Ladies and gentlemen, thank you for standing by. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the SS&C Technologies Q2 2022 Earnings Conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. It is now my pleasure to turn today's call over to Justine Stone, Head of Investor Relations. Please go ahead.
Hi, everyone. Welcome and thank you for joining us for our Q2 2022 Earnings call. I'm Justine Stone, investor relations for SS&C Technologies. With me today is Bill Stone, Chairman and Chief Executive Officer, Rahul Kanwar, President and Chief Operating Officer, and Patrick Pedonti, our Chief Financial Officer. Before we get started, let's review the safe harbor statement. Please note that various remarks we make today about future expectations, plans and prospects, including 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 factor section of our most recent annual report on Form 10-K, 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, July 27, 2022. 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 sections of our website at www.ssctech.com. In the Q3 of 2021, we entered into a joint venture named DomaniRx LLC, which we are the majority interest holder and primary beneficiary. All earnings figures discussed today, including operating income, EBITDA, net income and EPS, are attributable to SS&C based on the ownership interest retained by SS&C. I will now turn the call over to Bill. Bill, you might be on mute.
Thanks, Justine, and thanks everyone for joining. Our results for the Q1 are $1.33 billion in adjusted revenue, up 5.5%, and $1.10 in adjusted diluted earnings per share, down 11%. Adjusted consolidated EBITDA was $464.3 million for the quarter, and our EBITDA margin was 35.4%. Continued elevated labor prices, higher than expected interest rates, FX headwinds and a weaker economic backdrop put pressure on our results versus our expectations. Our Q1 adjusted organic revenue was up 2.2%. Our alternatives, Intralinks, and Advent businesses continued to be the growth leaders. Ex the impact of our healthcare business, our Q2 2022 organic growth in financial services, about 94% of our revenue was up 4.4%.
SS&C generated net cash from operating activities of $446.5 million. For the six months ended June 30, we were restricted from buying back stock in Q2 2022 due to some M&A discussions which have ended, and we paid down $234.7 million in debt. Our consolidated net leverage ratio now stands at 3.45, and our net secured leverage ratio is 2.48 times consolidated EBITDA. Our goal is to reduce leverage to 3 or less. Overall, our business is seeing more headwinds than we initially expected, especially compared to 2021. We believe there are three main challenges affecting our revenue growth.
The weakness in the healthcare business, while somewhat expected as we invest in DomaniRx, which will continue to be a 100-200 basis headwind to total company organic growth. We have a lot of faith in Domani and what it can deliver in 2023 and beyond, and development is currently on target for broad-scale release on 1/1/2024. Second, the slowdown in the M&A market is affecting Intralinks by about $20 million from our original plan. They're still growing close to 15% and it still has excellent margins. Despite the dip in deal volume and total deal value, Intralinks continues to gain market share and expects to continue to grow in about the 15% level. Lastly, the DST Financial Services business is taking the brunt of the FX impact.
As many of you know, the dollar has been unprecedentedly strong, and we expect an additional $28 million in FX headwinds in the second half. On the expenses side, our labor costs remain elevated, but there are signs of this plateauing. We communicated bonuses and a second round of merit increases in March and April, which has curbed some of the attrition, along with our employee-focused initiatives, which we have highlighted in our slide deck. We'll be tightly controlling our costs for the remainder of the year. Real estate reductions, IT spending, and implementing Blue Prism's digital workers throughout our operations will drive our margins back up to historical levels exiting the year. I'll now turn it over to Rahul to discuss the quarter in more detail.
Thanks, Bill. Our business remains resilient in the face of macroeconomic challenges that manifested in Q2. As you noted, Bill, foreign exchange headwinds impacted our international business with the largest impact to our European transfer agency and wealth revenue streams. Intralinks is also seeing some muting in the demand environment due to reduction in M&A volumes, but grew 14.2% in Q2. The alternatives business demonstrated our long-standing thesis that diversification among fund types, asset classes, and our commercial models gives us a strong hedge against market pressures. The alternatives business grew nicely despite some impact to new fund launches and fund inflows. GoCentral continues to roll out new functionality, enabling more efficiencies in daily processing and NAVs and providing an important market differentiator in our sales process.
We now have 69 clients on GoCentral in production, totaling 1,500 funds with an approximate AUM of over $300 billion. Our financial markets business had a strong quarter in the wake of market volatility and are well-positioned to take advantage of shifting investment strategies given the breadth of our product offering. Our DomaniRx joint venture also now continues to make progress. The new cloud-based system can now successfully execute a financial cycle, and we have completed the initial build and configuration of the API gateway and developer portal. We have accelerated our go-to-market plans, and DomaniRx can now be delivered in a modular fashion, sold as individual products, including finance, drug management, and communications hub for existing SS&C health clients and prospects starting in Q4 2022.
SS&C Private Markets grew 15% in the Q2 despite a slowdown in fundraising following several years of elevated activity. Prospects and clients in private markets are more than ever looking to partner with key service providers that can drive efficiencies utilizing technology, expertise, and data. Private credit and hybrid funds are a particularly attractive sub-segment. We continue to innovate in this space, incorporating Geneva and other leading technologies, and have multiple large private credit deals in the pipeline. I will mention some key deals for Q2. A $42 billion AUM hedge fund, an existing Geneva user, chose SS&C's Tax Optimizer to replace a Big Four accounting firm solution. An existing retirement client extended their TRAC 403 account record-keeping services with SS&C to service a recently acquired business. An existing GIDS client added SS&C event center services.
A large customer added our transfer agency services for retail alternatives for their non-traded real estate investment trust. An existing customer extended their Sylvan, PORTIA, and Recon licenses to a newly acquired division, significantly improving their workflow. An investment manager in Australia seeking to transform its operating model to gain operational efficiency and provide improved services chose SS&C's Aloha due to its advanced technology and our global wealth expertise. A large U.S. insurer chose SS&C's Singularity after a multi-year sales process. A Dutch private equity firm launching a registered investment fund for the first time chose SS&C for interval fund services and retail alt transfer agency services. I will now turn it over to Patrick to run through the financials.
Thank you. Results for the Q2 were GAAP revenues of $1,328.7 million, GAAP net income of $110.6 million, and diluted earnings per share of $0.42. Adjusted revenues were $1,330 million, including the impact of the adoption of ASC 606 and for acquired deferred revenue adjustments for the acquisition. Adjusted net income was $289.6 million. Adjusted revenue was up 5.5%. Adjusted operating income decreased 8.2%. Adjusted diluted EPS was $1.10, an 11.3% decrease over Q2 2021. Adjusted revenue increased $69 million or 5.5% in Q2. Our acquisitions contributed $65.6 million. Foreign exchange had an unfavorable impact of $24 million or 1.9% in the quarter.
Adjusted organic revenue increased on a constant currency basis was 2.2%. We had strength across several product lines, including alternatives, Intralinks, Eze, and the Advent businesses. That strength was impacted by weakness in our GIDS transfer agency business and healthcare businesses. Adjusted operating income for the Q2 was $455.3 million, a decrease of $40.5 million or 8.2% from the Q2 of 2021. Adjusted operating margins were 34.2% in the Q2 of 2022 compared to 39.3% in the Q2 of 2021. Expenses increased 8.1% on a constant currency basis. Acquisitions added $67.8 million in expenses, and foreign currency decreased costs by $20.6 million. Our cost structure was impacted by wage inflation, high recruiting costs, and higher staff to support our businesses.
Net interest expense for the Q2 was $67.7 million, and includes $3.9 million of non-cash amortized financing costs and OID. The average rate in the quarter, including the senior notes, was 3.45% compared to 3.02% in the Q2 of 2021. We recorded a GAAP tax provision of $45.2 million or 29.1% of pre-tax income. Adjusted net income as defined in Note four in the earnings release was $289.6 million and adjusted EPS of $1.10. The effective tax rate used for adjusted net income was 26%. Diluted shares decreased to 263.9 million from 267.6 million in Q1.
The impact of option exercises was offset by the decrease in the average share price during the quarter. On our balance sheet and cash flow, we ended the Q2 with $438.3 million in cash and cash equivalents and $7.4 million of gross debt. Net debt as defined in our credit agreement, which excludes cash and cash equivalents of $148.3 million held by DomaniRx, was $7.1 billion as of June 30. Operating cash flow in the six months ended June 30 was $447.5 million, a $114.8 million decrease compared to the same period in 2021. During the three months ended June 30, we paid down $234.7 million of debt.
Operating cash flows were down as a result of several factors, including payment of transaction expenses associated with the Blue Prism acquisition of approximately $67 million, which includes amounts paid by Blue Prism in the post-acquisition period and our operating activities compared to last year. Overall, for acquisitions year to date, we've paid $1.597 billion. That includes Blue Prism, Hubwise, O'Shares, and MineralWare. That number is net of cash acquired. Treasury stock buybacks were $170.9 million for purchase of 2.3 million shares in the six months. We did not buy any shares in the Q2 of 2022. In the six months, we've declared and paid $102.4 million in common stock dividends as compared to $82.1 million last year, an increase of 24.6%.
Total interest paid in the quarter was $112.6 million, and that compares to $97.8 million in 2021. In the six months this year, we've paid $156.5 million of income taxes, compared to $144.2 million in the same period last year. Our accounts receivable DSO ticked up a little in the quarter, up to 55.9 days, compared to 52.7 days as of March 2022. Capital expenditures and capitalized software were a total of $85.9 million, or 3.3% of adjusted revenue. Spending was predominantly for capitalized software and IT infrastructure. Our LTM consolidated EBITDA that we use for covenant compliance was $2,045.6 million as of June.
Based on the net debt of $7.1 million, our total leverage ratio was 3.45 times, and secured leverage 2.48 times as of June 30. Our outlook for the remainder of the year, I'll go through a couple assumptions. We have assumed that foreign currency exchange will be at current levels for the remainder of the year. We've assumed average interest rates will increase 100 basis points in the Q3 and additional 50 basis points in the Q4 . We expect to reduce our cost structure through staff reductions, productivity improvement, facility reduction, and controlling variable expenses to improve our operating margins. We'll continue to invest in our business in the long term with capital expenditures and capitalized software of approximately 3.4%.
On cash flow, we will focus on improving our working capital requirements to generate cash. In addition, we are recapitalizing one of our real estate joint ventures to generate approximately $70 million of cash distribution. We've also assumed we'll continue to allocate free cash flow to both debt and stock buyback, and we'll use a tax rate of 26% on an adjusted basis. For the Q3 of 2022, we expect revenues in the range of $1.324 billion-$1.364 billion. That will result in adjusted organic growth in the range of 1.6%-4.8%.
Adjusted net income in the range of $302 million-$318 million. Diluted shares in the range of 263.2 million to 262.7 million. For the full year of 2022, we expect revenue in the range of $5.32 billion-$5.406 billion. Adjusted organic growth in the range of 0.6% to 4.8%. Adjusted net income in the range of $1.256 billion-$1.297 billion. Diluted shares in the range of 264.6 million to 263.6 million. Our operating cash flow for the full year, we expect operating cash flow to be in the range of $1.18 billion-$1.22 billion. I'll turn it over to Bill for final comments. Thank you.
Bill, you may be on mute again.
Thanks, Patrick. We appreciate your continued interest in SS&C, and we believe we're on the right track to deliver stronger revenue growth and a more digitized workforce, which will be a lower expense base. Our Deliver Conference is the first week in October, and we hope to see you in Orlando. I'll now open it up to questions.
At this time, I would like to remind everyone, in order to ask a question, press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. In the interest of time, we request that you limit yourself to one question and one follow-up question. Your first question comes from the line of Alex Kramm with UBS Financial. Your line is open.
Yes. Hey, everyone. Good evening. There was a comment in the deck, I think, around, like, stepping up conversations on pricing with your clients. Just hoping that you can flesh this out a little bit more. In particular, maybe remind us what you thought at the beginning of the year pricing could add and how maybe those fresh discussions could maybe change that number. Then most importantly, is that already reflected in your updated organic growth guide, or could that be incremental to what you just laid out? Thanks.
Well, I think, Alex, that we have incorporated some price increases into our guidance and we're implementing as we speak, and we have implemented. I think you know we have CPI increases in most of our license maintenance, and obviously CPI is quite a bit higher than it was over the last few years. Also we've had individual businesses raising prices throughout. I think Rahul might have a few numbers on that.
Yeah. I think where we have CPI, obviously, you know, we're in the range of, you know, it's CPI plus 3, CPI plus 4, and some of those numbers look like, you know, anywhere between 7%-10%. But we're also going back to customers, as we've talked about with price increases, where contracts are renewing or, you know, where just in the context of the inflationary environment makes sense. In general, I would say we're targeting, you know, 5%-7% or higher percentage increases. Now, you know, this is an ongoing conversation, and in some cases we'll end up a little better, and in some cases we'll end up a little bit worse. As Bill noted, you know, some of that has already been reflected in the future forecasts.
Okay. Fair enough. Maybe just a quick one. You mentioned no buybacks this quarter because of M&A discussions. Maybe anything to flesh out there in general? Maybe what kind of areas you've been looking at? Just to clarify, was that to buy something or are you actually looking to maybe divest some businesses, if you can be that specific? Thanks.
Yeah. Well, you know, it really, you know, we don't wanna really comment on what we're buying or selling, Alex. You know, we look at our portfolio all the time and, you know, we're pretty interested in being able to bolster our private markets business. We're excited about some of the new stuff we're doing in tax, and we continue to look at unique asset classes that we think our clients may be moving more strongly into. We have a variety of different conversations going on at any one time. I think we thought that there was a pretty good chance that something would happen. That's why, you know, we felt like we had material non-public information, so we didn't trade our stock. Those conversations have ended, and I would guess that we will be active in Q3 in stock buybacks.
Sounds good. Just figured I'd check if there was more to disclose. Thanks.
Your next question is from the line of Peter Heckmann with D.A. Davidson. Your line is open.
Good afternoon, everyone. Thanks for taking the question. Bill, can you comment on what do you think is the bottom in terms of year-over-year growth in healthcare? Are we seeing it this quarter? Is that, are the client losses fully reflected?
Well, I think that as we start showing some of the modules of DomaniRx, we will start getting, you know, kind of a reversal of trend. That's why, you know, we have such a focus on that. You know, for healthcare to be down the 24% it was, you know, we had some more attrition that we really didn't expect. Again, it's, you know, 6% of our revenue or so. While, hey, we don't like reductions in revenue in anything, but we're pretty optimistic that we're, you know, spending a lot of money. There's a lot of interest in that healthcare business, you know, and there has been ever since we bought DST. I think we have a lot of optionality when it comes to healthcare and, you know, to date, we have felt like owning it is a lot better than divesting it.
Got it. If we thought about the healthcare business without the attrition, can you give us an idea how revenue would look just, you know, based on the underlying, you know, metrics? You know, would the business be, I mean, is attrition the main issue here, or is there also an issue around, you know, you know, number of prescriptions processed or claims or covered lives?
Yeah, I think you know that the biggest driver is the number of claims we adjudicate and pay. You know, and that's probably the biggest driver on the revenue. We're probably you know we've been up close to the 500 million range, and we're probably you know down in the you know 380-390 million. You know, but with Domani, we expect a large uptick in that. You know, as always, there's a lot of regulation of PBMs and fees that they charge, and different states have different rules. You know, we're constantly monitoring that and being able to comply with new rules all the time. You know, in general, the new rules are not revenue-enhancing, you know. You know, we deal with that regulatory environment as well.
Okay. I appreciate it. I will get back in the queue and follow up later.
Your next question comes from the line of Andrew Schmidt with Citi. Your line is open.
Hey, guys. Thanks for taking my questions and good evening. I wanted to dig in a little bit on DST Financial Services. I know you partially mentioned this, but if you could just talk a little bit more in depth about what drove the step down in organic growth in the Q2 . Then, you know, based on implementation and sales pipelines, how you're thinking about growth in this business in the back half and into next year. Thanks.
Well, we have very robust pipelines and we have a reasonably strong backlog of projects that we're implementing now that should give us some lift. You know, I think the challenge on some of this is these are very large organizations, and the implementations are sometimes drawn out. You know, again, they're still our customers and we support them all the way through the process, but sometimes the rev rec gets delayed. You know, I would say that, you know, we think that the ability for us to deploy digital workers, you know, throughout our business is to help us both in our sales pipeline development as well in reducing the rate of increase of personnel.
We think we have identified, you know, several hundred FTEs that these digital workers are gonna be able to be substituted for. Instead of hiring another 350, we think we're going to be able to deploy digital workers in order to satisfy those needs. These are in, like, reconciliations, break resolution and different things, you know, compliance with blue sky laws and so forth and so on. We're very optimistic about our margin rebounding back to our historical levels. You know, like I said, we've had some FX headwinds.
We've had you know, labor becoming dominant and therefore having way higher wage rates than has been the norm over the last five or 10 years. Even with all of this, you know, we run a 35% margin. You know, we have an excellent business that I think over the next number of quarters will just be more excellent.
Got it. Thank you for that, Bill. I appreciate the detailed response. Then this is a related question, but I recall last quarter, the retention issues were having an impact on implementation. It seems like that was starting to get smoothed out, but if you'd just give us an update in terms of where we're at in terms of just stabilizing the workforce and the implementation timelines across the business, that would be helpful. Thanks.
Well, you know, it's not the hemorrhage that it was towards the back half of the Q1 and the beginning of the Q2 . It's not quite that. You know, obviously, you know, you've seen slowdowns in a lot of the major companies in their hiring and also a number of them that have announced cutbacks. You know, those kinds of things, you know, tend to give people pause, right? You don't really want to switch jobs and then be subject to a risk. You know, people also like working for us because we are profitable, you know, and we do realize our biggest asset is our people.
We've done a number of things, and you can see some of it in slides that we put together. But we're really optimistic about what Blue Prism is gonna be able to do for us. You know, I was on a call with a prospect today on Blue Prism, and I think it. Again, you know, SS&C is making big investments in this business because we believe accounting's not going away. We don't think tax returns are going away, or financial statements are going away, or any of the other mission-critical things we do are going away. You know, trees don't grow to the sky, but you know, we'll still be about $5.3 billion or so in revenue at the end of this year, maybe better, you know.
I don't think that we're anywhere near what we can be, and we're expecting us to execute better. You know, the first thing you gotta do is you gotta maintain your workforce, and you gotta focus on customer service. That's what we've been doing. You know, we have spent tremendous amounts of money, you know, on our sales and marketing and R&D. I think R&D's up about 18%. I think our sales and marketing's up about 40%. I think we are spending the money. I think we're spending it wisely, and we expect it to pay dividends.
Got it. Thank you very much, Bill. Appreciate the comments.
Your next question comes from the line of Patrick O'Shaughnessy with Raymond James. Your line is open.
Hey, good evening. You guys, your presentation notes that you're committed to reducing your debt in a rising interest rate environment. On the call today, you also indicated that you look to be active in the share repurchase market. How do you think about balancing those priorities right now?
Carefully, right? We'll look at it, you know, depending on how much cash we generate. I would guess that we'll probably, you know, right now I think our forecast has us at about 50/50. You know, 50% debt reduction, 50% stock buybacks. That could fluctuate, you know, as much as 15%, so it could be 65/35. It just depends on what happens with either market.
Got it. That's helpful. Thank you. Patrick, maybe a question for you. Do you have a general rule of thumb for how much, you know, a given change in FX would impact the company's EBITDA or EPS?
For the Q2 ?
Just in general, but I mean, Q2 if you have that, but just in general-
Yeah, I mean.
Like if the dollar is up.
Yeah. I mean, in the Q2 , the impact to the EPS was probably somewhere around $0.01 to $0.015 negative to EPS. I would suspect it'd be, you know, based on where the current exchange rates are today, it'd be pretty similar in this third or Q4 .
Got it. Thank you.
Your next question is from the line of James Faucette with Morgan Stanley. Your line is open.
Hey, it's Mike on for James. Thanks for taking my question. I just wanted to hit on the sort of like the hedge fund backdrop quickly. Obviously, we've seen the number of launches slowing, but you've also seen the size of those launches also decreasing. Just anecdotally, how are you sort of performing in the blue-chip launches? What's your share capture, and sort of how are you thinking about hedge funds in general in this current environment?
You wanna take that, Rahul?
Sure. You know, I think what we're seeing is what we tend to see in periods of market volatility and when people come into pressure, which is we're viewed as the leader in the fund administration space and in the, you know, hedge fund space, as well as private equity. You know, we actually tend to perform better in terms of market share in these kinds of environments. We saw that in the financial crisis in 2008, 2009, and we're seeing that again.
You know, as you note, there aren't as many new launches, and the ones that are aren't as large. Most of our revenue capture is, you know, new clients and conversions and takeaways as opposed to new launches, which take, you know, generally some period of time before they become material to us. That process is going pretty well, and we're winning our share of what's out there in the marketplace, and if anything, strengthening. We expect that, you know, as things turn around, that'll be pretty positive for us.
Great. Thanks, Rahul. Just quickly, I saw on the deck that, you know, you're also looking at headcount in Blue Prism specifically. Can you just comment on the nature of those potential headcount reductions? Is that sort of back office staff? Is it quota-carrying sales reps? How should we think about that?
Yeah, we almost never cut back on quota-carrying salespeople. I think this is much more on, you know, as you combine these companies, right? There's a number of functions that are duplicative. We're moving relatively quickly on being able to reduce that headcount, you know, whether that's in legal, finance, IT and other support organization. We're excited about what we have with Blue Prism and what our opportunities are.
Great. Thanks, Bill.
Your next question is from the line of Christopher Donat with Piper Sandler. Your line is open.
Good afternoon. Thanks for taking my question. Bill, I wanted to ask another question on the price increases you're putting in, you know, related to inflation and other things. I'm just curious if you can give us some color on the receptivity from your clients. I would imagine, given the market conditions, they have very little appetite for the price increases, but they recognize the inflation side of it for you. Just wondering how they're reacting to it. Is it grudgingly or with a lot of pushback? Just some color would be helpful.
Yeah. I mean, you know, you kind of characterized it. You know, nobody particularly likes to have price increases. At the same time, they want their current team to be well-paid and well-respected. They realize that that's not for free, you know. I think that this is an industry that is populated by big boys and girls, you know. We're certainly not mega tech companies that walk in and say, you know, "25% more, take it or leave it." That's not our MO.
They, you know, they know that we're really just passing on the inflation that's hitting us. You know, our guess is that, you know, they're trying to pass on expense increases that they have. You know, it's a natural cycle and, you know, you do it with as much sensitivity as you can, and, you know, with a little bit of determination and persistence. I think it's going pretty well, and I think, you know, I think our people understand that these are the things that are going to, you know, kind of maintain, you know, our bonus structure and our ability to compensate well.
Okay. For my follow-up, wanted to see if I'm connecting things correctly here. You've got the cost controls and reducing your real estate footprint. Separately, you've got under HR initiatives, the hybrid work, and you've made some comments about having some employee attrition, which I think said you think it's plateauing. Is the hybrid work initiative and the real estate footprint, are those related issues, or are they really separate?
Well, if people don't come into the office, which they don't, I would say they're related, right? We don't need real estate footprint that we have. You know, we're doing much more of a hoteling concept rather than, you know, everybody having their office or their own space. You know, that's just changed the way we work and we're trying to be, you know, as flexible as we can be, you know, as long as we can maintain customer service and be able to hit our deliverables and meet our growth targets. Yeah, for sure they're related.
Okay. Thank you.
Your next question is from the line of Kevin McVeigh with Credit Suisse. Your line is open.
Great. Thanks so much. Is there any way to think about, maybe this is for Patrick, what the cost controls, the impact is on the guidance, the revised guidance? I guess maybe start there, is that fully in it or any way to think about how that comes in over the course of the year?
Yeah. I think if you look at Q2, you know, the baseline costs for Q2.
We've got in the back half of the year, you know, about $50 million in cost reductions, of which I think about $25 million have already been completed. The rest is mostly continuing to reduce facilities and productivity improvement with the Blue Prism product and, you know, holding back as much as possible on other discretionary spending.
That's helpful. It looks like the revenue retention and the AUA really kinda hung in there, you know, despite the market volatility. Anything to call out there?
I'm sorry, can you repeat that?
Bill, it looks like the revenue retention rates improved from Q1 to Q2, and then the AUA was actually flat sequentially despite the market volatility. Anything to call out among clients? Just anything in particular that drove that?
I think what Rahul said earlier about, you know, in these, you know, kinda tumultuous times, you know, people flight to quality. You know, we think that's gonna help us over the next couple of years. You know, there's been an awful lot of acquisitions in the fund services space and, you know, extremely high prices paid, you know. SS&C has not been much of a participant in that. We think that's gonna put some of our competitors under immense strain, and we think we'll be a beneficiary of that. That shows up in our AUA as well.
Thank you.
Again, if you would like to ask a question, press star followed by the number one on your telephone keypad. Your next question comes from the line of Jeff Schmitt with William Blair. Your line is open.
Hi, good afternoon. On Blue Prism, it sounds like it's performing better out of the gate, you know, than you expected. Maybe I missed it, but do you have an update on your revenue growth and EBITDA margin projections for that company? I think you were expecting, like, 15%-20% top line, and then you thought you can get the 30%-40% margins by, I think it was 2024 exit. Is that still the case, or do you see any change to that?
Yeah. I think in the Q2 , Blue Prism grew right at 17%. It was maybe, you know, about what we expected, maybe a little bit better. I think they had $2 million in operating losses. You know, we expect them to move to profitability in the second half of this year and probably end the year at about 10%. We think next year they'd be up to about 25% and then, you know, around 40% in 2024, which are our corporate averages. We're pretty optimistic and we're really optimistic about what it's gonna do for our own business, besides all the customers we're gonna be able to really help.
Right. That's helpful. On the healthcare business, with the client losses there, are those mainly for the medical claims part of the business, not the pharmacy claims? I'm just curious how big of a difference sort of the margins are in those two businesses. Like, how much. Just trying to get a sense on how much EBITDA you're losing, if that's sort of the medical claims business that's that you're losing there.
You know, the business as a whole still remains profitable. Pretty profitable actually. You know, we have had some attrition in our client base, we've had some attrition in our workforce. You know, we're trying to maintain a, you know, that kind of profitability ratio. Obviously, you know, the DomaniRx is $1 billion of us and our two partners. You know, we remain pretty optimistic, you know, because that's a pretty big bet for us. At least what we see in the marketplace today, there's not gonna be a competitor to DomaniRx when we come out of the gates.
That's what gives us the optimism, right? I mean, we're not in general. You know, we're a bunch of accountants and systems people, right? In general, we're pretty sober when it comes to those kinds of things. We don't just take flyers. We like to, you know, place pretty strategic bets that we expect great returns on.
Absolutely. Okay. Thank you for the answers.
There are no further questions at this time. I will now turn the call back over to Mr. Bill Stone.
Again, we appreciate all of the interest that all of you show. You know, obviously, we hope to improve upon our results. You know, as I said, right, we've had a lot of headwinds in the Q2 and we still came out with about 35% EBITDA margins. We look forward to talking to you know, at the end of October. We hope to see all of you in Orlando. Thanks again. Bye.
Ladies and gentlemen, thank you for participating. This concludes today's conference call. You may now disconnect.