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SS&C Technologies Touches New Highs After a Solid Quarterly Win

SS&C Technologies Holdings (NASDAQ: SSNC) announced slightly better-than-expected second-quarter 2017 results on Thursday after the market closed, including its 21st straight quarter of revenue growth and ambitious research and development investments aimed at capturing future growth opportunities. After briefly climbing more than 2% to a fresh all-time high early Friday, shares settled to close roughly flat on the day.

Let's take a closer look at what SS&C accomplished over the past few months, as well as what investors can expect from the financial services software company going forward.

Image source: Getty Images.

SS&C Technologies results: The raw numbers

Metric

Q2 2017

Q2 2016

Year-Over-Year Growth

GAAP revenue

$411.0 million

$373.1 million

10.2%

GAAP net income

$51.2 million

$28.2 million

81.3%

GAAP earnings per share (diluted)

$0.24

$0.14

71.4%

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 climbed 7.7% year over year to $414.1 million. Adjusted net income increased 21.1% to $96.2 million, and adjusted earnings per diluted share grew 17.9% to $0.46.
  • By comparison, both the top and bottom lines were above the midpoints of SS&C's guidance provided last quarter, which called for revenue of $408 million to $416 million, and adjusted net income of $93.7 million to $98 million.
  • Adjusted recurring revenue grew 8.8% to $387.4 million, including 11.3% growth in software-enabled services revenue to $272.5 million, and 3.2% growth in maintenance and term license revenue to $114.9 million.
  • Adjusted non-recurring revenue fell 5.9% year over year to $26.7 million, including a 24.2% decline in perpetual license revenue to $3.8 million, and a 2% drop in professional services revenue to $22.8 million.
  • Adjusted consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) grew 11% year over year to $163.7 million.
  • SS&C has generated operating cash flow of $193.8 million so far in 2017, up 39.1% year over year.

What management had to say

SS&C CEO Bill Stone stated:

SS&C's continuous investment in our 8,200 strong workforce and a relentless focus on customer service, delivers a superior customer experience. We have become one of the world's largest financial technology companies and our investments have strengthened our competitive advantage. We have been honored to receive numerous industry awards for technology and service over the past several years, and this quarter SS&C was named to Forbes' America's Best Midsized Employers. Looking forward we will continue to explore opportunities to reinvent the way we capture, process and deliver investment information. The various consumers of our output rely on us to stay abreast of new financial instruments, tax and financial reporting requirements, and changing investment strategies.  SS&C's clients understand our commitment and, during Q2 we spent over $39 million in research and development.

Looking ahead

For the third quarter, SS&C expects adjusted revenue of $420 million to $428 million, adjusted net income of $103.5 million to $108.0 million, and -- based on the midpoint of its expected diluted share count -- adjusted net income per share in the approximate range of $0.49 to $0.51.

Finally, similar to last quarter, SS&C once again modestly increased its full-year guidance. As it stands, the company expects 2017 revenue of $1.669 billion to $1.689 billion (up from $1.664 billion to $1.686 billion previously), and adjusted net income of $403 million to $413 million (up from $399 million to $412 million). The company continues to expect full-year cash from operations in the range of $485 million to $500 million.

All things considered, this was another simple beat-and-raise situation from SS&C Technologies, even as the company dedicates significant R&D expenses toward solidifying and extending its industry leadership.

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Steve Symington has no position in any stocks mentioned. The Motley Fool recommends SS&C Technologies Holdings. The Motley Fool has a disclosure policy.