10-Q 1 ssnc-20240331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2024

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

Commission File Number 001-34675

 

img164090713_0.jpg 

SS&C TECHNOLOGIES HOLDINGS, INC.

(Exact name of Registrant as specified in its charter)

 

 

Delaware

71-0987913

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

80 Lamberton Road

Windsor, CT 06095

(Address of principal executive offices, including zip code)

860-298-4500

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock, par value $0.01 per share

SSNC

The Nasdaq Global Select Market

There were 247,323,277 shares of the registrant’s common stock outstanding as of April 24, 2024.

 

 

 


 

SS&C TECHNOLOGIES HOLDINGS, INC.

INDEX

 

 

Page
Number

 

 

 

PART 1. FINANCIAL INFORMATION

 

 

 

 

 

Item 1. Financial Statements (unaudited)

 

3

 

 

 

Condensed Consolidated Balance Sheets at March 31, 2024 and December 31, 2023

 

3

 

 

 

Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2024 and 2023

 

4

 

 

 

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023

 

5

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2024 and 2023

 

6

 

 

 

Notes to Condensed Consolidated Financial Statements

 

7

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

13

 

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

21

 

 

 

Item 4. Controls and Procedures

 

22

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 1. Legal Proceedings

 

22

 

 

 

Item 1A. Risk Factors

 

22

 

 

 

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

 

23

 

 

 

Item 6. Exhibits

 

24

 

 

 

EXHIBIT INDEX

 

24

 

 

 

SIGNATURE

 

25

 

 

 

SS&C Technologies Holdings, Inc., or “SS&C Holdings,” is our top-level holding company. SS&C Technologies, Inc., or “SS&C,” is our primary operating company and a wholly-owned subsidiary of SS&C Technologies Holdings, Inc. “We,” “us,” “our” and the “Company” mean SS&C Technologies Holdings, Inc. and its consolidated subsidiaries, including SS&C.

This Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes”, “anticipates”, “plans”, “expects”, “estimates”, “projects”, “forecasts”, “may”, “assume”, “intend”, “will”, “continue”, “opportunity”, “predict”, “potential”, “future”, “guarantee”, “likely”, “target”, “indicate”, “would”, “could” and “should” and similar expressions are intended to identify forward-looking statements. The important factors discussed under the caption “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 28, 2024, among others, could cause actual results to differ materially from those indicated by forward-looking statements made herein and presented elsewhere by management from time to time. We do not undertake an obligation to update its forward-looking statements to reflect future events or circumstances.

 

 

 

2


 

PART I

Item 1. Financial Statements

SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per share data) (Unaudited)

 

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

412.5

 

 

$

432.2

 

Funds receivable and funds held on behalf of clients

 

 

2,027.0

 

 

 

2,615.6

 

Accounts receivable, net of allowance for credit losses of $27.4 and $25.1, respectively

 

 

879.9

 

 

 

799.4

 

Contract assets

 

 

43.2

 

 

 

36.1

 

Prepaid expenses and other current assets

 

 

142.8

 

 

 

165.8

 

Restricted cash and cash equivalents

 

 

2.2

 

 

 

2.4

 

Total current assets

 

 

3,507.6

 

 

 

4,051.5

 

Property, plant and equipment, net (Note 2)

 

 

300.1

 

 

 

315.3

 

Operating lease right-of-use assets

 

 

213.5

 

 

 

221.4

 

Investments (Note 3)

 

 

183.7

 

 

 

184.7

 

Unconsolidated affiliates (Note 4)

 

 

346.7

 

 

 

345.2

 

Contract assets

 

 

100.2

 

 

 

99.7

 

Goodwill (Note 5)

 

 

8,933.2

 

 

 

8,969.5

 

Intangible and other assets, net of accumulated amortization of $4,203.6 and $4,063.4, respectively

 

 

3,801.8

 

 

 

3,915.2

 

Total assets

 

$

17,386.8

 

 

$

18,102.5

 

Liabilities and Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current portion of long-term debt (Note 6)

 

$

50.8

 

 

$

51.5

 

Client funds obligations

 

 

2,027.0

 

 

 

2,615.6

 

Accounts payable

 

 

38.3

 

 

 

80.3

 

Income taxes payable

 

 

65.3

 

 

 

22.3

 

Accrued employee compensation and benefits

 

 

168.9

 

 

 

270.2

 

Interest payable

 

 

2.8

 

 

 

29.4

 

Other accrued expenses

 

 

226.5

 

 

 

232.3

 

Deferred revenues

 

 

493.2

 

 

 

470.3

 

Total current liabilities

 

 

3,072.8

 

 

 

3,771.9

 

Long-term debt, net of current portion (Note 6)

 

 

6,593.5

 

 

 

6,668.5

 

Operating lease liabilities

 

 

191.7

 

 

 

199.1

 

Other long-term liabilities

 

 

256.2

 

 

 

248.7

 

Deferred income taxes

 

 

779.9

 

 

 

816.6

 

Total liabilities

 

 

10,894.1

 

 

 

11,704.8

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

Stockholders’ equity (Note 7):

 

 

 

 

 

 

Preferred stock, $0.01 par value per share, 5.0 million shares authorized; no shares issued

 

 

 

 

 

 

Class A non-voting common stock, $0.01 par value per share, 5.0 million shares authorized;
no shares issued

 

 

 

 

 

 

Common stock, $0.01 par value per share, 400.0 million shares authorized; 277.3 million shares and 275.9 million shares issued, respectively, and 247.2 million shares and 246.6 million shares outstanding, respectively

 

 

2.8

 

 

 

2.8

 

Additional paid-in capital

 

 

5,468.2

 

 

 

5,371.0

 

Accumulated other comprehensive loss

 

 

(473.9

)

 

 

(426.3

)

Retained earnings

 

 

3,224.2

 

 

 

3,126.3

 

Cost of common stock in treasury, 30.1 and 29.3 million shares, respectively

 

 

(1,787.1

)

 

 

(1,734.2

)

Total SS&C stockholders’ equity

 

 

6,434.2

 

 

 

6,339.6

 

Noncontrolling interest (Note 8)

 

 

58.5

 

 

 

58.1

 

Total equity

 

 

6,492.7

 

 

 

6,397.7

 

Total liabilities and equity

 

$

17,386.8

 

 

$

18,102.5

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3


 

SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions, except per share data) (Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Revenues:

 

 

 

 

 

 

Software-enabled services

 

$

1,187.7

 

 

$

1,114.2

 

License, maintenance and related

 

 

247.3

 

 

 

248.5

 

Total revenues

 

 

1,435.0

 

 

 

1,362.7

 

Cost of revenues:

 

 

 

 

 

 

Software-enabled services

 

 

633.8

 

 

 

631.0

 

License, maintenance and related

 

 

94.0

 

 

 

94.7

 

Total cost of revenues

 

 

727.8

 

 

 

725.7

 

Gross profit

 

 

707.2

 

 

 

637.0

 

Operating expenses:

 

 

 

 

 

 

Selling and marketing

 

 

140.9

 

 

 

139.8

 

Research and development

 

 

120.9

 

 

 

118.2

 

General and administrative

 

 

112.5

 

 

 

98.9

 

Total operating expenses

 

 

374.3

 

 

 

356.9

 

Operating income

 

 

332.9

 

 

 

280.1

 

Interest expense, net

 

 

(116.0

)

 

 

(111.9

)

Other income, net

 

 

6.6

 

 

 

5.4

 

Equity in earnings of unconsolidated affiliates, net

 

 

2.3

 

 

 

5.7

 

Loss on extinguishment of debt

 

 

(1.1

)

 

 

(0.6

)

Income before income taxes

 

 

224.7

 

 

 

178.7

 

Provision for income taxes

 

 

66.7

 

 

 

52.5

 

Net income

 

 

158.0

 

 

 

126.2

 

Net income attributable to noncontrolling interest

 

 

(0.4

)

 

 

(0.2

)

Net income attributable to SS&C common stockholders

 

$

157.6

 

 

$

126.0

 

 

 

 

 

 

 

 

Basic earnings per share attributable to SS&C common stockholders

 

$

0.64

 

 

$

0.50

 

Diluted earnings per share attributable to SS&C common stockholders

 

$

0.62

 

 

$

0.49

 

 

 

 

 

 

 

 

Basic weighted-average number of common shares outstanding

 

 

247.0

 

 

 

250.4

 

Diluted weighted-average number of common and common equivalent shares outstanding

 

 

253.3

 

 

 

257.0

 

 

 

 

 

 

 

 

Net income

 

$

158.0

 

 

$

126.2

 

Other comprehensive (loss) income, net of tax:

 

 

 

 

 

 

Foreign currency exchange translation adjustment

 

 

(47.6

)

 

 

42.0

 

Change in defined benefit pension obligation

 

 

 

 

 

0.1

 

Total other comprehensive (loss) income, net of tax

 

 

(47.6

)

 

 

42.1

 

Comprehensive income

 

 

110.4

 

 

 

168.3

 

Comprehensive income attributable to noncontrolling interest

 

 

(0.4

)

 

 

(0.2

)

Comprehensive income attributable to SS&C common stockholders

 

$

110.0

 

 

$

168.1

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4


 

SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions) (Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Cash flow from operating activities:

 

 

 

 

 

 

Net income

 

$

158.0

 

 

$

126.2

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

165.5

 

 

 

165.9

 

Equity in earnings of unconsolidated affiliates, net

 

 

(2.3

)

 

 

(5.7

)

Distributions received from unconsolidated affiliates

 

 

 

 

 

15.0

 

Stock-based compensation expense

 

 

45.1

 

 

 

41.9

 

Net gains on investments

 

 

(0.3

)

 

 

(1.0

)

Amortization and write-offs of loan origination costs and original issue discounts

 

 

3.3

 

 

 

3.5

 

Loss on extinguishment of debt

 

 

1.1

 

 

 

0.6

 

Loss on sale or disposition of property and equipment

 

 

 

 

 

6.4

 

Deferred income taxes

 

 

(31.4

)

 

 

(30.2

)

Provision for credit losses

 

 

5.1

 

 

 

5.0

 

Changes in operating assets and liabilities, excluding effects from acquisitions:

 

 

 

 

 

 

Accounts receivable

 

 

(89.7

)

 

 

(35.3

)

Prepaid expenses and other assets

 

 

7.9

 

 

 

38.7

 

Contract assets

 

 

(8.6

)

 

 

0.1

 

Accounts payable

 

 

(40.6

)

 

 

(9.3

)

Accrued expenses and other liabilities

 

 

(133.9

)

 

 

(155.7

)

Income taxes prepaid and payable

 

 

70.1

 

 

 

59.6

 

Deferred revenue

 

 

31.2

 

 

 

29.1

 

Net cash provided by operating activities

 

 

180.5

 

 

 

254.8

 

Cash flow from investing activities:

 

 

 

 

 

 

Cash paid for business acquisitions, net of cash acquired and asset acquisitions

 

 

(0.7

)

 

 

 

Additions to property and equipment

 

 

(5.8

)

 

 

(10.5

)

Proceeds from sale of property and equipment

 

 

3.3

 

 

 

 

Additions to capitalized software

 

 

(50.0

)

 

 

(42.6

)

Proceeds from sales / maturities of investments

 

 

0.1

 

 

 

0.9

 

Collection of other non-current receivables

 

 

2.5

 

 

 

2.4

 

Net cash used in investing activities

 

 

(50.6

)

 

 

(49.8

)

Cash flow from financing activities:

 

 

 

 

 

 

Cash received from debt borrowings, net of original issue discount

 

 

15.0

 

 

 

145.0

 

Repayments of debt

 

 

(94.9

)

 

 

(189.6

)

Net decrease in client funds obligations

 

 

(690.0

)

 

 

(541.9

)

Proceeds from exercise of stock options

 

 

53.4

 

 

 

15.3

 

Withholding taxes paid related to equity award net share settlement

 

 

(6.8

)

 

 

(0.1

)

Purchases of common stock for treasury

 

 

(52.9

)

 

 

(133.3

)

Dividends paid on common stock

 

 

(59.7

)

 

 

(50.7

)

Net cash used in financing activities

 

 

(835.9

)

 

 

(755.3

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(3.8

)

 

 

0.9

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(709.8

)

 

 

(549.4

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

2,998.6

 

 

 

1,337.6

 

Cash, cash equivalents and restricted cash and cash equivalents, end of period

 

$

2,288.8

 

 

$

788.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash and cash equivalents:

 

Cash and cash equivalents

 

$

412.5

 

 

$

433.3

 

Restricted cash and cash equivalents

 

 

2.2

 

 

 

2.5

 

Restricted cash and cash equivalents included in funds receivable and funds held on behalf of clients

 

 

1,874.1

 

 

 

352.4

 

 

 

$

2,288.8

 

 

$

788.2

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

5


 

SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In millions) (Unaudited)

 

 

 

Three Months Ended March 31, 2024

 

 

 

SS&C Stockholders

 

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

of

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

Total

 

 

 

Issued

 

 

 

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

Treasury

 

 

Noncontrolling

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Stock

 

 

Interest

 

 

Equity

 

Balance, at December 31, 2023

 

275.9

 

 

$

2.8

 

 

$

5,371.0

 

 

$

3,126.3

 

 

$

(426.3

)

 

$

(1,734.2

)

 

$

58.1

 

 

$

6,397.7

 

Net income

 

 

 

 

 

 

 

 

 

 

 

157.6

 

 

 

 

 

 

 

 

0.4

 

 

 

158.0

 

Foreign exchange translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(47.6

)

 

 

 

 

 

 

 

 

(47.6

)

Stock-based compensation expense

 

 

 

 

 

 

 

45.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

45.1

 

Exercise of options, net of withholding taxes

 

1.4

 

 

 

 

 

51.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

51.9

 

Cash dividends declared - $0.24 per share

 

 

 

 

 

 

 

0.2

 

 

 

(59.7

)

 

 

 

 

 

 

 

 

 

 

 

(59.5

)

Purchases of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(52.9

)

 

 

 

 

 

(52.9

)

Balance, at March 31, 2024

 

277.3

 

 

$

2.8

 

 

$

5,468.2

 

 

$

3,224.2

 

 

$

(473.9

)

 

$

(1,787.1

)

 

$

58.5

 

 

$

6,492.7

 

 

 

 

 

 

Three Months Ended March 31, 2023

 

 

 

SS&C Stockholders

 

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

of

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

Total

 

 

 

Issued

 

 

 

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

Treasury

 

 

Noncontrolling

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

(Loss) Income

 

 

Stock

 

 

Interest

 

 

Equity

 

Balance, at December 31, 2022

 

271.9

 

 

$

2.7

 

 

$

5,111.6

 

 

$

2,740.1

 

 

$

(550.1

)

 

$

(1,260.1

)

 

$

56.6

 

 

$

6,100.8

 

Net income

 

 

 

 

 

 

 

 

 

 

 

126.0

 

 

 

 

 

 

 

 

0.2

 

 

 

126.2

 

Foreign exchange translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

42.0

 

 

 

 

 

 

 

 

 

42.0

 

Defined benefit pension adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.1

 

 

 

 

 

 

 

 

 

0.1

 

Stock-based compensation expense

 

 

 

 

 

 

 

41.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

41.9

 

Exercise of options, net of withholding taxes

 

0.4

 

 

 

 

 

15.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15.2

 

Cash dividends declared - $0.20 per share

 

 

 

 

 

 

 

 

 

 

 

(50.7

)

 

 

 

 

 

 

 

 

 

 

 

(50.7

)

Purchases of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(134.7

)

 

 

 

 

 

(134.7

)

Balance, at March 31, 2023

 

272.3

 

 

$

2.7

 

 

$

5,168.7

 

 

$

2,815.4

 

 

$

(508.0

)

 

$

(1,394.8

)

 

$

56.8

 

 

$

6,140.8

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

6


 

SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Note 1—Basis of Presentation and Principles of Consolidation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These accounting principles were applied on a basis consistent with those of the audited Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2024 (the “2023 Form 10-K”). In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments (consisting of only normal recurring adjustments, except as noted elsewhere in the notes to the Condensed Consolidated Financial Statements) necessary for a fair statement of our financial position as of March 31, 2024, the results of our operations for the three months ended March 31, 2024 and 2023, and our cash flows for the three months ended March 31, 2024 and 2023. These statements do not include all of the information and footnotes required by GAAP for annual financial statements. The Condensed Consolidated Financial Statements contained herein should be read in conjunction with the audited Consolidated Financial Statements and footnotes as of and for the year ended December 31, 2023, which were included in the 2023 Form 10-K. The December 31, 2023 Consolidated Balance Sheet data were derived from audited financial statements but do not include all disclosures required by GAAP for annual financial statements. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the expected results for any subsequent quarters or the full year.

The accompanying unaudited condensed consolidated financial statements include the accounts of SS&C Technologies Holdings, Inc. and its subsidiaries, including a variable interest entity (“VIE”) for which we are the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation.

Recent Accounting Pronouncements Not Yet Effective

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The standard is applicable to all public entities, including public entities with a single reportable segment, and requires enhanced reportable segment disclosures. The disclosures include significant segment expenses regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss. The standard also requires disclosure of the title and position of the CODM as well as how the CODM uses the reported measures of a segment’s profit or loss to assess segment performance and decide how to allocate resources. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 31, 2024. Early adoption is permitted. We are currently evaluating the potential impact the standard will have on our disclosures.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). The standard requires more enhanced disclosures specifically related to effective tax rate reconciliation and income taxes paid. The new requirements will be effective for fiscal years beginning after December 15, 2024, on a prospective basis. Early adoption and retrospective application are permitted. We are currently evaluating the potential impact the standard will have on our income tax disclosures.

Note 2—Property, Plant and Equipment, net

Property, plant and equipment and the related accumulated depreciation are as follows (in millions):

 

 

March 31,

 

 

December 31,

 

 

 

 

2024

 

 

2023

 

 

Land

 

$

37.5

 

 

$

37.7

 

 

Building and improvements

 

 

266.1

 

 

 

265.5

 

 

Equipment, furniture, and fixtures

 

 

525.2

 

 

 

525.7

 

 

 

 

 

828.8

 

 

 

828.9

 

 

Less: accumulated depreciation

 

 

(528.7

)

 

 

(513.6

)

 

Total property, plant and equipment, net

 

$

300.1

 

 

$

315.3

 

 

 

Depreciation expense for the three months ended March 31, 2024 and 2023 was $17.9 million and $19.0 million, respectively. As of March 31, 2024 and December 31, 2023, assets held for sale were $5.9 million and $9.0 million, respectively, and are presented in prepaid expenses and other current assets in our condensed consolidated balance sheet. Unpaid property, plant and equipment additions of $1.0 million and $2.9 million are included in accounts payable and other accrued expenses as of March 31, 2024 and December 31, 2023, respectively, in our condensed consolidated balance sheet.

 

7


 

Note 3—Investments

Investments are as follows (in millions):

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Non-marketable equity securities

 

$

124.0

 

 

$

124.0

 

Seed capital investments

 

 

26.3

 

 

 

26.1

 

Marketable equity securities

 

 

22.5

 

 

 

23.1

 

Partnership interests in private equity funds

 

 

10.9

 

 

 

11.5

 

Total investments

 

$

183.7

 

 

$

184.7

 

 

There were no realized gains or losses for our equity securities in the three months ended March 31, 2024 and 2023. Unrealized gains for our equity securities are as follows (in millions):

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Unrealized gains on equity securities held as of the end of the period

 

$

0.9

 

 

$

2.3

 

 

Fair Value Measurement

Authoritative accounting guidance on fair value measurements establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of March 31, 2024 and December 31, 2023, we held certain investment assets and certain liabilities that are required to be measured at fair value on a recurring basis. These investments include money market funds and marketable equity securities where fair value is determined using quoted prices in active markets. Accordingly, the fair value measurements of these investments have been classified as Level 1 in the tables below. Investments for which we elected net asset value as a practical expedient for fair value and investments measured using the fair value measurement alternative are excluded from the tables below. Fair value for deferred compensation liabilities that are credited with deemed gains or losses of the underlying hypothetical investments, primarily equity securities, have been classified as Level 1 in the tables below.

 

The following tables present assets and liabilities measured at fair value on a recurring basis (in millions):

 

 

 

 

 

Fair Value Measurements at Reporting Date Using

 

 

 

March 31, 2024

 

 

Quoted prices in Active Markets for Identical Assets (Level 1)

 

 

Significant Other Observable Inputs (Level 2)

 

 

Significant Unobservable Inputs (Level 3)

 

Money market funds (1)

 

$

1,781.6

 

 

$

1,781.6

 

 

$

 

 

$

 

Seed capital investments (2)

 

 

26.3

 

 

 

26.3

 

 

 

 

 

 

 

Marketable equity securities (2)

 

 

22.5

 

 

 

22.5

 

 

 

 

 

 

 

Deferred compensation liabilities (3)

 

 

(12.3

)

 

 

(12.3

)

 

 

 

 

 

 

Total

 

$

1,818.1

 

 

$

1,818.1

 

 

$

 

 

$

 

 

 

 

 

 

 

Fair Value Measurements at Reporting Date Using

 

 

 

December 31, 2023

 

 

Quoted prices in Active Markets for Identical Assets (Level 1)

 

 

Significant Other Observable Inputs (Level 2)

 

 

Significant Unobservable Inputs (Level 3)

 

Money market funds (1)

 

$

2,212.6

 

 

$

2,212.6

 

 

$

 

 

$

 

Seed capital investments (2)

 

 

26.1

 

 

 

26.1

 

 

 

 

 

 

 

Marketable equity securities (2)

 

 

23.1

 

 

 

23.1

 

 

 

 

 

 

 

Deferred compensation liabilities (3)

 

 

(11.7

)

 

 

(11.7

)

 

 

 

 

 

 

Total

 

$

2,250.1

 

 

$

2,250.1

 

 

$

 

 

$

 

 

8


 

(1)
As of March 31, 2024, included $112.3 million of cash and cash equivalents, $1.6 million of restricted cash and $1,667.7 million of funds receivable and funds held on behalf of clients on the Condensed Consolidated Balance Sheet. As of December 31, 2023, included $131.7 million of cash and cash equivalents, $1.8 million of restricted cash and $2,079.1 million of funds receivable and funds held on behalf of clients on the Condensed Consolidated Balance Sheet.
(2)
Included in Investments on the Condensed Consolidated Balance Sheet.
(3)
Included in Other long-term liabilities on the Condensed Consolidated Balance Sheet.

We have partnership interests in various private equity funds that are not included in the tables above. Our investments in private equity funds were $10.9 million and $11.5 million at March 31, 2024 and December 31, 2023, respectively, of which $9.3 million and $9.2 million, respectively, were measured using net asset value as a practical expedient for fair value and $1.6 million and $2.3 million, respectively, were accounted for under the equity method of accounting. The investments in private equity funds represent underlying investments in domestic and international markets across various industry sectors.

Generally, our investments in private equity funds are non-transferable or are subject to long holding periods, and withdrawals from the private equity firm partnerships are typically not permitted. The maximum risk of loss related to our private equity fund investments is limited to the carrying value of its investments in the entities.

 

Note 4—Unconsolidated Affiliates

Investments in unconsolidated affiliates are as follows (in millions):

 

 

 

 

March 31, 2024

 

 

December 31, 2023

 

 

 

Ownership Percentage

 

Carrying Value

 

 

Excess carrying value of investment over proportionate share of net assets

 

 

Carrying Value

 

 

Excess carrying value of investment over proportionate share of net assets

 

Orbit Private Investments L.P.

 

9.8%

 

$

212.9

 

 

$

 

 

$

211.6

 

 

$

 

International Financial Data Services L.P.

 

50.0%

 

 

68.9

 

 

 

30.6

 

 

 

68.3

 

 

 

31.4

 

Broadway Square Partners, LLP

 

50.0%

 

 

53.1

 

 

 

29.3

 

 

 

53.4

 

 

 

29.5

 

Pershing Road Development Company, LLC

 

50.0%

 

 

9.9

 

 

 

54.8

 

 

 

10.0

 

 

 

55.4

 

Other unconsolidated affiliates

 

 

 

 

1.9

 

 

 

 

 

 

1.9

 

 

 

 

Total

 

 

 

$

346.7

 

 

$

114.7

 

 

$

345.2

 

 

$

116.3

 

 

Investments in unconsolidated affiliates are accounted for under the equity method of accounting. We record our proportionate share of the results of the unconsolidated affiliates and amortization expense related to basis differences in Equity in earnings of unconsolidated affiliates, net on the Condensed Consolidated Statements of Comprehensive Income.

 

Equity in earnings of unconsolidated affiliates, net are as follows (in millions):

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Orbit Private Investments L.P.

 

$

1.2

 

 

$

4.8

 

International Financial Data Services L.P.

 

 

1.5

 

 

 

1.1

 

Pershing Road Development Company, LLC

 

 

(0.1

)

 

 

(0.2

)

Broadway Square Partners, LLP

 

 

(0.3

)

 

 

0.1

 

Other unconsolidated affiliates

 

 

 

 

 

(0.1

)

Total

 

$