SS&C Technologies Holdings Inc [SSNC] Filings

10-Q 1 ssnc-20240930.htm 10-Q 10-Q

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 September 30, 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

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 247,685,131 shares of the registrant’s common stock outstanding as of October 23, 2024.

SS&C TECHNOLOGIES HOLDINGS, INC.

INDEX


		Page Number

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)		3

Condensed Consolidated Balance Sheets at September 30, 2024 and December 31, 2023		3

Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2024 and 2023		4

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023		5

Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2024 and 2023		6

Notes to Condensed Consolidated Financial Statements		8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		17

Item 3. Quantitative and Qualitative Disclosures About Market Risk		27

Item 4. Controls and Procedures		27

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		28

Item 1A. Risk Factors		28

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		28

Item 6. Exhibits		29

EXHIBIT INDEX		29

SIGNATURE		30

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.

PART I

Item 1. Financial Statements

SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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


	September 30,			December 31,
	2024			2023
Assets
Current assets:
Cash and cash equivalents	$	694.7		$	432.2
Funds receivable and funds held on behalf of clients		2,081.5			2,615.6
Accounts receivable, net of allowance for credit losses of $31.5 and $25.1, respectively		934.0			799.4
Contract assets		47.2			36.1
Prepaid expenses and other current assets		129.8			165.8
Restricted cash and cash equivalents		3.5			2.4
Total current assets		3,890.7			4,051.5
Property, plant and equipment, net (Note 2)		309.4			315.3
Operating lease right-of-use assets		193.8			221.4
Investments (Note 3)		184.6			184.7
Unconsolidated affiliates (Note 4)		327.7			345.2
Contract assets		115.2			99.7
Goodwill (Note 6)		9,374.4			8,969.5
Intangible and other assets, net of accumulated amortization of $4,537.8 and $4,063.4, respectively		4,042.6			3,915.2
Total assets	$	18,438.4		$	18,102.5
Liabilities and Equity
Current liabilities:
Current portion of long-term debt (Note 7)	$	47.1		$	51.5
Client funds obligations		2,081.6			2,615.6
Accounts payable		43.6			80.3
Income taxes payable		7.7			22.3
Accrued employee compensation and benefits		280.1			270.2
Interest payable		19.7			29.4
Other accrued expenses		275.9			232.3
Deferred revenues		464.0			470.3
Total current liabilities		3,219.7			3,771.9
Long-term debt, net of current portion (Note 7)		7,155.6			6,668.5
Operating lease liabilities		175.4			199.1
Other long-term liabilities		203.4			248.7
Deferred income taxes		796.2			816.6
Total liabilities		11,550.3			11,704.8
Commitments and contingencies (Note 14)
Stockholders’ equity (Note 8):
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; 282.3 million shares and 275.9 million shares issued, respectively, and 247.3 million shares and 246.6 million shares outstanding, respectively		2.8			2.8
Additional paid-in capital		5,770.9			5,371.0
Accumulated other comprehensive loss		(312.1	)		(426.3	)
Retained earnings		3,456.0			3,126.3
Cost of common stock in treasury, 35.0 and 29.3 million shares, respectively		(2,103.5	)		(1,734.2	)
Total SS&C stockholders’ equity		6,814.1			6,339.6
Noncontrolling interest (Note 9)		74.0			58.1
Total equity		6,888.1			6,397.7
Total liabilities and equity	$	18,438.4		$	18,102.5

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

SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Revenues:
Software-enabled services	$	1,206.2		$	1,122.1		$	3,586.3		$	3,342.8
License, maintenance and related		259.6			243.8			766.0			748.4
Total revenues		1,465.8			1,365.9			4,352.3			4,091.2
Cost of revenues:
Software-enabled services		661.9			617.8			1,949.7			1,877.4
License, maintenance and related		99.7			93.7			292.9			281.3
Total cost of revenues		761.6			711.5			2,242.6			2,158.7
Gross profit		704.2			654.4			2,109.7			1,932.5
Operating expenses:
Selling and marketing		144.1			134.7			427.6			411.6
Research and development		131.3			117.7			380.9			355.5
General and administrative		103.7			95.6			315.6			290.7
Total operating expenses		379.1			348.0			1,124.1			1,057.8
Operating income		325.1			306.4			985.6			874.7
Interest expense, net		(109.6	)		(120.6	)		(338.9	)		(350.5	)
Other income (expense), net		9.3			(5.0	)		16.5			15.3
Equity in earnings of unconsolidated affiliates, net		1.1			27.5			20.7			42.6
Loss on extinguishment of debt		(1.3	)		(0.5	)		(30.1	)		(1.1	)
Income before income taxes		224.6			207.8			653.8			581.0
Provision for income taxes		60.0			51.2			140.5			167.3
Net income		164.6			156.6			513.3			413.7
Net income attributable to noncontrolling interest		(0.2	)		(0.6	)		(1.0	)		(1.0	)
Net income attributable to SS&C common stockholders	$	164.4		$	156.0		$	512.3		$	412.7

Basic earnings per share attributable to SS&C common stockholders	$	0.67		$	0.63		$	2.08		$	1.66
Diluted earnings per share attributable to SS&C common stockholders	$	0.65		$	0.61		$	2.02		$	1.62

Basic weighted-average number of common shares outstanding		246.1			247.5			246.4			248.8
Diluted weighted-average number of common and common equivalent shares outstanding		254.1			253.9			253.3			255.3

Net income	$	164.6		$	156.6		$	513.3		$	413.7
Other comprehensive income (loss), net of tax:
Foreign currency exchange translation adjustment		159.0			(113.0	)		114.1			(4.8	)
Change in defined benefit pension obligation		—			—			0.1			—
Total other comprehensive income (loss), net of tax		159.0			(113.0	)		114.2			(4.8	)
Comprehensive income		323.6			43.6			627.5			408.9
Comprehensive income attributable to noncontrolling interest		(0.2	)		(0.6	)		(1.0	)		(1.0	)
Comprehensive income attributable to SS&C common stockholders	$	323.4		$	43.0		$	626.5		$	407.9

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

SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions) (Unaudited)


	Nine Months Ended September 30,
	2024			2023
Cash flow from operating activities:
Net income	$	513.3		$	413.7
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		504.3			500.4
Equity in earnings of unconsolidated affiliates, net		(20.7	)		(42.6	)
Distributions received from unconsolidated affiliates		13.1			21.2
Stock-based compensation expense		147.9			117.5
Net (gains) losses on investments		(2.5	)		0.9
Amortization and write-offs of loan origination costs and original issue discounts		6.7			10.2
Loss on extinguishment of debt		30.1			1.1
Loss on sale or disposition of property and equipment		—			7.6
Deferred income taxes		(52.6	)		(89.1	)
Provision for credit losses		13.7			9.8
Changes in operating assets and liabilities, excluding effects from acquisitions:
Accounts receivable		(100.4	)		(69.0	)
Prepaid expenses and other assets		5.5			27.6
Contract assets		(25.3	)		0.5
Accounts payable		(40.8	)		(5.3	)
Accrued expenses and other liabilities		(75.7	)		(73.8	)
Income taxes prepaid and payable		(8.9	)		(16.3	)
Deferred revenue		(5.7	)		12.3
Net cash provided by operating activities		902.0			826.7
Cash flow from investing activities:
Cash paid for business acquisitions, net of cash acquired and asset acquisitions		(646.9	)		(0.1	)
Additions to property and equipment		(41.7	)		(40.7	)
Proceeds from sale of property and equipment		3.3			—
Additions to capitalized software		(149.7	)		(140.9	)
Investments in securities		—			(0.6	)
Proceeds from sales / maturities of investments		0.3			7.7
Distributions received from unconsolidated affiliates		24.4			—
Collection of other non-current receivables		7.7			7.5
Net cash used in investing activities		(802.6	)		(167.1	)
Cash flow from financing activities:
Cash received from debt borrowings, net of original issue discount		5,545.0			275.0
Repayments of debt		(5,060.1	)		(499.5	)
Payment of deferred financing fees		(36.6	)		—
Net decrease in client funds obligations		(952.2	)		(163.7	)
Proceeds from exercise of stock options		271.1			79.2
Withholding taxes paid related to equity award net share settlement		(20.3	)		(1.7	)
Purchases of common stock for treasury		(369.3	)		(341.0	)
Dividends paid on common stock		(182.6	)		(160.9	)
Proceeds from noncontrolling interests		14.9			—
Net cash used in financing activities		(790.1	)		(812.6	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		2.2			(4.2	)
Net decrease in cash, cash equivalents and restricted cash		(688.5	)		(157.2	)
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	$	2,310.1		$	1,180.4


Reconciliation of cash, cash equivalents and restricted cash and cash equivalents:
Cash and cash equivalents	$	694.7		$	447.6
Restricted cash and cash equivalents		3.5			2.3
Restricted cash and cash equivalents included in funds receivable and funds held on behalf of clients		1,611.9			730.5
	$	2,310.1		$	1,180.4

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

SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In millions) (Unaudited)


	Three Months Ended September 30, 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) Income			Stock			Interest		Equity
Balance, at June 30, 2024	278.6		$	2.8	$	5,557.0	$	3,354.4		$	(471.1	)	$	(2,015.2	)	$	58.9	$	6,486.8
Net income		—		—		—		164.4			—			—		0.2			164.6
Proceeds from noncontrolling interests		—		—		—		—			—			—		14.9			14.9
Foreign exchange translation adjustment		—		—		—		—			159.0			—			—		159.0
Stock-based compensation expense		—		—		52.2		—			—			—			—		52.2
Exercise of options, net of withholding taxes	3.7			—		161.6		—			—			—			—		161.6
Repurchases of common stock		—		—		—		—			—			(88.3	)		—		(88.3	)
Cash dividends declared - $0.25 per share		—		—		0.1		(62.8	)		—			—			—		(62.7	)
Balance, at September 30, 2024	282.3		$	2.8	$	5,770.9	$	3,456.0		$	(312.1	)	$	(2,103.5	)	$	74.0	$	6,888.1


	Three Months Ended September 30, 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			Stock			Interest		Equity
Balance, at June 30, 2023	273.2		$	2.7	$	5,230.6	$	2,895.6		$	(441.9	)	$	(1,506.7	)	$	57.0	$	6,237.3
Net income		—		—		—		156.0			—			—			0.6		156.6
Foreign exchange translation adjustment		—		—		—		—			(113.0	)		—			—		(113.0	)
Stock-based compensation expense		—		—		42.1		—			—			—			—		42.1
Exercise of options, net of withholding taxes		1.2		—		36.0		—			—			—			—		36.0
Repurchases of common stock		—		—		—		—			—			(97.8	)		—		(97.8	)
Cash dividends declared - $0.24 per share		—		—		—		(59.7	)		—			—			—		(59.7	)
Balance, at September 30, 2023		274.4	$	2.7	$	5,308.7	$	2,991.9		$	(554.9	)	$	(1,604.5	)	$	57.6	$	6,201.5

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

SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In millions) (Unaudited)


	Nine Months Ended September 30, 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) Income			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		—		—		—		512.3		—			—			1.0		513.3
Proceeds from noncontrolling interests