.32 billion fell shy of the FactSet consensus estimate of $1.35 billion and management’s midpoint guidance provided in July of $1.34 billion. Adjusted EPS of $1.15 and adjusted EBTIDA of $502 million missed the consensus estimates of $1.20 and $510 million, respectively. We attribute the miss to macroeconomic conditions, particularly lower asset values for fund administration, but we believe the firm’s solutions are sticky. We view SS&C as having a narrow moat due to switching costs and note that the firm’s retention rate of 96.5% in the quarter came in slightly above 2020 and 2021 levels. We maintain our $75 fair value estimate and view the shares as attractive.

Founded in 1986, SS&C Technologies provides software products and software-enabled services to financial-services and healthcare firms. SS&C, which stands for Securities Software and Consultants, introduced CAMRA, or complete asset management, reporting, and accounting, in 1989. Since inception, SS&C has acquired more than 50 companies, and acquisitions have been a big part of the firm’s growth strategy.

Narrow-moat SS&C reported second-quarter results showing broad-based revenue growth deceleration, particularly from its DST businesses, which it acquired in 2018. Second-quarter revenue of $1.33 billion and adjusted EPS of $1.10 fell below the FactSet consensus of $1.35 billion and $1.18, respectively. As we incorporate revenue and expense headwinds, we expect to lower our fair value estimate of $83 in a range of 5%-15%.

Founded in 1986, SS&C Technologies provides software products and software-enabled services to financial-services and healthcare firms. SS&C, which stands for Securities Software and Consultants, introduced CAMRA, or complete asset management, reporting, and accounting, in 1989. Since inception, SS&C has acquired more than 50 companies, and acquisitions have been a big part of the firm’s growth strategy.

SS&C reported first-quarter results mostly in line with consensus expectations. After accounting for the inclusion of Blue Prism, revenue of $1.30 billion and adjusted EPS of $1.25 were essentially in line with the FactSet consensus. SS&C kept its 2022 midpoint organic revenue guidance at 4%, but lowered its earnings per share outlook. As we take into account higher interest rates on its debt, we expect to lower our fair value estimate of $85 by a single-digit percentage.

Founded in 1986, SS&C Technologies provides software products and software-enabled services to financial-services and healthcare firms. SS&C, which stands for Securities Software and Consultants, introduced CAMRA, or complete asset management, reporting, and accounting, in 1989. Since inception, SS&C has acquired more than 50 companies, and acquisitions have been a big part of the firm’s growth strategy.

SS&C finished 2021 with a good fourth quarter. Revenue for the quarter of $1.30 billion and adjusted EPS of $1.28 topped the FactSet consensus of $1.26 billion and $1.23, respectively. The firm’s initial 2022 outlook was mostly in line with consensus estimates. Overall, there was little in the firm’s financial results that would alter our long-term view of the firm. We will maintain our narrow moat rating and fair value estimate of $85.

Blue Prism, which trades publicly on the London Stock Exchange, announced today that it is reviewing an offer from narrow-moat-rated SS&C Technologies of GBX 1,200 per share. The board had previously recommended shareholders accept an offer by private equity firm Vista Equity Partners for GBX 1,125. We believe Blue Prism could still get a higher offer and to that end shares of Blue Prism closed at GBX 1,220. We note that SS&C has lost bidding wars in the past and we generally applaud this given the risk of overpaying. Shares of Blue Prism have been sideways in recent years and large shareholders such as Coast Capital and Hawk Ridge have complained about the Vista Equity takeout offer as being too low. We do not believe a deal if it was finalized would materially alter our fair value estimate of $85 on SS&C’s shares.

On the heels of strong third-quarter results and ahead of the firm’s analyst day, we are raising our fair value estimate for SS&C Technologies to $85 from $75, primarily as we tweak our longer-term revenue estimates higher. In addition, we modestly increased our adjusted EBITDA margin expectations. At its current share price of $78, we believe shares of narrow-moat-rated SS&C Technologies are modestly undervalued.