Good afternoon. My name is Chris, and I will be your conference operator today. At this time, I would like to welcome everyone to the SS and C's 2nd Quarter 2018 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
Thank you. Justine Stone, you may begin the conference.
Hi, everyone. Welcome and thank you for joining us for our Q2 2018 earnings call. I'm Justine Stone, Investor Relations for SS and C Technologies. With me today is Bill Stone, Chairman and Chief Executive Officer Norm Bollinger, Vice Chairman Rahul Kanwar, President and Chief Operating Officer and Patrick Pedanti, our Chief Financial Officer. Before we get started, we need to review the Safe Harbor statement.
Please note that various remarks we make today about future expectations, plans and prospects, including the financial outlook we provide, constitute forward looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent Annual Report on Form 10 ks, which is on file with the SEC and can also be accessed on our website. These forward looking statements represent our expectations only as of today, August 2, 2018. While the company may elect to update these forward looking statements, it specifically disclaims any obligation to do so. During today's call, we will be referring to certain non GAAP financial measures.
A reconciliation of these non GAAP financial measures to comparable GAAP financial measures is included in today's earnings release, which is located in the Investor Relations section of our website at www.ssctech.com. I'll now turn the call over to Bill.
Thanks, Justine, and thanks everyone for being on the call. As we reported, we did $908,500,000 in adjusted revenue for the quarter and we earned $0.62 a share in adjusted diluted earnings per share, a good quarter indeed. We've now owned DSD for 3.5 months and we've made significant progress that Rahul will go through in a few minutes. Central to this acquisition success is to focus on the clients and make sure they have satisfaction with our services. Since the acquisition closed on April 16, we have met with over 200 clients.
The clients are demanding innovation and quicker delivery. We've eliminated overly process oriented functions and now focus on delivering top initiatives faster. There's also been broad interest to leverage SS and C's leading products and services, including our web services and our mobility. Much of the focus this quarter has been on DST, our core fund administration and software businesses have also maintained a momentum, delivering 3.7% inorganic growth this quarter. SS and T continues to expand the breadth of our service offering.
On Tuesday, we announced a definitive agreement to acquire Edge Software from TPG for 1,450,000,000 dollars We're expecting about $30,000,000 in expense synergies with to bring the purchase price multiple to 10.7 times. We are very familiar with Eze having been on EdCastle back in 2013. Eze Software is a premier provider of trading software to the asset management industry and is very prominent in hedge fund space. We expect this transaction to be immediately accretive and plan to use a mix of cash on hand and incremental term loan debt as our funding sources. As always, we will pay down debt quickly and we expect to reduce our leverage profile by about 0.7 or 0.8 a turn every year.
Finally, I'm pleased to announce Rahul Kanwar's promotion to President and Chief Operating Officer. Rahul joined SS and C in 2,005 through our acquisition of Eisner Fast Fund Administration and has grown our fund services business to the $1,000,000,000 business it is today with over 5,000 employees. Norm Bollinger, who's been with us for 24 years will become Vice Chairman and will continue to have some executive responsibilities around revenue and also technology innovation. In Norm's 24 years, he started off as a manager in our professional services business and has been instrumental in the drive to a $4,000,000,000 in revenue and $1,000,000,000 in EBITDA. All three of us have worked closely together and we look forward to continuing on as these talented executives assume new roles.
I'll now turn it over to Norm.
Thanks, Bill. I've been at SSC since 1994 and I've witnessed the transformation of SSC Technologies into the SSC
Technologies into
the company it is today. In June, we had a soft release of our brand new product SS and C Singularity, our next generation intelligent financial services platform. SSCC Singularity is highly scalable cloud based system that supports all major asset classes and in the industry segments on a single platform. Embedded machine learning and intelligent process automation enable the system to learn from user behavior and become smarter over time. I believe this product has tremendous potential.
Singularity will streamline our customers' operations, also provide us an upgrade path for many of our current products and systems and I think it is a strong competitive advantage against our competitors. When deployed within our outsourcing business, SSC will reap the benefits of the system's artificial intelligence to increase efficiency and reduce our costs. The system represents a major milestone in the digital transformation of investment in account and operations and I'm really excited about it. Now I'd like to review some of the key deals for Q2. Dollars 2,500,000,000 AUM asset manager in United Arab Emirates chose SS and C Advent Sinkova.
A wealth manager in Saudi Arabia chose a suite of SS and C Advent products including APX, Moxi, TradeX, Rules Manager and InvestTrack. A $2,000,000,000 asset manager and current APX client chose SS and C's performance measurement and reporting solutions. $100,000,000,000 hedge fund expanded their use of Geneva. 3 new banks ranging from $6,000,000,000 to $8,000,000,000 in assets selected SSC Primatics' Evolve product as their CECL solution. They will go live by the Q1 2020 mandatory adoption date.
A $10,000,000,000 AUM advisory firm chose SSC Black Diamond reporting platform. We won due to our pricing integrations, the different CRMs and planning solutions. A $100,000,000 family office based in Russia with operations in Russia, Cyprus and Luxembourg chose to operate from access to APX and the Advent Data Solutions. And finally, a Canadian public investment management company acquired a current SS and C Net client and realized the efficiencies of using SS and Net for all broker communication replacing trader emailed allocations. I'll now turn the call over to Rahul.
Thanks, Norm. We had a strong quarter in winning new mandates, providing upgrades for current customers and identifying new opportunities. Deal sizes and complexity continue to increase, which play well to our strengths. As Bill said, DSD integration is progressing smoothly. We have taken steps to simplify the organization, increase pace of decision making and rationalize expenses.
We expect these changes will focus the organization more directly on the overall customer experience. We have empowered a strong leadership team under Mike Slighthome and refocused them on customer satisfaction and revenue growth. We have already identified a number of opportunities to further enhance DSD's strong relationships with their customers. I would also like to announce the hiring of a new Chief Technology Officer, Anthony Kayafa. Prior to this role, Anthony was a Senior Technology Executive at Bloomberg LP, where he led efforts in infrastructure, automation, monitoring and security.
We're excited to welcome Anthony to SS and C as we continue to evaluate and incorporate the latest technologies into our products and processes. Now I will mention some key deals for Q2 2018. A Middle East based wealth manager serving high net worth individuals and families chose SS and C GlobeOp for our ability to support their complex structure. A $10,000,000,000 hedge fund chose SS and C GlobeOp. Our team's expertise and ability to handle the daily net asset value calculations were key factors in the win.
1 of the nation's largest record keepers selected DST Retirement Solutions to leverage our retirement planner engine, which allows participants to optimize their portfolios. A large interval fund manager selected DST for outsourcing of their transfer agency solution, including technology and business process outsourcing. 2 private equity firms entering in the 40 Act space through acquisition selected our fund administration services provided by ALPS. Will now turn it over to Patrick to run through the financials.
Thanks, Rahul. We reported results for Q2, 2008 and our GAAP results are revenue of $895,800,000 a GAAP net loss of $63,700,000 and a diluted loss per share of $0.27 On an adjusted basis, revenue for the quarter was $908,500,000 and which is excluding the adjustments for implementing the new revenue recognition standard and for the acquired deferred revenue from the Advent and DST acquisitions. We had a strong quarter, adjusted revenue was up 119%, adjusted operating income was up 73% and adjusted EPS was $0.62 up 35% over Q2 2017. Our adjusted revenue increased $494,500,000 or 119 percent. The acquisitions of DST, DECIS, Modest Spark and Commonwealth contributed $477,300,000 of revenue in the quarter.
Foreign exchange had a favorable impact of $1,900,000 or 0.5 percent in the quarter, mostly due to the strength of the British pound, euro and Canadian dollar compared to Q2 2017. And as a result, organic growth on a constant currency basis in the quarter was 3.7%. Adjusted operating income for the 2nd quarter was $271,800,000 an increase of $114,000,000 or 73% from Q2 2017. Adjusted operating margins increased decreased to 30% from 38% in Q2 2017. Foreign exchange had a negative impact of $2,000,000 on expenses the quarter.
The margin decline was mostly driven by the DST acquisition where operating margins were 21.8% for the quarter. An update on synergies, as of June 30, we've taken cost reduction actions that will generate approximately $130,000,000 of annual cost savings in the future. Consolidated EBITDA was $291,800,000 or 32.1 percent of adjusted revenue and increased 78% over Q2 2017. Net interest expense for the quarter was $70,200,000 and includes $3,400,000 of non cash amortized financing costs in OID. The average rate in the new quarter for the new term facility was 4.6% compared to 4% in Q2 2017.
We recorded a GAAP tax benefit in the quarter of $99,900,000 or 61 percent of the pre tax loss. Adjusted income was $154,600,000 and adjusted diluted EPS was $0.62 The adjusted net income includes $106,800,000 of excludes $106,800,000 of amortization of intangible assets $92,500,000 of acquisition deal costs mostly related to DST acquisition $55,000,000 of severance related to staff reductions, dollars 45,000,000 of stock based compensation. We took a charge of $44,400,000 of a loss of extinguishment of the debt. Dollars 12,700,000 of purchase accounting adjustments, dollars 9,700,000 of revenue adjustments related to the adoption of ACS 606, a new revenue recognition standard and $3,600,000 of other items. Diluted shares in the quarter increased 17.5% over Q2 'seventeen mostly due to the equity offering in the 2nd quarter to fund the DST acquisition.
And the effective rate we use for adjusted net income in the quarter was 25%. On the balance sheet and cash flow, as of June, we had $785,100,000 of cash and cash equivalents and $6,992,500,000 of gross debt for a net debt position of $6,207,400,000 Operating cash flow for the 6 months was $119,700,000 a $76,500,000 or 38% decrease compared to the same period in 2017. The DST acquisition costs impacted the operating cash flow in the quarter by approximately $135,000,000 Adjusting for those transaction costs, operating cash flow was up 30% over Q2 over the 6 months in 2017. Couple highlights on the balance sheet and cash flow, our gross debt has increased approximately $4,900,000 from Q4 2017 due to the DST acquisition. Since the DST acquisition on April 16, we've paid down 408 $300,000 in debt.
We paid $100,300,000 of interest compared to $41,900,000 in Q2 'seventeen. In the quarter, we paid $67,900,000 of cash taxes compared to $30,100,000 in Q2 'seventeen. As of June 30, our accounts receivable DSO was 53.7 days and that compares to 54.7 improvement from March 2018. We spent $38,900,000 in capital expenditures and capitalized software. The CapEx was mostly for facilities expansion and IT.
Option proceeds were $55,000,000 compared to approximately 36,000,000 dollars in
Q2 2017.
And for the year, we paid a $31,400,000 dividend common stock. Our LTM EBITDA LTM consolidated EBITDA used for our covenant compliance was $1,413,000,000 as of June 2018, including $572,000,000 of acquired EBITDA and cost savings related to the acquisition. And based on a net debt position of $6,200,000,000 our total leverage as of June is 4.4 times. On the outlook for the remainder of the year, first for the Q3, and our Q3 outlook only includes acquisitions that have closed through today. So it excludes as which we expect to close in the 4th quarter.
Our current expectation for the Q3 is adjusted revenue in the range of $992,000,000 to $1,012,000,000 adjusted net income of $162,000,000 to $168,000,000 and diluted shares in the range of $255,000,000 to $253,000,000 And we expect adjusted tax rate to be approximately 25% in the quarter. Our current expectation for the full year is adjusted revenue of $3,356,000,000 to 3,396,000,000 dollars and adjusted net income in the range of $607,000,000 to $617,000,000 Diluted shares in the range of $243,000,000 to $245,000,000 Cash from operating activities are estimated to be in the range of $520,000,000 to $550,000,000 and we expect capital expenditures for the full year to be between 2.8% and 3.2% of revenues, adjusted revenues. And I'll turn it back over to Bill for final comments.
Thanks, Patrick. SS and C is ramping and transforming very quickly. Mike Switholme has a really talented group of people at DSP including Willie Slattery in London and Nick Wright in London, as well as our friends in Kansas City, like John Gee Lai and Jonathan Behm, Chris Binner and a whole number of others. And we're excited about that. We're excited about Jeff Storman and his team at EZ coming over to us in the next few months.
And I think that we have a lot of momentum. We'll be holding 2 big events in the fall. Our annual client conference, the SS and C delivered client conference will be September 11 12 in Vegas and we'll have an Analyst Day in November in New York City. We look forward to seeing any number of you at those two events and we'll now open it up for questions.
Our first question comes from Rayna Kumar with Evercore ISI. Your line is open.
Hi. This is Nick Cremo on behalf of Rayna Kumar. Can you please walk through what the drivers of organic revenue were for the quarter and what organic revenue growth was as well as your expectations for the Q3 and for 2018? Thank you.
Organic revenue in the Q2 was 3.7%. And for Q3, based on the range we provided, the organic revenue would be between $5,500,000 on the high end and $3,200,000 on the low end. And for the full year, based on the range, the organic revenue would be between 5% and 3.8%.
Thank you.
Your next question comes from Surinder Thinds with Jefferies. Your line is open.
Good afternoon. I'd like to actually start a question with Ed Software. Are you able to provide a little bit more details on the transaction in terms of how we should be thinking about or maybe some historical context around the growth rate at Ed's on revenues? And then maybe even what we should be thinking about? It seems like the accretion should be meaningful.
Any guidance that you can provide there and maybe what the target leverage ratio will be at deal close?
Yes. I would say that
as has been affected over the past couple of years with some headwinds in the hedge fund industry and particularly hedge fund startups. But they performed well and we'd expect that their revenue growth over the next several years is going to in the mid single digits. They have a couple of very exciting platforms that are coming out and I think that will help drive growth. And then as far as synergies are concerned, we would expect something in the $30,000,000 worth of cost synergies over a 3 year period. And I think that as we said, it's going to be immediately accretive to our adjusted earnings per share.
And we really don't have a range yet of exactly the amplitude of that accretion.
And then the target leverage ratio maybe?
We think, I mean, it's going to depend on how some of the debt financing goes and what we decide with that. But I think our target would be to be somewhere around 4.9 times to 5 times net leverage.
Got it. Thank you. And then one quick question on DST. Given the meaningful announcements around the cost synergies, can you talk about maybe a little bit more color on just the fact that you were able to achieve the level of synergies so early in the process and maybe that versus what the initial what's changed since maybe a quarter ago? And then how that maybe impacts or if there is any impact on the final guide of $175,000,000
Yes. Surinder, I mean, we 90 days ago, we've only owned them for 90 days, right. So there's a lot of things that happen relatively rapidly in those kinds of situations. And like I said, we got a number of really talented people at DST are really excited about their opportunities to make more and more decisions. And we're a much more distributed type kind of decision making process at SS and T than they were at DSP.
And they've really helped us to accomplish what we've done so far. And I think if anything, it's just probably moving the bulk of the 175 into the 1st year rather than the 2nd year.
Thank you. I'll get back in the queue for my follow-up questions. Thank you.
Your next question comes from Alex Kramm with UBS. Your line is open.
Yes. Hey, Just staying on the topic of DST, can you talk about a little bit what's going on at DST, I guess, from their organic perspective? I mean, you announced a couple of business wins there. But just curious like how fast that business is growing and any more color you can give. If I look at my numbers, I don't know if I'm looking at the right comparison, but it actually said something like 6% year over year, but I might be looking at the wrong base.
So any numbers you can share would be great.
Yes, the 6% number is wrong.
I figured. Thank you.
Yes. I think the healthcare business, we expect to grow somewhere in the 5% to 7% range. So if you just took that one, I think you'd be in the range. But the transfer agency business both domestically and internationally has been a minus 2 to plus 2 kind of business for a number of years. And we see opportunities, right.
We see a lot of opportunities and in my town hall with the whole staff, they asked me what's the difference between SS and C and DST and it's primarily speed. We like to go quickly. We like to make decisions. We like to empower people and we think that's going to help us drive revenue growth. It's still early and obviously the financial impact of getting the cost synergies is pretty important and we've put some focus on that.
But we're also focused on the sales force and how we go to market and what our opportunities are. And I think when we talk at the end of the Q3, I think we should have any number of initiatives that have begun to bring revenue.
All right. Thank you. And then, I guess, just going back to S for a second, you just talk a little bit more about the strategic rationale? I think you talked about a little bit more. But in terms of I think you have some EMS, OMS systems already.
Is this just having more to show in front of clients? And also related to that, I guess, to some degree, I think, as it's had a bunch of turnover over the last few years with some of the changes over there, I mean, is this the does that make it easier for you to kind of integrate it and hit the ground running or how would you view that?
Well, I think Jeff Shoreman has been at Edge for almost 15 years and has been the CEO for the last couple of years and has done a really nice job. And his senior management team that we've been with a number of times needs to be very stable. So I don't know about where the high turnover is. Of course, right, when a big portion of your new sales is start up hedge funds and it slowed down pretty good in 2016, but it's starting to rebound and so is their business. So we're real optimistic and then they got 2,500 clients and they're very strong in the trading space, both from a derivatives and an equities and a fixed income.
And we have some good complementary stuff for them. And obviously, Moxie is very popular on the loan only side. So think there's just a lot of stuff that we're going to be able to deliver to our clients in a way that is going to delight them.
Sounds good. Thank you.
Your next question comes from Andrew Schmidt with Citi. Your line is open.
Hi, everyone. Thanks for having me on the call. And Norman Rule, congratulations on the new rules. So first a strategic question on as software. We've seen recently a lot more consolidation in front office tools and also in front to back office sort of integrated platforms.
I guess where do you see you clearly pick up good OEMS products with Eze. You also have a front to back office platform as well that you're picking up. How do you see the role of just an integrated front to back office platform within the product suite? I know you do some of that now, but just curious how that fits into just the overall strategy and then just the overall product suite?
Well, maybe Raul can comment on this too. But what I would say is that we have now for the Edge business, a natural upgrade path through to Geneva to be able to handle increasingly complex and difficult to handle multi strat funds and private equity funds and a whole series of other structures that has not been as is particular strength on the middle and back office stuff. It's still very, very strong on the front office. So I think that's the idea is that the clients are going to have opportunities to upgrade throughout our suites. And I think that's something that will increase our retention and then also give us opportunities to cross sell into each other's client base.
The things I would add to that are there as we met with the Eze team and went through their product, there are a number of things on their roadmap for what they'd like to do with the system that we feel we have solutions for, right. So that's a big part of the opportunity here. The other thing is we're also pretty big outsourcer of middle office activities and we think that for us to be able to provide that capability to customers will enhance their win rate and ultimately result in larger tickets. So those are some of the opportunities.
Makes sense. Thanks. And then maybe a question for Patrick. Nice uptick in the adjusted net income outlook. It looks like it's well in excess of the 2nd quarter beat here.
Is it the DST cost synergies that's driving that? Are there other factors considered in the outlook? Just give a little bit more color on that just the implied outlook for the back half of twenty eighteen.
I think there are several of our businesses that are performing well, including we've implemented more synergies than we expected in the back half of the year for DST. So we've got some business performing well, revenues growing, the cost structure is fairly flat. And then also we're getting higher synergies falling into the second half of the year than we initially expected.
Got it. Understood. Thank you, guys. Appreciate it.
Your next question comes from Peter Heckmann with D. A. Davidson. Your line is open.
Hey, good afternoon, everyone. Rahul, could you give us
an update on end of quarter AUA and whether you've included any of the ALPS number in there?
Yes. So we're at $1,660,000,000,000
at the end of the quarter. We have included the ALPS hedge and private equity numbers in there. We have not included their 40 Act and mutual fund numbers.
Okay. Okay. And then do you anticipate any issues or challenges? I think with a change of control of ALPS, you have to have a shareholder vote. Has that occurred yet?
We've been through most of those processes, if not all.
Okay, great. And then just lastly on Eze, can you comment or based on the revenue composition and their sensitivity to equity trading volumes, is it fixed minimums with volume bands or is it completely sensitive to volumes?
Yes. Pete, it's a combination of things. It's both trading volumes and number of seats and number of entities. So it's similar to how SS and C prices in that it's more of a matrix than any one particular point.
Got it. Thanks so much.
Your next question comes from Chris Shutler with William Blair. Your line is open.
Hi, guys. Good afternoon.
Can you
just be more specific on the cost savings that you achieved from DST in the Q2? I'm guessing not that much. And then what's in the Q3 and Q4 implied guide?
There's approximately $20,000,000 in each quarter Q3 and Q4. In addition, the DST's rebillable expenses kind of fluctuate quarterly depending on the services they provide in each quarter. So that kind of affects their cost and they're expected to be a little bit higher in the second half of the year. But we're probably expecting about $20,000,000 a quarter.
I mean, just to confirm, Patrick, there weren't any cost saves really in the Q2?
No, there were cost saves in the Q2. I mean, there were some like public company costs and executives that left. But the vast majority of the staffing reductions that we announced were done at the end of the quarter. Got it. Okay.
And then on the DST revenue and adjusted EBITDA, can you give us a sense where that ended up in the quarter and what you're expecting for the full year?
The quarter was 4.74, that's for 2.5 months.
Yes.
And we're expecting a little over $1,600,000,000 for the full year, a little over $1,600,000,000 for the full year.
All right. Thanks a lot.
Your next question comes from Jackson Ader with JPMorgan. Your line is open.
Great. Thanks. Hi, guys. First question from my side is, the Eze acquisition seems like it's bringing some pretty nice margins already. So where do you think you're going to be able to find the $30,000,000 in synergies over the next 3 years given they have 35 plus EBITDA margins?
We think Jeff Schorrman is a really talented guy and we have high expectations for our ability to get that $30,000,000 and we're going to help them in all kinds of ways. But there's a lot of stuff when you become part of an organization the size of SS and C that you don't have to spend at that level, right. So there'll be a number of things that are cheaper for him. We won't probably pay him any fees to TPG anymore. You probably won't pay much director fees anymore and a whole bunch of other stuff like that.
Okay. And then Bill, I think you mentioned that as has over 2,500 clients, any sense that you can give us on customer overlap of those 2,500 with SS and C?
We haven't done a straight match, but I would bet there's at least 1,000.
Okay. Yes, that's helpful. All right. Thank you.
Your next question comes from Brad Zelnick with Credit Suisse. Your line is open.
Hi, this is Kevin Ma on for Brad Zelnick. Congrats on the quarter guys and Rahul congrats on the promotion. So my first question, Bill, I think you mentioned last quarter that you want to optimize DST sales cycle a little bit, for example, getting the time between contract win and actual contract signing to 30 days. Can you talk about the progress there? Any other incremental data points that give us a sense of how you're simulating DST?
Well, that's been a focus and both Joe Frank and Jason White have been focused on that. And then the team out at Kansas City and they realized that in order to get speed, we got to have speed in all the support functions as well as have speed in the go to market strategies and then also in our development queues. And so that's moving along at a brisker pace. We think it can get a little more brisk and we're helping people with that.
Got it. Okay. And my second question is, does the acquisition of Eze impact the pace of your normal strategy of just smaller tuck in acquisitions in AltFund admin?
I don't think so.
Got it. Thanks.
Your next question comes from Chris Bin Lip with Sandler O'Neill and Partners. Your line is open.
Hi, thanks for taking my questions. At the end of the second quarter, you had about $785,000,000 of cash on your balance sheet. So how much cash do you need for working capital and regulatory reasons? Or kind of asked in another way, how much of the cash on your balance sheet would we expect for you to use in
the Eze
acquisition? Yes, we'll use between $600,000,000 $700,000,000 and remember we're going to generate a lot of cash between now and closing. So it may be even a little bit better than that.
And I guess just one more on Eze. Can you give us some of the color of the negotiating history of the Eze acquisition? And is the timing after State Street's Charles River acquisition just a coincidence?
Yes. We would say it's completely a coincidence. And we had also made some overtures to Firdesa and we weren't able to quite get that done. And if we had to choose at the start whether we could have Charles River or Fidessa or Ed, we chose Ed. So we feel pretty fortunate that we were able to come to a conclusion and get it done.
And now we have to go through the necessary closing processes, but we're cautiously optimistic.
Okay. Thanks for taking my questions.
Your next question comes from Chris Shutler with William Blair. Your line is open. Hey, guys. Thanks for taking
the follow ups. It looks like the license and maintenance revenue line was up about $25,000,000 sequentially on an adjusted basis. How much of that was due to the core business and how much was due to DST?
All the products that's in the whole product line?
Yes.
It was about $38,000,000
of the $25,000,000 roughly was DST related?
Yes.
Okay. Thanks, Patrick. And then the I don't think you called out the organic growth rate for the alternatives business in the second quarter.
Yes, I've got that. So the whole alternatives business was 0.2%.
I'm sorry, could you say that again?
6.2%. 6.2%, okay, got it. That's a total alternatives business including the license product business. Fund administration was probably a little bit higher.
This concludes the Q and A session for the conference. I'd now like to turn it back to Bill Stone for any closing remarks.
Well, we look forward to seeing you at some of the conferences we have this fall and I look forward to hosting this call on sometime in November. And I congratulate Rahul and Norm and we look forward to talking to you in a few months. Thanks.
This concludes today's conference call. You may now disconnect.