RBC, and I'm delighted to welcome the management team of SS&C, a longtime friend to the conference and RBC. From the company, we have Brian Schell, who's the company's Chief Financial Officer. Thank you so much for taking the time to be here today. Really appreciate it.
Great. Thank you. We love being here, and thank you for everything you've done so far.
Yeah, absolutely. What I thought we would start with is the underlying growth algorithm of SS&C's organic growth. Right? It feels to me like it's changed a little bit over the years. It feels a lot more durable. Certainly much more consistent in this mid-single-digit range. What I'm trying to get at here is, one, what has changed in that period of time, and then how durable do you foresee that being into the future?
Yeah. I would say that, just to start things off as we think about the business and where we are, and this'll be a recurring theme, I think, as we maybe talk about the business a little more, is we've seen the strength of the brand and what the brand represents in a technology space, and the importance of having that partner who's been there, who's been operating in your domain, who understands all the regulatory environment, understands the data, understand what needs to happen. With that as a backdrop, and we've seen that growth, is the business over time has become a little bit less dependent on licensing revenue at the end of the day, right? As we've seen that evolution, as we've seen that technology-enhanced services has spanned beyond licensing. Licensing's still important.
Yep.
It still happens. It still shows up with a little bit of lumpiness within the financials. If we look at 75% of the business is with the three largest business units. You see that growth being that mid to high single-digit growth rates of recent. The remaining 25% are bouncing back to that flattish to low single digits, which again, that's a bit a little bit seasonal. We've seen that broad growth. At the end of the day, where you're seeing that sustainability is we are seeing the biggest source of growth has continued to come from our existing clients, and either, one, they're growing, and we're leveraging that and helping them grow more. That pure organic growth that they have, whether that be AUA, or transactions, or clients. Number two is more services.
We're seeing a broader traditional share of wallet that they're coming to us to help support. That's been a really nice element to it. That's literally the number one reasons. We see number two essentially is that pipeline growth, and what we're doing is, "Here's what we're going to do, here's what we're seeing." The last, obviously, is that obviously our retention rate continues to hold strong, if not improve a bit. That's been the source of that durable growth over time.
Yeah. If you could just paint a picture for us in terms of the macro backdrop that we're operating in today. How are your clients handling their budgets? Are you seeing anything going to get pulled back, delays, implementations, anything in that regard? Just the health of the overall business.
Yeah. I would say we have not seen any impact to the sales cycle. I think the dialogues have been actually quite the opposite. We actually just, as you know, recently increased our organic growth rate guidance for the year.
We're seeing that continued strength of our underlying client base, the increasing relationship of what they're looking for for us. We have not seen any pause or slow down or lengthening of any sales cycle.
Okay. I want to touch on the M&A playbook first, we'll get into the details of the business. It does feel like the playbook has tilted a little more towards finding businesses that are also very good contributors from an organic perspective, not just the traditional operating leverage opportunities that you might have taken advantage of in the past or been able to grow from in the past. One, is that intentional? Two, how does that contribute as you think about, again, the durability of organic growth, and these businesses coming in at maybe a little bit higher than corporate average? Anything in that regard.
Yeah. I would say that we haven't lost the operational execution.
Right
And leverage that we think we can bring to an organization, and what we've done. That's still a key element. You're right, the last several transactions have been more about the accretion to our growth rates, both on the top line as well as the bottom line. That has been an important driver. Again, even underlying that is adding, I'll call it, assets to the organization. The continuing, the depth and breadth of what we offer is that incremental domain knowledge and expertise and what that group of people and/or technology brings to SS&C, right?
Yep.
Whether it's the incremental client, whether it's incremental technology, whether it's incremental geography, that's increasingly important. What they bring to our organization and help expand that growth on its existing network has been very important. We've seen those growth rates really turn out even better than our expectations. The last two acquisitions, for example, with Calastone and Curo, they're growing in the high teens right now, right?
Yeah.
That's certainly incremental to the overall revenue growth rate, and that's helping to, in over time, contribute to a higher, to your earlier question, organic revenue growth rate-
Yeah
In the future.
Yeah. It just seems like the weighted average contribution as they anniversary in is just creating a new normal for this company that we just hadn't seen over the prior several years. Let's get into the big three parts to the business, right? There's GlobeOp, there's GIDS, and then there's the Wealth and Investment Tech. As you point out, 75% of the company growing very strong. Maybe disaggregate each one of those, starting with GlobeOp.
Sure. GlobeOp has certainly been the beneficiary of a very strong hedge fund performance environment at the end of the day, right? SS&C services the largest, most complex hedge funds in the world, and predominantly here in the U.S. With their successes, certainly help facilitate the success of our overall revenues and what we've seen. We've continued to really lean into that with our clients, additional services, particularly as they want to do something more complex, new strategy, new fund, new managers. We're able to support that geography or wherever that might take place, and not a lot of folks can do that.
We've continued to work with them, and that's been a real nice source of strength. The other things I will mention outside the hedge fund, which is the bulk of that business, but another two important growth drivers are we continue to see strength in the private markets. That's private equity and private credit.
I know there's been a lot of headlines around private credit, we've continued to see double-digit growth broadly around that space and supporting that, right? We've seen private equity expanding their look to a, call it a fund administrator, more broadly than just in-house. The last one is retail alts, which we continue to see growth, right?
Smallest part of our business as far as within that GlobeOp part in those categories, but probably the highest growth rate, right? As there continues to be client demand and supplier interest in providing more of those assets into the market. Shifting to GIDS, we obviously we've seen that organization really grow nicely. It's a lot of that more recent growth has been around some of the lift-out transactions it's been able to do.
Yep.
Particularly Australia, which we've talked about quite a bit. We've seen the pipeline there continue to grow. That's where we're seeing a lot of share of wallet increase.
Particularly with some of our largest clients, is they're wanting us to do more for them, as we've seen that. We've seen the retention rate actually increase within our U.S. clients. Before, the U.S. was a bit shrinking, naturally, we've seen that stabilize and starting to actually be positive. Broadly, that's contributing to a very strong growth rate there. We see that pipeline looking strong. Finally on WIT, the Wealth Investment Technology, that's a little bit more subject to the rev rec lumpiness with ASC 606 requirements. Sometimes within any one quarter, it's not necessarily the best gauge about the health of the business, because you could've had a term license that was a very long timeframe that show up in this quarter, but there wasn't one in the prior quarter, or vice versa.
It was last year at this quarter, it wasn't in this quarter, it looks like your business is not doing as well. It's just not a great economic measurement of how well that business is doing. That is going to continue to do well. We expect that to continue to actually have much higher growth rate than indicative of the first quarter. It will be lumpy, certainly within the year, but even sometimes over a year, where you might have more renewal opportunities than the prior year. All in all, I think all three are performing very well right now.
Yeah. I want to stay on the lift-out concept. I guess, one, can you just mechanically explain what that really means for the business? Two, we're framing it around a lot of different opportunities, but Australia is clearly a big one with the superannuation market. Maybe give us the mechanics of actually what is happening, why that's an important facet for the clients, and why they want it, let's go into the growth opportunities that you've created for yourself in Australia.
Yeah. That's a great topic that we'd love more people to learn about.
Right.
I think what a lot of the funds have learned is that, it's similar almost in a way the way GlobeOp started, right? We're really good at, meaning the fund managers or the hedge funds or the PE firms, really good at investments and choosing those and knowing what to invest in and grow ROI, maybe not as much on the operational execution of supporting our LPs, supporting the clients of the clients, those types of things. What we have seen is that we're now applying our operational expertise from either the transfer agency business or even the the fund admin business to the superannuation funds in the example that you're talking about right now, right? There's a lot of compliance that needs to happen.
There's a lot of reporting and investor support that needs to occur. If not done well, you can get tripped up in either some of your filings or client satisfaction that may not be reflective of the financial performance on the asset side of the business, right, on the investment side of the business. We've taken that discipline and excellence and applied it to a lift-out, so it's not an acquisition in the sense that we're paying money to take on that business. Essentially what happens initially is lift-out, meaning we will lift out 100 people, 1,000 people, whatever those operations we are there to support with this scope of work, and we will set a price, and we'll provide these services with these performance criteria. Gradually what will happen is that we improve the quality.
Actually, the quality improves immediately, but we will improve the quality, and overall the efficiency over time, and the compliance as we adopt our operational procedures, which we think are best in class, as well as then migrate to our software, which we also think are best in class. Which creates a much more efficient framework of revenue, certainly for us, so that margin grows over time with the lift-outs. As well as gets better execution for the firm that we're doing that service for.
Yeah. It's interesting, as opposed to just signing a contract and having a new client come on board, you've got this migration path that ultimately leads you down a similar financial conclusion, but you're able to do it with this kind of bridge.
Exactly.
Yeah. That's actually pretty interesting. How do we think about sizing the Australian market? I know Bill talks about it as I forget what he says, but it's pretty big.
It's pretty big. I think that's why this first transaction, I think, is very important.
Yeah
A lot of eyes on it, both with our client, we want to make sure every client talks about us to all the other clients in the most positive way. We know execution's very important for Insignia itself. We know a lot of eyes are on it because there have been others who have tried to do this in this market and haven't done as well.
Yep.
We think it's an important opportunity for the existing client to say, "I think you can do more for us." There's an opportunity, more share of wallet there, as well as other players in the market.
Yep
We think that's where it really comes in both of those fronts, over time, we hope to take advantage of that.
Okay. Other international markets you've talked about is in and around the Middle East and APAC, excluding Australia. What specifically are you doing in those markets, and where do they fit in the geography of your business?
Yeah. Those have grown nicely, kind of across all elements of both GlobeOp and GIDS, is kind of the two primary ones. Although we see Intralinks continuing to expand. They're pretty global as well as far as transactions, and expand their presence. Primarily the first two, we've seen those services really look to both GIDS and GlobeOp as we establish new locations with, for example, the Curo acquisition. We now have a presence in South Africa which we hadn't had before.
We are seeing nice presence of looking at the sovereign wealth funds in the Middle East and the family offices, helping them as they continue to move forward. Frankly, I will probably add into that more recently, we're actually seeing a resurgence in growth in Europe itself as well not just the Middle East and APAC. We've seen this really nice glide path as far as incremental firms and wanting us to leverage our capabilities in those geographies.
Interesting. You mentioned private credit earlier. It is still a debate. We get lots of questions on it, in and around GlobeOp. I'm just wondering how you would describe potential exposures or lack thereof, and maybe just explaining why those would be the case.
I would say that we saw a slowdown in growth rate, which was really, really high in 2025. 2026 has still got a solid growth rate, and I think what's limited the exposure here to SS&C as far as what does that mean for us, is that a lot of the private credit clients that we have are closed-end funds. The redemptions, that type of activity just is not showing up.
Right.
We obviously don't have the credit exposure that may exist with maybe the owners of the fund itself. Yes, there's been some incremental activity. We've seen a lot of headlines, but the bulk of our clients, we haven't seen that.
Nor would you in a closed-end fund anyway, right?
Right. In a closed-end fund, you just wouldn't see it.
Right.
Those that aren't, like I said, it's been more limited exposure. Shorter term, there's actually probably a little brief lift, just incremental activity. At the end of the day, it's very limited, and we just didn't bake a lot into our revenue growth algorithm for private credit in 2026. Just knowing that there were signs of it, we know there's a lot of headlines. Think the headlines are bigger than the actuals of what we've seen.
Yeah. That makes sense. I want to go back to Wealth Investment Tech for a moment because I feel like there's just some difficult comparisons and optics that are occurring on the platform as one of the clients kind of rotated off. Your commitment to kind of still being in that 3%+ range seems very high. How do we interpret that interplay?
Yeah. I would say the First of all, not that I would ever be critical of our general accepted accounting principles, but I wish ASC 606 certainly complicates that story.
Yeah
As far as to truly understand the economic performance of a business. I would say we are very optimistic about the next three quarters and what we see, just because of the pipeline, the renewals we see, and there was a little bit of a drag with some of the State Street contract that we've talked about that went away, that essentially that team has done a great job of refilling that pipeline of some of those services. We expect to see significantly stronger growth rates for the remaining three quarters that will get us back up to that mid-single digit growth rate.
Got it. Moving on to one of the non-big threes, kind of the Intelligent Automation and Analytics business. Been a little bit of a slower start there, I think, to the year than maybe you would've thought. Blue Prism, I think, is half of that business. The question that comes up oftentimes is AI kind of creating disruption to RPA? Is that impacting that business? How do you kind of defend against it? If it's not actually impacting it, what's actually occurring?
Sure. I think for context, I think we started seeing that RPA market start to slow down probably a year and a half ago.
Okay.
Partly when you saw when chat came out, it was like, "Well, this whole AI thing," it's like, "Should I be doing that or should I be looking at RPA?" I think people were just pausing, trying to understand the difference of what does AI and what do agents really do for me versus what a digital worker does for me when I'm.
Right
I'm making digital worker synonymous with RPA. I think people were paused a little bit on the growth rate, so we saw the growth rate starting to stall. Where we are today is that people are realizing that RPA is still incredibly efficient, incredibly economical, and much less expensive and does probably a better job than AI in a lot of usage.
AI doesn't work as well with historical APIs at the end of the day. What that has to happen, and RPA does. I don't have to pay tokens to continue to make it operate. There's the cost structure and what you need to do, and you can just set it and go. That still exists. We actually had the strongest retention rate in Q1 for the Blue Prism, for the RPA.
Now, again, it is about half the business. We've seen some real strength from that core.
I think the migration now is how do I leverage using the agents and AI around both use of RPA as well as a workflow orchestration, which is what we do know really, really well.
Yeah.
We know the domain expertise with respect to the accounting, the respect to the regulatory compliance reports. We're already the system of record for the data. We're already housing that data and the knowledge of where that goes. We're actually doing a lot of this internally with the Client Zero concept that it's really resonating with clients and prospective clients to be able to implement more with them. It will be a migration, so to speak, and more and more, but I don't think RPA is going anywhere.
I think it will be continued to be enhanced, and I think the combination of that package and our knowledge of the workflow and having this data get to over here, from a compliance, from a filing, from the LPs, whatever that might be, from a reporting standpoint, that knowledge is still very critical to understand how it's done, where it needs to go to, and make sure there's the right controls around it.
Yeah. Maybe speak to the point even further about the entirety of the business around AI. Opportunities, again, threats, why it's not disruptive to the business. We were actually talking about this a little bit last night at dinner.
Right.
It was a good discussion.
I would say the way that we've kind of initially thought about it. Similar to any technology or productivity tool is that first level of our first approach might be, I can do more with the same resources, my margin on my incremental revenue is higher because I don't have to add more to it. I think the next phase is how do I It's like, wow, I can actually do more with not just the same, but now less.
We'd expect to see margin enhancement over and above some of those productivity gains. The third element is how is that involved in the overall revenue cycle? Does it increase my sales because of what I'm able to do, what I'm able to innovate, or what I'm able to embed
Yep
In the software that existing today? Or is it a new type of service, like WorkHQ, that we're able to sell to our clients, and they can leverage? That's the cycle. We see it showing up in incremental revenue and incremental margins over time.
Yep. Let's talk about tokenization of assets for a minute. We're going to talk more about that later on with another company that's coming here today. You have Calastone.
You see it kind of firsthand. One, what are you seeing today in the market? Where do you think this is actually going? How important is it for you, and is there any disruptive properties to that as well?
Yeah. We have several clients who are live, who are utilizing it via Calastone. It's real. It's being delivered. It's still relatively small part of overall revenue base.
Yep.
We haven't seen a huge client demand for it, but we're ready there, we're serving it. We have one client who's doing a bunch of business on it, and a couple others who are, I'll call it, piloting and offering there. I think what it does is it takes out a lot of frictions and a lot of manual processes. That also actually helps us on the manual processes as well on our end, so our costs can go down. Overall, we're there. We're ready to support, ready to roll out. Right now, I'm not sure there's a lot of disruption quite yet.
Yep.
Even then, in the future, it will be a lot of the same reports, filings, investor calls are still going to occur regardless if it's tokenized or not.
Yep. Let's talk in this last moment we have here about the pathway to get you back to kind of 40% EBITDA margins, clearly a goal to exit that out of 2026. What are the building blocks that we need to be mindful of as we think about the rest of the year?
Yeah. My favorite building block is incremental revenue.
Yeah.
Frankly, our opportunity is how do I then go from a incremental 45% margin on that incremental revenue to 50% or more at the end of the day. How do I deliver that? A lot of times, it depends on where that revenue is coming from and the type of service that's being supported there. I think scale at the end of the day. Number two will be the technology enhancements that we've talked about is how do I continue to do it even more efficiently within our own operations? Again, that can lead to even then even greater margin expansion than what we've been able to demonstrate in the past. We haven't changed that guidance going forward yet, but we think there's definitely an opportunity with technology enhancements, including AI, to be able to expand that even more over time.
Okay. In the last 30 seconds or so, just the capital allocation decisions of the organization. Historically been a little more M&A heavy, the valuation's been a lot more compelling these days. How do we think about those two attributes?
Yeah. The priority hasn't changed. The compelling M&A that's accretive, we can benefit our shareholder, we absolutely want to do. Absent that, we're going to buy the heck out of the stock.
That's awesome.
Given where it's trading.
It's a great way to end it. Thanks, Brian. I really appreciate your time today.
Sure.
It's always a pleasure.
Thank you.
Thank you.