The Fintech Analyst at Needham. I'd like to welcome everyone to the conference. We have SS&C with us, Rahul Kanwar, who is President and COO, and Justine Stone, Head of Investor Relations. They're gonna run through a brief presentation, and then we'll do some Q&A. Rahul, it's yours.
Great. Thank you. Thanks for having us, and thanks, everybody, for joining. W hat we'll do is we'll take you through the company for the first 10, 15 minutes of this, and then happy to talk about anything, you know, that any questions that people have. Safe harbor statement, I will not read that. I don't think I can see it, but it's up there. W hat we do today is we're 27,000 people global, been in business since 1986. And really the words I would focus on here are mission-critical and cloud-based, right? Most of what we're doing is deep in the essential have-to-have in really big financial institutions, hedge funds, banks, insurance companies.
We're doing things like investment processing and portfolio accounting and reporting, dealing with the trading departments internally and giving them P&L and things like that that they need to run their day-to-day activities. We're doing the reporting out to end clients for, you know, hedge fund investors, private equity fund investors, folks that buy into retirement plans and mutual fund companies. It is very sticky revenue. It's, you know, stuff that even in periods like 2022, where there's a lot of volatility, it stays somewhat stable and predictable and things like that. What the cloud-based does is in effect give you the market differentiation. We're a technology company. We're a software company, have been since the beginning.
We have a lot of software companies, evolved into a mix of software and services, and I'll talk about model and delivery in a few minutes. We're constantly building new products. We're innovating. We're taking what are generally not the most attractive parts of these businesses. It's not what they go to market with, but it has to work. We're making that different, and that's how we got to as big as we are today, and it's also what we think positions us for the next aspect of our growth. Just a little bit more detail. T here's two or three key ingredients to our business and how we're evaluated in the marketplace. One is the expertise.
You know, as I already mentioned, we're deep into regulatory, we're deep into taxation, we're deep into hedge fund accounting, we're deep into, you know, complying with all kinds of regulations around the world, and that requires expertise, right? We've got a labor force that is largely centered around the financial centers in the world New York, London, Toronto, Hong Kong, Singapore, pretty big centers of excellence in places like Mumbai, where we're building up our own talent and also taking advantage of the engineering talent that there is. We think that expertise is hard to replicate. We have also over our history done a lot of acquisitions, over 50 acquisitions, and with that has come a lot of talented expertise, much of which still is retained at SS&C today.
I t's not so much we built it all ourselves. We built, we bought, we've tried to observe best practices and have built up a workforce that in a lot of the markets we're in is a pretty big differentiator. A track record of delivery. I think this is important because, you know, generally speaking, if you go into an RFP process for any institutional buyer or any sophisticated buyer, you know, obviously they wanna hear about your credentials and your track record and, you know, how many have you implemented that look like them.
Generally speaking, if you've got a lot of things that they can get comfortable with, then they're willing to trust you on the last 10% or 15% that is somewhat aspirational, your new products, the things, the new integrations that you're seeking to deploy with whatever the latest acquisition is, and that's where the revenue growth comes from. We have 20,000 customers. Just about every financial services company in the world of size is a customer in some form or the other. When we buy something new, and earlier this year we bought a company called Blue Prism, which is digital workforce, digital workers.
It's workflows automation and intelligent automation and robotic process automation, and really a lot of fancy ways of saying, you know, they take human-based workflow and turn that into so a machine can do it. We've got a pretty big use case for it internally within SS&C with 27,000 people doing, you know, a lot of repetitive tasks that we think machines can do over time. We've also got a pretty good use case for it in our 20,000 customers. That track record of delivery gives us the credentials to be able to do those kinds of things. Just I think the other part of our business, I already talked about how it's fairly sticky because these are essential things.
There's a pretty big barrier to entry because of the expertise and the ownership of technology. I think the other kind of characteristic of our business is broadly diversified, right? Here's one way to look at broadly diversified. These are, you know, some of the things that we do. If I just take you through a few of them. GlobeOp is the world's biggest alternatives fund administrator, $2.4 trillion in assets. We do hedge fund administration, private equity fund administration, fund of funds and real estate administration. We also do a variety of middle office services. Eze is probably the leading order management system used by really anybody that trades equities and equity-linked derivatives and working its way to fixed income and other things like that.
Intralinks, many of you probably have Intralinks accounts, is where you go when you have a virtual data room or an M&A process that you're trying to do or secure document exchange. It's the biggest one. You know, Advent is a variety of different things. It's a software company that we acquired in 2015. Their flagship product is something called Advent Geneva, which is used by, you know, about half of the top hedge funds in the world, either directly or through a third-party administrator. A lot of those third-party administrators who are our competitors in the first business I talked about are also users of our technology, which is a dynamic that we think has a lot of benefits to us.
On the right side of the equation, I think on the right side of the chart rather, I think the thing I'd highlight is our GIDS business. We have 115 million retail accounts that we do their transactions. We provide their digital interface. We work on behalf of big wealth managers in the U.K., big regulated funds in the U.S., you know, kind of a ever-expanding geographical reach. What that does is it gives us access to retail, which that blend of retail and institutional in the same organization we think is pretty unique. Brings a lot of good discipline on both sides and strengthens our company. You know, I'll round it out, and I'll turn it over to Justine. We're a technology company, right? We're a software company.
It's a big part of our DNA. We have monetized that software not just to sell software, but also to deliver services to our customers and turn that into some of the big services businesses in the world, whether that's in our fund administration business or our transfer agency business or several others. In the process, we have grown those software businesses 5x or 10x what they would've been standalone, right? So we think we can continue to do that. That combination of software and services also gives us a lot of flexibility and gives our customers a lot of flexibility into how they buy from us. Most of our large deals, and I would say large deal as, you know, let's say $10 million+ in annual recurring revenue, will end up buying a number of our products and services.
Some will be systems that they deploy internally, some will be wholly outsourced solutions that we run for them, some will be somewhere in the middle. That, that combination makes us different than most people. A lot of the markets we're in, we're competing with big custodian banks and things like that, we're generally viewed as the independent provider. We're not, we're not really. W e're not a health plan trying to sell pharmacy benefits management systems who are really just a pharmacy benefits provider. We're truly just a fund administrator. We're also not trying to be your prime broker or your custodian, things like that.
We have now 15, 20 years of doing a lot of these kinds of things, and in some cases longer, become big enough that the largest firms in the place will look at us or the largest firms in these markets will look at us as credible. Generally speaking, we're on, you know, everybody's RFP list, they would also view it as public, transparent, independent, and those things are pretty important to us in our business. Just this is kind of what it looks like in numbers. These numbers are really only helpful in the sense that they, you know, tell a story. We have widespread market acceptance, widespread market reach. There's a lot of access to distribution for new products and services.
We've been focused, you know, heavily on sales and marketing and product development so that we can continue to tap into these things, but the foundation is already there, right? We think that's what kind of leads to the next level of growth and the next level of success in our company.
I'll just take us through a bit of our financial numbers and our capital allocation strategy. You know, we had very strong cash flow characteristics in our business and you know, over $1 billion in free cash flow, $1.4 billion in 2021. W e're really known for our ability to allocate capital, whether that's for one of our 65 acquisitions that we've done, to stock buybacks to debt paydown. C urrently, we're guiding, you know, a 50/50 split between buybacks and debt paydown, and that will kind of tilt one way or the other depending on where the stock is trading.
We have a billion-dollar buyback authorization. We have a modest dividend that we've kind of increased over the years and kind of aim to have a 1% yield. You know, we've utilized leverage in the past to fund our acquisitions. O ver the past couple of years, this is kind of what our leverage profile has looked at. You know, we've been as high as 5.5% to do some bigger deals, and we work to pay that down as quickly as possible. Currently, we're at about 5.5%, or 5.5 x our total leverage. We're pretty comfortable there given given our cash flow characteristics.
We don't ever really leave leverage stagnant, and we'll continue to pay it down. I think we aim to be, you know, below 3 x at some point. I think that's where, you know, the market would be happy to see us. We view acquisitions as one of our core competencies. Like I said before, we've done, I think, about 65 since, you know, we really started doing acquisitions in 1995. you know, some of the big ones over the past few years, Advent Software in 2015, GlobeOp in 2012, Advent Software in 2015. In 2018, we allocated about $8 billion towards acquisitions with DST Systems, Intralinks and Eze Software.
Our most recent acquisition is Blue Prism in March of 2022. Blue Prism, like Rahul said, is intelligent automation software and digital workers, for, you know, mostly the financial services industry, but also manufacturing, health care about $200 million in revenue and growing nicely at 15%-20% a year. We're really excited about that acquisition, both as a standalone business unit, but also our ability to take that software and that RPA technology and deploy it throughout our organization to kind of change our margin profile and how we look at our cost structure, and, you know, can make our processes a bit more resilient in the future.
We're a global company, although about 75%-80% of our revenue comes from the Americas, and we still think that that is really our biggest opportunity to grow. We have been seeing good growth in EMEA and in Asia Pac. We do have some currency exposure, especially to the pound, which has been a bit of a headwind to our revenue growth this year. We're a high-margin business model. 2021, a little over $5 billion in revenue, and we operate at about 40%-42% EBITDA margins. They've come down a little bit in 2022 because of the wage pressures that we've seen and some of the recruiting costs and things that we've had to do to protect our workforce.
W e anticipate to exit 2022 back to our historical margin levels of around 40%. We also have pretty high retention rates. Like Rahul said, you know, we are mission-critical, and, you know, we have very sticky software and very sticky businesses. As long as you're in business and you're running a portfolio, you know, you have to use us or someone like us to get the job done. And I think that leads to, you know, our 96.5% last quarter revenue retention rates. And we've, you know, consistently grown adjusted diluted EPS. You know, over the past 5 years, it's been a 21.7% CAGR.
I think you can look at any five-year chunk of SS&C's history, and it will be a similar type of growth rate for our EPS. It's definitely a focus of ours, and it will continue to be. That's it. We'd like to open it up to questions if you guys have any.
Maybe, Rahul, I'll kick things off. Just in terms of the macro impact, then you mentioned the fixed-rate issue as well. Could you talk about the impact to each of the key businesses? What may be more durable versus what may be less durable given some of these headwinds that we're seeing right now?
Sure. You know, I think that the macro impacts are there's probably four or five big drivers for us that impact us in different parts of our business. You know, inflation, and we're by no means unique in this, but, you know, the impact that that has had on wage inflation and kind of our workforce, and Justine talked a little bit about this in terms of, you know, we've done. I think we did a raise in October 2021. We did another raise in April of 2022. In places like India, where traditionally we've had a lot of tenure and retention relative to everybody, you know, we've done some of the highest increases we've ever done in our history.
The good news for us there is it does seem like we're turning the corner. Seems like while labor markets continue to be healthy, they're no longer nearly as heated as they were even a year ago. You know, you start to read headlines about really big places announcing a whole bunch of layoffs. T hat does. Some of those pools of talent are the same kinds of pools that we're going after. I think the conditions are easing there a little bit. The other thing is the health of the financial markets overall, right? The health of the financial markets impacts us in a couple different ways.
There is a percentage of our revenue, and it's not, you know, it's not incredibly material but enough that it matters at the margins that's linked to assets. In our fund administration business, we have, you know, contracts that are linked to how much assets are in the fund. In some of our software businesses, it's similar. That goes up and down a little bit at the margins, and there's some natural protections built in in terms of minimums and fees that are driven by transactions and other things outside of just AUA, but that's a factor. I think the bigger impact is, you know, when the financial markets are healthy, people are more optimistic. They go out, and they go start a hedge fund, or they start a new venture or something like that.
Generally speaking, when they do that, they buy software, and they set up their systems. Current organizations are a little bit more risk-averse when, you know, things are really volatile, so taking on a big software project or something like that has been a challenge. We've been in now for I would say since 2020, been in a altered environment, right? It isn't. I think people are realizing that the things they need to do, they need to do anyway, and they can't wait forever, and we're starting to see demand normalize as well. You know, some of the other things that impact some of our specific businesses, the M&A environment impacts our Intralinks business because it supplies data rooms to M&A companies.
While they've done a good job of finding other use cases and applications for secure document exchange, which is really what that is, you know, that has had an impact. Those are, you know, none of those things in of themselves are terribly material, but, you know, when you put them all together, they're probably a couple hundred basis points of growth in one direction or the other, depending on what they how they come out.
Right. Even in this macro environment, do you think the company can grow organically given these headwinds that you talked about? At the same time, maybe there are some indications that M&A is picking up, you know, very early, but who knows how the year will progress. Any sort of indicators out there in the market that gives you some reassurance that maybe this could still be a year of organic growth versus a downturn?
No, I would say we're pretty optimistic, right? That's driven by the fundamental analysis on each of our businesses, what's in the pipeline, what have we sold, what's being implemented, so on and so forth. Hey, we do better j ust like everybody else, we do better when everything is rosy and healthy and optimistic, but we expect to be able to grow.
Can I ask you two things, Rahul? One about healthcare last year. Then also on that digital worker, just to give some sense how many you deployed last year, what were your commitments this year and next year?
Sure. I think our healthcare business has been. It has not grown, right? It's actually declined, fairly. To put it in perspective, healthcare is about $300 million to $350 million in revenue. We've had some pretty significant attrition in that business in 2022. We think a lot of that is behind us. I don't have an outlook for 2023 yet because we haven't put out guidance, but we do expect to lap that and return to a more solid footing. We are working on a next- generation platform called Domani Rx, which is a pretty big bet for us in 2024 and beyond.
Justine talked about Blue Prism a little bit, which is the digital worker aspect of this. Blue Prism is growing 10%-15% +. In the company we acquired earlier this year, we expect to be able to accelerate that growth rate or at least maintain it at current levels, but improve profitability. They were losing money a little bit. Now they're slightly profitable, maybe 10%. We expect over the course of, you know, 18-24 months to be able to get that a lot closer to our corporate margins, which is more like 40%.
I think the question on deployment is, you know, we announced at our last earnings call that 5%-10% of our workforce we expect will be, you know, digital workers by the end of 2023, right? That doesn't mean we're gonna lay off 5%-10% of our workforce, but it just means that the natural attrition that happens, we're not gonna replace and we're gonna, you know, reskill and upskill and do some other things like that. That is well underway, right? We feel good about that process. You know, as automated as we think we are, and in a lot of the markets we have really, you know, the best margins, there's still lots of jobs within SS&C that are done in a fairly repeated way with a large level of human intervention, right?
I think that's where technologies like digital workers and bots help us, and that's what we're focused on.
Rahul, as you think about the growth overall, and this may be more of a general question, how does the growth break down between potential for increasing pricing across the different products versus land and expand within the installed base and then the contribution from new logo wins?
We do think that the pricing is a lot more important now than it has been in our history, right? That's just because we're in a heated inflationary environment, and our costs are going up. It'll be a bigger portion, but it's still, even as a bigger portion, it might be maybe 20% of the overall growth algorithm or something like that. A lot of our growth does come from the land and expand, right? As I mentioned, we have 20,000 customers. Just about everyone that you would want to sell to that's a current client is a customer in some part of our business. That makes things a little bit simpler.
It also makes it so that when we do an acquisition, that distribution process and the process of upselling and cross-selling and things like that is a little bit simpler. So, that's all, maybe I would say of the remainder, if 20% is price of the remainder is 2/3 current customers and 1/3 is new customers.
On the big deal side, what are you seeing in terms of the decision-making cycles? Are these customers taking longer? I would imagine they are. Are they looking for maybe shorter or smaller engagements to start with versus what you would have seen maybe 12, 18 months ago?
I actually think that things are better than they were 12, 18 months ago, right? I kinda think that the post-pandemic, you know, let's do nothing, let's do nothing, and then all of a sudden, wow, this really became a problem is really what's happened. We're seeing folks with big projects being more willing to make a decision, finalize, move on to implementation, wanna get live, you know, those kinds of things. That's actually working out pretty well. You know, labor markets and things like that have been a little bit a headwind in that process because you need talent and expertise to be able to do some of these large-scale deployments. That's true within SS&C, but it's also true within our customers. On the whole, we are...
It's more of a normalized environment than it has been.
What about competition? I think there have been some companies that have gone public lately in certain areas of your portfolio. Could you speak to what are you seeing? Especially on the software side, are you seeing more competition or let's call them, for lack of a better term, more innovative companies that maybe have come out public recently that are starting to potentially compete with you at all? What could be the impact?
I'll make a broader comment on competition, and then we could talk about any specific examples. But I think the broader comment is, in general, we compete against two kinds of players, right? On the one hand, we compete against startups, right? Which I think is smaller companies that are somewhat narrowly focused on some particular aspect of it. In general. You know, our big customers wouldn't buy from them because they're too small. You know, we've had 30 years of building functionality, and it's very, very complicated. Most people are looking for global at scale, right? Hey, we care about new functionality, and we invest in R&D and innovate all the time.
We have a scale advantage when it comes to some of the smaller players. Then the other side of the equation is, you know, we're dealing with the great big banks, right? Whether that's trust banks or custodian banks and things like that. You know, we don't say we have a scale advantage, but we do think we have a agility and innovation and technology development capability that is hard to do in a heavily regulated kind of banking type environment. There, we generally win on technologies, right? If you look at our business, we think we're in the sweet spot, right?
We're big enough that we can be viable for just about anybody, and we're still agile and nimble enough that we can kind of outmaneuver some of our larger competitors.
I think over the past few years, we've really strengthened our presence, especially in the software markets. You can see that in our growth rate. You know, Advent has been putting up high single-digit growth. Our institutional and investment management business has, you know, historically, you know, because of the client base it serves, which is insurance companies, banks, pensions, traditional asset managers, has been, you know, flat to up two points. In last quarter, it was up 15%. I think that's just attributable to some of our newer technologies that we've put out in the marketplace that are really being well received, things like Singularity, Aloha. On the Advent side, Geneva continues to be the gold standard in portfolio accounting for hedge funds and fund administrators.
They're coming out with Genesis, which is that next- gen cloud-based solution. Black Diamond continues to perform. We think that we've done a lot of internal developments in R&D and put a lot of focus on strengthening our presence.
Very helpful. I was gonna ask you a question. Justine, you mentioned the capital allocation strategy between buybacks and paying down debt. Does M&A still take precedence if there are opportunities in the market that will still be the focus for SS&C versus potentially paying down debt or buying back stock?
I think it's a bit more nuanced than just saying that we'll go after M&A first. I think we have criteria that we want our targets to meet. First of all, it has to be we're disciplined on price, so the valuation has to be reasonable, and it has to be something that we're willing to pay for. Then we wanna see revenue growth rate. We wanna see margin expansion and opportunity to get margins to our corporate levels. Then how does it fit into our business? How do we cross-sell and upsell? Do we like the management team? All of those qualitative aspects of a deal.
The price has to be there, and those financial metrics have to be there or have to be able to get there for us to wanna do it.
c overed a lot of ground. Thank you so much.
Well, we really appreciate it. Thanks, everybody.
Thanks, Mayank.