SS&C Technologies Holdings Inc.

Given the current state of the pandemic, we view an early 2021 recovery as a possibility. However, the risk of a resurgence in the fall could push out planned 2020 implementations and delay recognition of 2021 revenue. We forecast fiscal 2020 organic revenue declines to be about 3%, with reported revenue declines around 1%. Delayed fund launches and weakness in both of DST Systems Inc. segments (Health: reduction in procedures/pharmacy claims; Financial: lower volumes/activity) are expected to be main contributors to declining organic revenue growth. Tempering these headwinds is its relative strength in alternative funds administration, increased trading volumes (Eze Software Group LLC segment) arising from volatile markets, and new use cases arising for its secure deal rooms (IntraLinks Inc.

...The coronavirus pandemic is creating revenue headwinds on 2020 organic revenue growth. Following 2019 operating results in line with our expectations, we expect SS&C Technologies Holdings Inc. to face revenue headwinds throughout 2020, as COVID-19 disrupts its various end markets. On its first-quarter 2020 earnings call, SS&C announced it was withdrawing its fiscal 2020 organic revenue guidance (0.5% to 3.9%), opting to provide three scenarios incorporating different timing assumptions on the economic recovery. Its baseline forecast assumes a recovery beginning in early 2021, with organic revenue declines in 2020 of about 1%-2.7%. On a reported basis, including contributions from its recent acquisitions (Algorithmics in November 2019, Captricity in March 2020, and Innovest Systems in May 2020), guidance indicates revenue declines of 0.7% in 2020. Given the current state of the pandemic, we view an early 2021 recovery as a possibility. However, the risk of a resurgence in the fall could...

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