SS&C Technologies Holdings Inc at RBC Capital Markets Technology, Internet, Media and Telecommunications Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Yeah. Always a pleasure. I wanted to just jump right off in kind of the demand environment overall. Specifically, you sounded pretty optimistic coming off of last quarter. When we look at kind of the deal pipeline that you got to have with new clients, I'm interested to know where you sit kind of today? And how that feels versus maybe a year ago or even kind of leading up into kind of the exit strategy of '25?

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Yeah. It feels like the market underappreciates or maybe you misunderstood how much a preparatory change was actually taking place in the organization to kind of land you guys at this point in time. Because listening to you talk about it is like there's structural differences clearly in the organization than would have been the case maybe I don't know, maybe two years ago or something like that.

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Yeah. And we talk about like three areas of interest for a lot of investors, GIDS, obviously, wealth and investment tech and alternatives as they think about those growth areas, both or all three of them doing really well. So if we start with GIDS, just as an example, kind of what are you seeing some of the dynamics near-term?

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Okay. And then again, like as we think about -- you say wealth, like that seems to be an area that that's been quite strong for you guys as an alternative. So I'm just wondering what are the key secular dynamics maybe that are going to allow you to underwrite kind of a longer-term duration in that business -- both of those businesses, quite frankly. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2024 / 4:20PM, SSNC.OQ - SS&C Technologies Holdings Inc at RBC Capital Markets Technology, Internet, Media and Telecommunications Conference

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Okay. And then same kind of question in terms of like secular dynamics around alternatives. This has been a space for you that has been very strong for a very long period of time. It's kind of had a couple of ebbs and flows. But it feels like it's kind of starting to have a payday again. Are you seeing that? You can see the numbers, but I mean, are you feeling confident about that?

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Yeah. So one of the questions is just as a broad brush that we're asking kind of every company given the time of year where we are now, in this cycle is, we have clarity now in the administration. As you've talked with clients kind of pre and post. Are you feeling like those investment dollars that they might have been willing to unleash or -- are going to be more readily available now that they have clarity? And are you feeling that there's a sense of urgency or difference between what you might have seen just even a few months ago? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2024 / 4:20PM, SSNC.OQ - SS&C Technologies Holdings Inc at RBC Capital Markets Technology, Internet, Media and Telecommunications Conference

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Yeah. Not yet. Okay. All right. And not in the conversations or anything like that? The tone or --

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Okay. All right. Well, let's hit the number one question that we get, which you and I were just talking about, before we went live, which is kind of the organic growth rate deceleration implied in the fourth quarter, right? So you had a really strong third quarter. The midpoint of the range in 4Q kind of implies about a 400 basis point deceleration. And I know there's some puts and takes. So maybe you should flush that out? And then is that the right way to really be looking at this business as we go forward as we maybe normalize some of those things, how do you think about that?

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : This is a better distribution. just tell it here and hopefully, a lot more people --

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Yeah. I mean it's hard to digest, when you gave a midterm -- or I guess medium-term guidance 4% to 8%. So maybe you can dovetail into some of the things that allow you to kind of feel confident in that range. I know that the high end of the range, it might have some inorganic spirits to it. But if you wouldn't mind elaborating on that, give some color.

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Yeah. You've mentioned bundling, not so much on stage right now, but in the past, in the context of this kind of 4% to 8% organic growth rate. So -- what about bundling that is going to allow you to be like, again, more growth enabled, you're pulling all these products together. Is that a function of the structure that you talked about early on about, how you changed the business over the past couple of years?

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Okay. I did want to kind of cover off the cadence from 4Q to 1Q. Because there's -- we get a lot of questions on this as well. So historically, on an absolute dollar basis, that number is building on itself. So I think there had been some questions about the slowdown in 4Q, is that going to continue to be the case. Is there any reason why like seasonality or anything that's in the pipeline that, that number wouldn't continue to build or --

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Yeah. Okay. Let's spend a minute on health care because -- this has been an area that has been kind of like the Achilles heel for SS&C for a while. It was starting to really move in the right direction in terms of its organic trends. And then third quarter, it looked like it kind of hit a little bit of a wall. So maybe let's talk about why that occurred? And then why you think it can actually continue to grow in 2025, like you still committed to pretty reasonable growth in '25?

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Okay. So you're still feeling like that's going to be a growth business like an organic growth business because I think there was at one point there was even stock, maybe in double digits at some point. And I think this last quarter, maybe through in the question.

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Yeah. Okay. Humana, is that still coming online, like that's still on track would be kind of a January conversion, how meaningful is that?

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Okay. Okay. I want to spend a minute on Blue Prism. This has been kind of a two-sided opportunity for you. You bought the asset, you actually turned it on yourself a little bit. You gained a lot of efficiencies to scale out of it. The question we get all the time is just how much more room do you have? I think the original goal was to get like [100 million] out of the digital workers that you had said you had like 1,100 in the third quarter, something like that. So where are we in that process of kind of hitting a wall on that? Or is this going to be like the continual process that just go through SS&C for multiple years?

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Still early in terms of being able to roll that out.

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Yeah. So now that you've had it kind of internally for a couple of years, how are you taking those learnings and deploying those out? To selling it to the clients? Like how is that sales motion gone?

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Okay. That's awesome. I wanted to touch on the acquisition of Battea-Class Action Services. I think from what we've heard from investors, I think they're still a little surprised just by it. Not that you guys would do M&A. That's clearly part of the DNA of the company, but just this one in particular. So if you wouldn't mind maybe refreshing what's the strategic importance of having something like this in your portfolio? And does it create variability that we might need to be aware of? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2024 / 4:20PM, SSNC.OQ - SS&C Technologies Holdings Inc at RBC Capital Markets Technology, Internet, Media and Telecommunications Conference

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Okay. Yeah, it's interesting because most of the acquisitions we've done historically, not everyone, but many of them are, either the businesses that were suboptimal or EBITDA margins way lower. Just generally not run very efficiently, but this one has better growth, better EBITDA margins than your business. So it begs the question of, is it changing like the way you're thinking about M&A. The way you described it makes a lot of sense, but it's also had some characteristics that run contrary to the nature with them.

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Cool. Staying on M&A for the moment. Here again, kind of releasing kind of animal spirits as they say. Your leverage is still kind of under three, I think, on a pro forma basis with this deal flows. You raised some capital. You have some excess capital as a result of that, I think so. So -- and you've got variable rate debt. So presumably, there might be some interest benefits coming at some point this year.

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : You are due, big time. So what are you thinking about M&A outside of what we just talked about Battea, like do you guys still feeling like there's room for that in '25?

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Okay. On the excess cash that came with this transaction, are you thinking about that more in the context of buyback right now?

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : Okay. Great. And then we have maybe another minute left. But just lastly on kind of the EBITDA margin trajectory. You're kind of getting yourself back to more historical levels. And it sounds like you're in a much more efficient organization and you've got Blue Prism that's helping that along with other things. But is it safe to assume like that, that trajectory can continue as we go into 2025? Or are there certain investments that are out there that we need to be mindful of so that we're not putting ourselves too far, but when it comes to market.

Question: Dan Perlin - RBC Capital Markets, LLC - Analyst : That's great. Well, it sounds like you got a lot of good things heading into '25. You got some organic momentum, hopefully, we'll carry through margin expansion and we get some leverage on the balance sheet and interest expense is going to be down. So hopefully, all those things will come to fruition. Thanks so much for being here. Really appreciate it.