SS&C Technologies Holdings Inc at UBS Global Technology and AI Conference Transcript

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

Question: Kevin Mcveigh - UBS - Analyst : Bill, this is the third time we've been fortunate to host you. I've always started with the same question. And it's important to level set what you've done with SS&C over time. And so maybe just briefly talk about, I think, the business you started in 1986 with $86,000 of revenue and you're kind of pacing to $6 billion today. And over the course of time, there's been some transformational events, whether it's the acquisition of DST, Intralinks. So maybe talk about the initial vision and kind of some of those more transformational acquisitions that kind of put you where you are today because you've been -- just had so much foresight for the industry and continue to really, really execute at a high level.

Question: Kevin Mcveigh - UBS - Analyst : When I do this, I try to remove my CPA bias, but it's hard to do. But one of the things I think that -- and we've been covering the sector a long time. But I think one of the things we've always marveled at is, I feel like sometimes the market doesn't fully discount the complexity of what you do and how embedded your systems are. And I think you've been able to prove that out, to your point, on average client size, which has scaled pretty dramatically. And the more embedded the service, the more embedded the disruption they try to change. And I think another thing we think about is as your clients become more complex from an asset allocation perspective, they need to lean into you more, given the complexity of the accounting system. So maybe talk to that a little bit. And one thing with -- remember, I think it was 2018, you acquired DST, Intralinks and Eze, and it was about $8.3 billion in capital you committed. Since that time, you've delevered the balance sheet from 6.5 turns down to sub-3, which underscores the free cash flow. But maybe talk to the average client size and how much more you're embedded because you've been talking about this for a while where the larger the client, right, the longer the implementation, you're starting to see that today. And that's going to lead to this next question, but maybe help us frame that a little bit. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 05, 2024 / 7:15PM, SSNC.OQ - SS&C Technologies Holdings Inc at UBS Global Technology and AI Conference

Question: Kevin Mcveigh - UBS - Analyst : And that really proves that, I mean, I think if you look at the AUA that you disclosed about $2.5 trillion in the most recent quarter, it's up almost 15% since 2022 in a market that's been uneven. And to your point, it just got the private market dynamics of that and really impressive. Switching to kind of the growth targets, just rounding out the M&A. Maybe talk to Blue Prism a little bit. Just you've had it a couple of years. There's been a real opportunity on both the revenue side but also the margin. So maybe how we're thinking about that, particularly, I think, both internally

Question: Kevin Mcveigh - UBS - Analyst : In addition, what's been really impressive growth on the AUA, the retentions really increased, too. Is that a function of the client mix as you're kind of scaling more up? Maybe help us understand that a little bit because I think it's -- when I think of AUA and the retention and the pricing, which I'll get into a minute, I think it really helps explain some of the success you've seen on the organic growth. But maybe just talk to the retention a little bit.

Question: Kevin Mcveigh - UBS - Analyst : You had a terrific Investor Day in the fall. I think what we're really encouraged about was the organic growth targets of 4% to 8%. I think historically, it was probably closer to 4% to 7%. I was just to kind of frame that a little bit. I think the midpoint of the range for '24 is 4.9%, which is up pretty meaningfully from 1.6% in '22. One of my big takeaways from kind of the new range was it didn't feel like it was macro. It felt a little bit more structural to me, right, whether it's pricing, retention, AUA, average quantas. So maybe talk to that a little bit, if you can, because I think it's been a really nice outcome in terms of, again, a lot of the larger wins, as they start to come in kind of create this base, that you can kind of grow off of. So maybe any way to dimensionalize the pricing as opposed to retention as opposed to -- and again, it doesn't feel like we're in the best launch environment. Clearly, there hasn't been an M&A cycle yet, ECM, which would impact things like Intralinks, but maybe just any thoughts around that?

Question: Kevin Mcveigh - UBS - Analyst : That's helpful. Any questions from the audience? Probably pretty good time to open up or anyone -- I'll check, anything on the line? All right. Terrific. We'll keep going then. You alluded to this a little bit but I think it's important. Maybe talk to -- because the margin impact in '22 was staffing levels. Also maybe some of the margin dilution from Blue Prism. You scaled up pretty dramatically, right? But you talk about efficiency with your staff. Maybe how Blue Prism can impact the efficiencies because I think one of the things that we think is terrific is, right, some of that lower pick and axe work that your staff don't need to do and you can kind of upskill them, right? And to your point, pay them more without maybe having the same impact on margin as what you might have had historically. So maybe talk to that a little bit and where we are in the pacing of Blue Prism internally at assets. And obviously, there's a pretty important external

Question: Kevin Mcveigh - UBS - Analyst : One thing, because, as long as we've covered you, you've been maniacal about cash flow. And again, you've delevered the balance sheet from, I think, 6.5 times in 2018 to sub-3. If you look at the pacing of that, I probably don't have it to the dollar. But over that period, it was probably 50% deleveraging, 25% buyback, 25% dividend. More recently with the leverage where you want it, it seems like you really increased the buyback. So maybe any thoughts on capital allocation, given where you are? And you've been much more, I'd say, selective on M&A. Just any thoughts around just capital allocation more broadly?

Question: Kevin Mcveigh - UBS - Analyst : Sounds like Juan Soto. I'm glad you mentioned competition because maybe talk to that a little bit. And to your point on, I think, the market endorsing your strategy, whether it's SimCorp being acquired by Deutsche Borse, Addenda being acquired by Nasdaq and really healthy multiples. Maybe talk to that a little bit in terms of, has that created any opportunity on that integration or anything across the broader spectrum? Because again, was kind of $86,000 but of -- revenue. But when you look at 2018, the shift in the scale of the business, I think, is a opportunity, really scaling to much larger clients and deliver on that, which we really like because it creates more stability, more retention, more predictability. Maybe just talk to that a little bit.

Question: Kevin Mcveigh - UBS - Analyst : Two other, and correct me if I'm wrong, but I think it used to be historically, you'd have to hire somewhere around 1,500 accountants a year to service the incremental revenue that you'd have come in, in any given year. I think that number has been reduced. Maybe I think in '24, it was flat. I don't know if it's quite going to be flat going forward, but any thoughts as to some of the leverage just -- and again, it's right, you drive more expertise as some of the lower end things get automated. But any thoughts -- because we always thought one of your real core competencies was the hiring process because it's -- when I started Deloitte, class was 450. I think it's 200 now. So there's a supply-demand imbalance in CPAs, but just any thoughts on what you need to hire to kind of serve the demand, if you would?

Question: Kevin Mcveigh - UBS - Analyst : I think we'll close it there unless any last questions in the audience?