Summary
SS&C Technologies reported second quarter 2023 GAAP revenue of $1,362.6 million, up 2.6% from the prior-year quarter. GAAP operating income was $288.2 million, up 17.3%, and the operating margin was 21.2%, up 2.7 percentage points. GAAP net income attributable to SS&C was $130.7 million, up 18.2%, while diluted GAAP earnings per share came to $0.51, up 21.4%. Gross profit was $641.1 million, up 2.7%, and gross margin held at 47.0%, flat versus the prior-year quarter. The quarter's GAAP strength contrasts with the first half. Year-to-date revenue was $2,725.3 million, up 3.9%, but year-to-date GAAP net income was $256.7 million, down 9.2%, and year-to-date diluted GAAP earnings per share was $1.00, down 5.7%.
The non-GAAP view was softer on per-share profit. Adjusted revenue was $1,363.4 million, up 2.5%. Adjusted diluted earnings per share attributable to SS&C was $1.08, down 1.8%. Adjusted operating income attributable to SS&C was $485.8 million, up 6.7%, and adjusted consolidated EBITDA attributable to SS&C was $502.4 million, up 6.7%, with a 36.8% margin. Operating cash flow was $584.2 million for the six months ended June 30, 2023, up 30.5%. Capital expenditures were $24.2 million for the same six-month period, up 7.1%; in the quarter, capital expenditures were $13.7 million, up 16.1%. Deferred revenue, current portion, was $472.8 million and was flat, up 0.3%. Remaining performance obligations were $966.4 million, up 3.5%.
Operationally, organic revenue growth was 2.5% in the quarter, or 2.6% excluding Healthcare. Segment performance was mixed. Alternatives grew 6.1%, Advent grew 4.2%, GIDS grew 3.5%, Retirement grew 7.7%, Intralinks grew 9.2%, and Blue Prism grew 11.6%. Three businesses declined. Healthcare fell 1.0%, Eze/Financial Markets fell 13.3%, and another business fell 10.1%. The company bought back 2.0 million shares for $111.9 million at an average price of $56.17 and paid down $125.2 million in debt. Net leverage was 3.27 times consolidated EBITDA attributable to SS&C, and net secured leverage was 2.28 times. SS&C announced a new $1 billion common stock repurchase authorization. It also announced the appointment of Brian Schell as Chief Financial Officer.
Guidance points to continued adjusted growth but with pressure on GAAP results. For the third quarter of 2023, SS&C guides adjusted revenue to $1,355.0 million to $1,395.0 million, adjusted net income attributable to SS&C to $287.0 million to $309.0 million, and adjusted diluted earnings per share to $1.13 to $1.21. For full fiscal year 2023, the company guides adjusted revenue to $5,469.0 million to $5,575.0 million, adjusted net income to $1,160.0 million to $1,225.0 million, and adjusted diluted earnings per share to $4.57 to $4.77. Risks include high interest expense, which grew because of a higher average interest rate of 6.59% in the quarter. The effective tax rate rose. Foreign currency translation reduced revenue by $3.4 million in the quarter and $23.1 million for the six months. Management cited elevated expenses from interest expense, medical claims and professional fees. The broader risk list includes economic and financial services industry conditions, acquisition integration, customer consolidation, competition, regulatory scrutiny, cybersecurity and privacy concerns, and substantial indebtedness.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2023 | Q1 FY2023 | QoQ | Q2 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.36B | $1.36B | -0.0% | $1.33B | +2.6% |
| Gross profit | $641.1M | $637.0M | +0.6% | $624.3M | +2.7% |
| Gross margin | 47.0% | 46.8% | +0.3 pp | 47.0% | +0.1 pp |
| Research & development | $119.6M | $118.2M | +1.2% | $118.4M | +1.0% |
| Sales & marketing | $137.1M | $139.8M | -1.9% | $139.3M | -1.6% |
| General & administrative | $96.2M | $98.9M | -2.7% | $121.0M | -20.5% |
| Total operating expenses | $352.9M | $356.9M | -1.1% | $378.7M | -6.8% |
| Operating income (loss) | $288.2M | $280.1M | +2.9% | $245.6M | +17.3% |
| Operating margin | 21.1% | 20.6% | +0.6 pp | 18.5% | +2.7 pp |
| Net income (loss) | $130.9M | $126.2M | +3.7% | $110.3M | +18.7% |
| Net margin | 9.6% | 9.3% | +0.3 pp | 8.3% | +1.3 pp |
| Diluted EPS | $0.51 | $0.49 | +$0.02 | $0.42 | +$0.09 |
Risks
Net interest expense rose to $118.0 million and $229.9 million for the three and six months ended June 30, 2023, compared to $67.7 million and $117.0 million in the prior-year periods, as the average interest rate increased to 6.59% and 6.40% from 3.45% and 3.30%. The company carries significant variable-rate term loans, so further rate increases could continue to pressure net income.
The amended senior secured credit facility contains a financial covenant requiring a maximum consolidated net secured leverage ratio of 6.25x, and the actual ratio was 2.28x at June 30, 2023. A breach could accelerate payments and have a material adverse effect on results, financial position and cash flows.
MD&A states that the COVID-19 pandemic and ongoing macroeconomic conditions, such as increases in interest rates, inflation and changes in foreign currency exchange rates, could have uncertain and material negative effects on the business and results of operations. The situations remain dynamic and subject to rapid change.
Unfavorable foreign currency translation reduced total revenues by $3.4 million in the quarter and $23.1 million in the six months ended June 30, 2023. It also reduced revenue in both software-enabled services and license, maintenance and related lines.
The effective tax rate rose to 32.7% and 31.1% for the three and six months ended June 30, 2023, from 29.1% and 27.9% in the prior-year periods, primarily due to an increase in uncertain tax positions and a change in the composition of income before income taxes from foreign and domestic jurisdictions. Future composition changes could impact the periodic effective tax rate.
Six-month cost of revenues increased $67.6 million, or 4.9%, partly due to personnel costs including wage inflation and costs to support organic growth. Continued wage inflation or difficulty retaining personnel could pressure margins.
Results include recent acquisitions such as Blue Prism, Hubwise, MineralWare, O’Shares, Tier1 and CFO. Acquisitions added revenue and expenses, and integration or related charges could affect future results.
License, maintenance and related revenues decreased $1.9 million, or 0.7%, in the quarter ended June 30, 2023, primarily due to unfavorable foreign currency translation and a decrease in organic revenues. This source was 18.8% of total revenues in the quarter, down from 19.4%.
SaaS KPIs
All quarters →Summary, forecast, risks and KPIs are extracted from SS&C Technologies Holdings Inc's SEC filings for Q2 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.