Afternoon, everybody. Thanks for joining us this afternoon. I am very pleased to have Brian Schell. Thank you for joining us from SS&C. SS&C is always a very interesting company to talk about. You guys have done a lot of things over the years, but as a quick introduction, I'm James Foster. I lead fintech research here at Morgan Stanley, and like I said, I'm very pleased to have Brian, CFO of SS&C. Maybe we'll just start, Brian, and I'd love to hear how you describe SS&C in one or two sentences, because I have my own way of talking about it, but I'd love to hear how you do.
The elevator pitch to my family, who is not as financially oriented, I would say if you manage assets, you're likely using SS&C to help you manage them in your middle or back office broadly.
Right. That's right. And I think that it's an interesting company because over the years, you guys have, Bill, in his leadership position, et cetera, have created a lot of value and grown the business tremendously. At the same time, the growth dynamics and the way that you're pursuing growth is changing a little bit. Like historically, Bill focused a lot on finding the right assets to integrate into the business, et cetera. Now you have a broad portfolio of products and looking to continue to expand those, but doing so more from an organic perspective than maybe historically. So maybe with that as a backdrop, let's talk about the organic growth component. You delivered just over 5%, 5.1% organic growth in Q1, 3.5% in the second quarter, 5.2% in 3Q. And you're talking about 4.5% year- over- year, including Battea and 4Q. And that was an acquisition.
And maybe we can talk a little bit about that. But in context of your targeted 4%-8% medium-term organic growth rate, talk to us about both the drivers of the improvement in organic growth that we've seen thus far in 2025 and your confidence in being able to sustainably deliver on that medium-term range?
Yeah, I would say it's a combination. First of all, thank you for the invite and being here. This is a terrific opportunity to meet with a group of investors that it wouldn't normally happen in North America per se. So thank you again. I would say it's a combination of, I would say, client success and client growth and what they're doing and what we're seeing pursuit of, I'll call it risk across various asset classes and us pursuing a broader share of wallet and being able to offer more services to our existing clients at the end of the day. So primarily, if you look at two of our largest businesses with GlobeOp, which is primarily the fund administrator for hedge funds, private markets and PE firms and private credit, retail alts, real estate.
And that business has grown very well for us, again, somewhat driven by new logo growth that was generated a couple of years ago and then asset growth from our clients that have really been quite successful. And those funds are some of the largest funds, most complex funds. And we are in a unique position to actually help service them and assist in their growth, particularly as they cross over traditional assets from a hedge fund to starting looking at private credit or into retail alts. And there are very, very few participants who can help them service all of those needs based on the different types of strats they might have or the type of investments we talk about or even geographies at the end of the day. And we've seen that success and our unique positioning there.
The other half of that growth story from at least those two businesses with the GIDS business then as a second half of that is we've done a very good job of continuing to expand internationally and offering incremental services outside of transfer agency services, the additional investor support services of helping them with some of the projects that they're growing, their investor communication, their retirement services, the reporting and the support. So the team has done a terrific job of doing that. And then on that international front, I will mention is that we've had some really nice expansion into Australia, supporting more and more of the superannuation funds and providing those services. So that's been kind of the story more broadly there. And that's really shown up in the organic growth that's kind of permeated through basically all of SS&C.
So that's kind of what's been happening. And as you think about kind of staying in or even hopefully moving to the top end of your targeted range, I think is kind of would be the aspiration for a lot of investors. Is it a continuation of those as the key drivers, or are there incremental things that we should be paying attention to?
I think it's a continuation, certainly of those two. And just simply put, right from a math standpoint, two of your largest businesses kind of have to continue that momentum to be able to achieve, I'll say, midpoint to the higher end of that range that we talked about. And I would say what's going to help push it to that higher end of the range is I think we're going to see a shift in 2026 and 2027 from Intralinks. So a little bit of a stall when we see, while the M&A has had a lot of press, that's been more around the value of an increase over prior year versus the number of transactions. And the business model for Intralinks is more geared toward number of transactions. And it's down.
I think the S&P just came out with a report of down 8% through the third quarter on number of transactions being down. So to be able to kind of maintain that flattish element has been, I think, a pretty good performance. I think we've seen our bookings. We see some backlog. We start to see some of that starting to increase. So I think when we look forward, we expect to see the continued progress around the first two businesses.
Excuse me.
Sorry about that. Thank you. And then I think Intralinks starts to expand on an upward trajectory. I think the other two businesses that we haven't quite mentioned yet is with Intelligent Automation and then Healthcare turning that from flattish, mid-single or low single digits up to mid-single digits, continuing to contribute. And then the last one is WIT, the wealth tech framework. And that, I think, increasing where its growth rate was, again, more around driven by renewals opportunities in 2025, much more opportunities kind of on a go-forward basis, just kind of how the pipeline lays out.
Got it. Got it. And I want to touch on at least some of those businesses at a high level. But before I do, what are you seeing from an overall demand environment perspective amongst your customer base? Any call outs you would make either by end customer type or underlying segment where you're seeing particular strength? I thought your comment just now on Intralinks and the M&A is interesting and something to take note of. But where would you call out particular strengths or weaknesses?
Yeah, I would say we see a continuing blurring of the lines of traditional asset managers. Kind of like in my opening comments when I talked about hedge funds and private credit and private market, private equity and retail alts. There's obviously been an explosion in retail alts. And so seeing that, and I mentioned, obviously, it's a little bit of obviously selling our own book. But at the end of the day, there are only so many people who can actually be a transfer agent and a fund administrator in the same organization. I think we might be it. So we're in a great position to be able to do that.
So seeing that appetite for more risk and distributing more of those, I'll call it higher risk assets potentially and for a broader appetite of consumers, we see as a really interesting spot at the end of the day. But we've really continued to see, I would say, a positive economic environment for anybody who is, I'll call it, touching or managing those assets from banks to insurance companies to pension managers to the funds I talked about earlier. Again, we're seeing a very positive environment right now.
Got it. So let's talk about with a little more detail kind of the key business segments. And we'll start with GlobeOp. Results this year have certainly been impressive and modestly surprising, at least to us and kind of vis-à-vis our forecast when we started the year. What are you seeing from a competitive perspective that's enabling SS&C to win significant mandates in alts against established players? And what are some more nuances on the secular trends in private equity, hedge funds, and retail alternatives that are playing to your favor?
So I think it goes to the there's a core level of service offerings. There's plenty of fund administrators out there that aren't named SS&C. But I think where we differentiate ourselves is that ability to handle the complexity of a long-only fund, long-short, different macro, and then also being able to serve dipping their toes into or probably more than dipping their toes, but being able to enter into the retail alts market. And how do they have a service provider that can do something that looks a heck of a lot more like a transfer agent? And there essentially isn't. Or just the level of sophistication in supporting just the large hedge funds in general and the capacity and the reliability and the service, the ability to do that at a highly accurate service to the minutiae because the details matter for so many of our clients.
And getting that right shouldn't be underestimated. And the amount of IP that's built into that business intelligence process and the technology that we can influence based on their input and the fact that we own Geneva and be able to continue to service that has really given us a strong advantage at the end of the day. The other macro trend I'd see is that while hedge funds have typically wanted to outsource that fund administration more, we're seeing the private markets wanting to do that more, partly because as some of the PE firms traditionally have tried to do that in-house, as they launch more vehicles, they're like, all right, this is getting harder to do. And they need more scale.
And they may not have the resources either from a technology or a human capital management standpoint, or they're getting into the private credit, which you cannot do that on a spreadsheet or anything else like that. This requires a sophisticated software like a Geneva to be able to manage that. And as they do that, they realize they're going to have to do that from an administrative standpoint. And so we're seeing that trend, say, if I'm not doing it already, outsourcing it, I'm going to need to. And I see primarily with the private markets, we're seeing that TAM expands just because we're seeing their success and they're realizing I might need to step up another level.
And what about? So there's been a little bit of consolidation among competitors and that kind of thing. And it seems like it's always talked about. What's your feeling in terms of your current product portfolio? And as you said, as a lot of these private equity shops, et cetera, they end up with more complicated portfolios. Is there incremental opportunity to add functionality there to address that?
I think there's always opportunity to add to that and providing some of the ancillary services that maybe we don't have or we wish we had to really be able to strengthen the relationship at the end of the day. We want to make it we want to serve our clients so well. And this is obviously not unique to us, but they just could never dream of going into the next fund or the next expansion without us. Or they don't have to worry about it. We'll be able to do this because SS&C has been able to support our growth in either new vehicle, an expansion, a new pod, whatever that might look like.
Got it, so let's talk about Intralinks a little bit. You talked about we've seen deceleration there because the number of deals are down year- over- year, and that comes despite the chatter we keep hearing. As you said, if you talk to bankers, they'll tell you there's a flood of them coming, et cetera. How much of the slowdown do you think is just purely cyclical timing in nature for Intralinks, and is there anything that you can do to internally improve the growth rates of that business or at least improve visibility?
Yeah, I mean, we've talked a little bit about when we provide some of our regular investor updates at the Intralinks calls and what's behind the scenes that's not showing up in the revenues that we're reporting. So we talked a little about bookings. We're seeing that grow. It's bounced off the lows. And so we're seeing that pipeline continue to build. I think one of the things that we continue to do is we're continuing to invest today. We're continuing to invest in R&D, I would say into AI, into agents to be able to enhance the toolset within the data rooms in and of itself. I mean, what's going to differentiate us is that we still think we have the superior product. How do we continue to enhance that?
How do we give an incremental tool that's going to benefit the participants from either understanding the materials, do a better scouring of the diligence, the summarization, the redaction techniques, whatever that might be to incremental tools to make that process more efficient and timely for them? Because ultimately, the less time they spend in kind of prep mode before they get the deal, there's risk, either a risk of not getting it done or risk of making a decision too quickly. So getting that data more quickly and more timely to make a decision we think is a very valuable part of the process.
Got it. So let's touch on Blue Prism. Maybe you can give a quick summary of the Blue Prism business. But I guess then if you can talk about the drivers there, there's clearly from our perspective a lot of internal expense savings in the form of lower headcount. But how do you think about the net new opportunity for Blue Prism and how that's evolved of late and any initiatives that you may have in place?
Yeah, so it is. We've almost, in a way, moved to that business of calling it Intelligent Automation, which I know we kind of call the entire business unit, but it's kind of really moved beyond the traditional RPA. There's a standard RPA. To your earlier point, we generate a lot of productivity internally, and we learned a lot from that process of the automation, what you can do. Sometimes you go through that process, you're like, why do I even have this process, and so you go through that, so we look at the agentic AI and the shift that they're making is how do we make our traditional product do even more complex tasks, and that is enabled with the agents that enables that if there's a break in the process, I have these five choices.
It can be smart enough to go out and go get the right one, bring it back in, and continue the process in different breaks, so it allows the automation to do increasingly complex, more dynamically at the end of the day, again creating that efficiency, creating the increase in accuracy, the timeliness, and everything else, and that's a product that we've got 20 cases that we're working at internally, and we're client zero, and we've been able to frame those up and actually then be able to turn around and start to sell those commercially. Again, small on the revenue side, but we're making progress one step at a time. We're keeping it very practical, real-life uses, and here's what can be done.
Got it. Let's turn to Healthcare. Another area where the organic growth in the Healthcare business has improved meaningfully over the last few quarters. How much of that is just mitigating or lapping churn versus underlying improvements in the core business, whether it be demand or selling, et cetera?
Yeah, I think it's been a combination of both. I mean, last year has been a little bit more of a stopping the bleeding, so to speak, in that my retention is kind of getting to that more manageable level where I don't have as much of a, like I said, you can't fill that hole. And some of that was known. There were some really large contracts that just kind of bled off at the end of the day. And they just take time similar to the large contracts take a long time to get up to scale over consecutive quarters, things of that nature. And then I think that that team has done a very nice job of basically putting new contracts in place, getting new clients, and starting to leverage the DomaniRx platform to get the additional sales.
And then hopefully leading to a much stronger sales cycle in 2026 and 2027 for some of those large contracts.
Let's explore just really quickly on Domani. It sounds like you're expecting acceleration there. What's driving that? How should we think about the potential medium-term impact of Domani?
It's more likely to be a medium-term than a short-term impact because it just takes a while to get a large client onboarded, which is what I call the meaningful kind of revenue growth because it's obviously heavily regulated. It's an industry typically that doesn't move at light speed. And the regulations exist at the state level. So sometimes it's easier to move in chunks like that versus a wholesale move. They're coming off of a lot of times they have legacy technology that's already different technology. That's not all just moving from this one ERP to this new one. It's probably seven from a prior acquisition that they move on and take different integration steps to be able to build along the way.
Got it. Got it. Got it. And then last segment I wanted to focus on here was GIDS. And once again, strong outperformer this year, particularly as you've targeted liftouts in Australia and elsewhere. How should we think about the composition of your future pipeline and any probability of incremental liftouts of similar scale to Insignia?
Yeah, so we're excited about Australia at the end of the day. So to date, that transaction, we don't typically like to talk about individual clients, but that's obviously a big one. It was marquee in a sense of, I'll call it that, a superannuation fund and what that represents and what it does for us in Australia as far as an opportunity to earn their trust and do that for the entire industry at the end of the day. So, so far, so good. It's going very well. I think they're pleased with our progress and what we're doing. And we do believe that over the next several years, there will be continued opportunity to provide different services. It may not look exactly the same within those superannuation funds. We actually are touching probably several others, but a much smaller extent and doing some other different services.
So we're building up relationships with many of those funds, building up our presence, building up our capability, building up the scale to be able to continue to, like I said, once we have that scale, we can support and launch even more services that we couldn't before.
Got it, so that's a run through the different businesses and kind of the drivers. I think for a lot of investors, including us in that group, love talking about newer technologies and the impact on SS&C, and maybe I'll start with the thematic technology of tokenization. How do you think about asset tokenization as a tailwind or headwind for SS&C? What are the puts and takes there over the next five to 10 years, and I guess specifically, does the potential for example, on-chain type record keeping and peer-to-peer settlement threaten or disintermediate parts of your administration and transfer agency stack, or does it expand your addressable market by creating new workflows and data services, et cetera, so how do you think about the puts and takes of tokenization?
Yeah, if you have the answer, that'd be awesome, so I think it's all of those, and we're evaluating that, and here's why I say when people say, 'oh, it's going to destroy you.' Here's why I say that's not going to be the case. It doesn't happen overnight, and no matter what the service provider, whether it's tokenization or whether it's existing today, there's still going to be investor support. There's still somebody's going to want to either email, call, whatever that might be. There's going to have to be support. Now, we are introducing AI behind that with the chat and everything else to support it. We obviously have the live behind that as well if they want to go one step further, and we've all been in the cases where we're good from one end of the service to the other.
And they're still going to need that regardless of the vehicle of delivery. We do think it's an opportunity. There's probably puts and takes where some of the revenue goes away. But to your earlier point on your question, there's probably new revenue stream opportunities and to provide that. And the Calastone transaction that we recently closed on, they actually already have a tokenization project client already live and going. So we already have a foothold into real world supporting it. And as we move that forward, they're already in the mix of it.
So, maybe I'll just follow up there. Is that if there are puts and takes, and I think your characterization of scope and magnitude and speed are probably key uncertainties. When would you expect to start to see some impact? Or have you heard enough about pilots, et cetera, et cetera, that you can say, well, at least we can start to see the use cases and develop some idea of what that might look like? And from there, we can start to develop some broader ideas?
Yeah, I think that's the fundamental question at the end of the day. So the only basis, and I'm certainly not the expert at SS&C, so I will qualify that, that the team will come back and say, "Brian, why did you say that?" But if you liken it to rapid adoption of other technologies, you think about either RPA or even where we're going through the AI right now and everything that's happening, there is a lot of dialogue about it. There's probably a lot of things going on behind the scenes. I don't know how many people are really making any money from it. Are they saving money from it? But at some point, that's probably going to flip over to it having more of a meaningful impact. And this was probably effort was started.
Maybe those were early on, were 2023, maybe 2024, gaining some traction in 2025. Do we start seeing results in 2026, or is it 2027? So if you think about, and that's pretty rapid adoption, right? And will this be that rapid? So is it a three to four-year cycle where you start seeing meaningful impact? Will it be similar to that? Don't know. So that's my personal only basis to say, here's a potential comparison that might say maybe it's a three, four-year process before it really gets traction and then has a meaningful impact where you see adoption and everybody switching.
Got it, so I want to dig in similarly on AI. You've mentioned a couple of times some of your initiatives or at least alluded to them just now, but at Deliver 2025, you highlighted a governance-first agent-based AI platform and domain-specific agents across financial services and Healthcare workflows. How are you actually packaging and pricing those AI capabilities today? I mean, are they seat-based, usage-based, embedded in broader platform pricing? Just love to get some early feedback there.
So what the client sees will look more like an annual license versus a, "I've got five people on it. You're going to charge me five grand per person." And so it's more of a license basis from that standpoint. As we look at how do we determine what that license or what that fee is going to be, we're basically looking at the value that's being provided and that service and how does it make it compelling. So we're at early stages of pricing and understanding along that elasticity curve what makes sense for adoption and usage and I would say the expected benefit from the person on the other end of that.
Got it. Got it. Last couple of questions here. I want to ask about profitability. You're running adjusted EBITDA margins, kind of 39%-40%, while still investing behind new products and AI initiatives like we've just talked about. Do you think you're deliberately under-earning on margins today and maybe by how much? And how do you gauge whether the long-term opportunity makes sense or at what point do you say, you know what, we've kind of invested enough, let's kind of move it up? And how much do you think you could move profitability up?
Yeah, I think if you spend any time, as you know, working with our CEO, I don't think under-earning is in his interest given, as a larger shareholder, but he does think long-term. He does know that to be able to see that revenue growth trajectory longer term is that there has to be a continuous stream of R&D investment to make sure that we're continuing to supplement the software and software-enabled services capabilities that we're staying ahead of competition. We're being best in class. We're working with our clients and this is what they say they want or need or this is what they'd really be paying extra to be able to do it, which would really save them or allow them to be better to their clients or their own profitability.
So I think paying attention to that and doing that across the board is always going to be important to us. But I think having that goal of increasing profitability annually is important for us through scale growth of incremental revenues, through then on top of that, productivity independent of that within each of our business units, which we challenge all of our business units to try and deliver that independently as well. And then what is reinvested either through an OpEx initiative and whether there's more development around AI, whether that's different sales, whether that's a startup in a different geography that we don't have scale, that's going to be quote expensive day one, or could be, hey, this is a long-term contract.
Are we willing to price it a little bit more aggressively that we grow into the traditional margin that will show up, but maybe have a little bit of a compression day one? So those are all things that go into mix to kind of that 50 basis point EBITDA improvement annually.
Got it. Last question here. Capital allocation, really impressive metrics thus far this year. Year- to- date, operating cash flow is up over 20%. You've grown the buyback authorization to $1.5 billion, increased the dividend 8%, and still funded sizable deals like Calastone and Curo. On a go-forward basis, how do you rank order, do you think right now, capital uses, M&A, buybacks, dividend growth, and incremental delevering, especially if rates come down?
Yeah, so I would say that dividend growth hasn't been our priority. I mean, it's been there. It's been anywhere from 2%-10%. I know that's kind of a big range, but we're talking pennies. Is it a penny or two pennies? It kind of has that percentage output. And our investor base hasn't said, you got to raise the dividend. So that hasn't necessarily been a driver. We know it's important and we want to continue to do it. But I would say number one priority, especially given that we are levered into a, I'd say a pretty comfortable spot below three, and we don't have to bring ourselves down, is M&A, but only if it makes sense and it adds value.
Otherwise, it's going to be predominantly share buyback, but there's always going to be a supplement of paying down the debt. Now, does it become less attractive and accretive with rates if short-term rates do fall? Less so. And so maybe even more share buyback.
Got it. We're out of time. Brian, thank you very much for joining us today.
Great. Thank you.
Good seeing you.
Okay. Appreciate it.