Summary
SS&C Technologies posted third quarter 2021 GAAP revenue of $1,264.4 million, up 9.7% from $1,152.8 million a year earlier. Gross profit rose 19.1% to $624.0 million, and gross margin expanded to 49.4% from 45.4%. Operating income climbed 32.3% to $340.1 million, with operating margin at 26.9% against 22.3%. Net income attributable to SS&C common stockholders was $184.4 million, up 15.7%, and diluted earnings per share was $0.69, up 15.0% from $0.60. For the nine months ended September 30, 2021, revenue of $3,756.8 million rose 8.4% and diluted earnings per share of $2.05 rose 27.3% from $1.61.
The margin improvement came largely from cost discipline. Total cost of revenues rose only 1.8% in the quarter, and MD&A notes that costs excluding acquisitions and foreign currency translation fell $2.8 million, mostly on lower depreciation and amortization. Amortization of intangible assets was $146.8 million in the quarter, down from $153.9 million a year earlier. That pullback in non-cash charges did real work on the income statement.
Adjusted results run ahead of GAAP on growth. Adjusted revenue of $1,266.3 million was up 9.5%, and adjusted diluted earnings per share of $1.32 was up 20.0%. Adjusted operating income attributable to SS&C of $524.1 million rose 16.8%. Adjusted consolidated EBITDA attributable to SS&C reached $538.9 million, and the related margin of 42.6% was up 230 basis points. Adjusted organic revenue growth of 8.2% accelerated from 7.2% in the second quarter. The quarter's revenue increase included $91.3 million of organic growth, $10.0 million from acquisitions, and $10.3 million of favorable foreign currency translation.
Software-enabled services remains the engine. That revenue line grew faster than the total, while license, maintenance and related revenue edged up. Management pointed to strength across fund administration, Black Diamond, Geneva, Retirement Solutions, ALPS Advisors and virtual data room services, and to momentum in Alternatives and M&A. The investor deck notes that Alternatives assets under administration have grown $480 billion since the first quarter of 2020.
Cash generation was the strongest part of the report. Operating cash flow for the nine months ended September 30, 2021 was $944.9 million, up 25.1% from $755.1 million. The third quarter alone produced $382.6 million of operating cash flow, up 91.9% from $199.4 million. Capital expenditures were $13.4 million in the quarter, up 42.6%, and $31.0 million for the nine months, up 22.0%. SS&C ended the quarter with $351.1 million in cash and cash equivalents and $6,190.3 million in gross debt; net debt under the credit agreement was $5,977.5 million. Repayments of $317.8 million over the first nine months brought the consolidated net leverage ratio to 2.96 times and the secured net leverage ratio to 1.97 times. The company also repurchased 2.1 million shares at an average price of $75.97 for $162.9 million.
Backlog deserves a closer look. Deferred revenue of $325.8 million was up 1.8%, but remaining performance obligations of $543.1 million fell 7.4%. Guidance for the fourth quarter of 2021 is adjusted revenue of $1,225.0 million to $1,275.0 million and adjusted diluted earnings per share of $1.17 to $1.25. For the full fiscal year 2021, management guided to adjusted revenue of $4,988.0 million to $5,038.0 million, adjusted net income attributable to SS&C of $1,312.0 million to $1,335.0 million, and adjusted diluted earnings per share of $4.92 to $4.99. Cash from operating activities is projected at $1,365.0 million to $1,385.0 million, with capital expenditures at 2.6% to 3.0% of revenue. Adjusted revenue and adjusted net income guidance is not reconciled to comparable GAAP measures.
Two items temper the print. Other expense, net of $44.9 million included a $43.4 million legal accrual tied to the DST ERISA litigation, which explains why net income grew more slowly than operating income. Interest expense, net of $50.2 million was lower than a year earlier, but the balance sheet still carries meaningful leverage, and the credit agreement limits the consolidated net secured leverage ratio to 6.25 times against an actual 1.97 times. The MD&A attributes the change in the effective tax rate to the mix of foreign and domestic income, windfall tax benefits from stock awards and tax law changes. Management also flags COVID-19 related client delays, customer consolidation, competitive pressure, regulatory and privacy scrutiny, foreign exchange swings, and the transition away from LIBOR as items that could move results.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2021 | Q2 FY2021 | QoQ | Q3 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.26B | $1.26B | +0.4% | $1.15B | +9.7% |
| Gross profit | $624.0M | $595.0M | +4.9% | $523.9M | +19.1% |
| Gross margin | 49.4% | 47.3% | +2.1 pp | 45.5% | +3.9 pp |
| Research & development | $97.7M | $100.8M | -3.1% | $97.0M | +0.7% |
| Sales & marketing | $96.4M | $97.7M | -1.3% | $85.2M | +13.1% |
| General & administrative | $89.8M | $83.6M | +7.4% | $84.7M | +6.0% |
| Total operating expenses | $283.9M | $282.1M | +0.6% | $266.9M | +6.4% |
| Operating income (loss) | $340.1M | $312.9M | +8.7% | $257.0M | +32.3% |
| Operating margin | 26.9% | 24.9% | +2.0 pp | 22.3% | +4.6 pp |
| Net income (loss) | $184.7M | $189.8M | -2.7% | $159.4M | +15.9% |
| Net margin | 14.6% | 15.1% | -0.5 pp | 13.8% | +0.8 pp |
| Diluted EPS | $0.69 | $0.71 | -$0.02 | $0.60 | +$0.09 |
Risks
MD&A reports a $43.4 million legal accrual recorded in connection with the DST ERISA litigation for both the three and nine months ended September 30, 2021, contributing to other expense, net of $44.9 million and $20.4 million for those periods.
MD&A states COVID-19 impacts and related economic conditions are uncertain and outside the company's control, and while no direct material negative effects on business and results of operations have occurred to date, there have been some client delays in committing to services and products. The situation remains dynamic and could result in material negative effects.
The Revolving Credit Facility requires maintenance of a minimum consolidated net secured leverage ratio, with an actual ratio of 1.97x against a maximum of 6.25x as of September 30, 2021, but a breach could result in an event of default and acceleration of debt.
A substantial portion of indebtedness bears interest at variable rates primarily based on USD-LIBOR, and MD&A says the company is assessing the impact of LIBOR discontinuance on its contracts, hedging relationships and other transactions.
The effective tax rate for the nine months ended September 30, 2021 increased to 26.5% from 20.9% in the prior-year period, and MD&A warns that a future change in the composition of income before income taxes from foreign and domestic tax jurisdictions could impact the periodic effective tax rate.
MD&A notes severance expense related to personnel reductions in connection with continued integration efforts within recently acquired businesses, highlighting execution risk as acquisitions add costs and revenue.
SaaS KPIs
All quarters →Adjusted Operating Income Margin
Adjusted Consolidated EBITDA Margin
Adjusted Revenue
Adjusted Organic Revenue Growth
Adjusted Consolidated EBITDA
Adjusted Revenue Growth
Summary, forecast, risks and KPIs are extracted from SS&C Technologies Holdings Inc's SEC filings for Q3 FY2021 (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.