Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the SS&C Technologies third quarter 2021 earnings 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 during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. Thank you. I would now like to turn the call over to Justine Stone, Investor Relations, for opening remarks. You may proceed.
Hi, everyone. Welcome and thank you for joining us for our Q3 2021 earnings call. I'm Justine Stone, Head of Investor Relations for SS&C. 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, we need to review the safe harbor statement. Please note the various remarks we make today about future expectations, plans and prospects, including the financial outlook we provide, constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995.
Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the risk 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, October 28, 2021. While the company may elect to update these forward-looking statements, it specifically disclaims any obligation to do so. During today's call, we'll be referring to certain non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to comparable GAAP financial measures is included in today's earnings release, which is located in the investor relations section of our website at www.ssctech.com.
Also, in the third quarter, we entered into a joint venture named DomaniRx LLC, in 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.
Thanks, Justine, and thank everyone for joining. Our results for the third quarter are $1.266 billion in adjusted revenue, up 9.5%, and $1.32 in adjusted diluted earnings per share, up 20%. Adjusted consolidated EBITDA was $530 million, and we are on track to end the year with over $2 billion in EBITDA. Our adjusted consolidated EBITDA margin grew to 32.6% in the quarter, up 230 basis points from Q3 2020. Our third quarter adjusted organic revenue was 8.2% as we continue to gain momentum and beat Q2's 7.2% organic revenue. All of our businesses outperformed our expectations and our alternatives. Intralinks and software businesses drove the top line growth.
We have accelerated our new business wins and competitive takeaways while capitalizing on strong markets. The past few quarters highlights SS&C's financial power. Without digesting large acquisitions, we were able to drive strong top-line growth organically while improving margins over 200 basis points and growing earnings at 20%. We have maintained our lower cost structure through the pandemic and continue to drive efficiencies through automation. Machine learning, robotics, process automation, and artificial intelligence capabilities are being implemented across our businesses and products. We are currently rolling out our strategic development enhancement within the hedge fund services portal, whereby we are leveraging various AI principles and concepts to enhance controls, provide greater transparency around NAV anomalies, exceptions, and key operational processes. This new product is called GoCentral. These types of development efforts not only generate revenue, but are margin-enhancing.
SS&C generated net cash from operating activities of $944.8 million for the nine months ended September 30, 2021, up 25% from the same period last year. We repurchased 2.1 million shares of common stock in Q3 2021 at an average price of $75.97 per share for $152.9 million or $162.9 million. At our current valuation, we will continue to aggressively buy back stock. We paid down $317.8 million in debt for the first nine months of 2021, and our leverage ratio stands at 1.97x secured and 2.96x total leverage.
We remain committed to a shareholder-friendly capital allocation strategy, and now that we are under 3.0x levered, we have increased flexibility to allocate more cash towards buybacks. Our business is running on all cylinders. Our pipelines are strong, with increasingly complex global large deals as organizations review their complete operating model and technology stack. Several of our products have met milestones, the most recent being Precision LM, exceeding 100 clients. The growth comes as banks and non-bank lenders have increased their investment portfolios, private credit lending activities, and exposure to commercial and residential loans.
Precision LM added 20 new clients in the last 12 months. We are capitalizing on market trends and recently launched our ESG reporting solutions platform for asset managers to better monitor and report on ESG exposure. Our solution provides accurate and detailed ESG ratings data, which is a game-changer to help investors understand sustainable investing and ESG exposures. I'll now turn the call over to Rahul to discuss the quarter in more detail.
Thanks, Bill. Most of our global offices have reopened, and we're seeing employees attending in increasing numbers on a voluntary basis. We're optimistic that the added opportunities for in-person collaboration, combined with the work-anywhere flexibility we're providing to our staff, will enhance innovation and execution. Our businesses are benefiting from the global trend towards outsourced technology and services. As firms evaluate their desired post-pandemic operational state, our fund administration, middle office, and Advent businesses are seeing greater demand. This trend also impacts private market alternatives, with firms looking at their operational capability and limited partners assessing the resilience and scalability of the managers they invest with. Our functional depth continues to grow in lockstep with the steady addition of signed and live clients. Collaboration across SS&C teams, combined with R&D investments, have resulted in a new generation of enterprise solutions.
These allow asset managers, banks, insurance companies, alternative managers, retirement and wealth management firms, and others to look to SS&C as a strategic partner that offers a comprehensive solution set to address several of their requirements. As a result, we're seeing larger deal sizes and greater appreciation for the ways in which we can deliver value to our customers. Now I will mention some key deals. One of the world's largest hedge funds and existing middle office client chose SS&C to run shadow accounting. A managed account platform chose SS&C Global for fund services, financial statements, bank loan servicing, and reconciliation. A $30+ billion hedge fund who had been running Axys for over 20 years upgraded to Geneva and Geneva Cloud delivery after a three-year evaluation. A $10 billion-plus Canadian prime broker added Advent Syncova to their technology stack, citing its scalability.
A 50 billion AUA asset manager chose Black Diamond because of our partnership focus. A U.S.-based wealth manager sought a higher level of SaaS support and stability and chose a combination of SEMS and MarketTrader to replace their current solution. A top U.S. insurance company chose Chorus, our latest automated workflow solution. An existing fund administration client expanded their relationship to include retail alternatives, transfer agency, digital investor, and Chorus. I'll now turn it over to Patrick to run through the financials.
Thanks, Rahul. Results for the third quarter 2021 were GAAP revenues of $1,264.4 million, GAAP net income of $184.4 million, and diluted EPS of $0.69. Adjusted revenues were $1,266.3 million, including the impact from the adoption of ASC 606 and for acquired deferred revenue adjustments for acquisitions. Adjusted revenue was up 9.5%. Adjusted operating income increased 16.8%. Adjusted EPS was $1.32, a 20% increase over Q3 2020. Overall, adjusted revenue increased $110.1 million or 9.5% over Q3 2020. Our acquisitions contributed $10 million in the quarter. Foreign exchange had favorable impact of $10.4 million or 0.9% in the quarter.
Adjusted organic revenue increase on a constant currency basis was 8.2%. We had strength across several product lines, including alternative assets, Advent Software, retirement business, ALPS, our brokerage business, and the Intralinks business. Adjusted operating income for the third quarter was $524.1 million, an increase of $75.3 million or 16.8% over the third quarter of 2020. Adjusted operating margins increased from 38.8% in Q3 2020 to 41.4% in the third quarter of 2021 or a 260 basis points improvement, driven by strong revenue increase and cost controls. Expenses increased 2.2% on a constant currency basis.
In addition, acquisitions added $9.6 million of expenses, and foreign currency increased costs by $8.4 million. Adjusted consolidated EBITDA, which is defined in note three of our earnings release, was $538.9 million or 42.6% of adjusted revenue, an increase $72.6 million or 15.6% from Q3 2020. Adjusted consolidated EBITDA margins increased 230 basis points from the third quarter of 2020. Net interest expense for the third quarter was $50.2 million and includes $3.3 million of non-cash amortized financing costs and OID.
The average rate in the quarter for our credit facility and our senior notes was 3.1% compared to 3% in the third quarter of 2020. A reduction in our debt balance would result in interest expense decreasing $4.5 million or 8.2%. During the third quarter, in connection with the legacy DST/ERISA matters and associated legal proceedings, we recorded an expense of $43.4 million to other income and expense. Due to the inherent uncertainties associated with the resolution of this litigation, the ultimate resolution of, and any potential exposure related to this matter is somewhat uncertain at this time. We recorded a GAAP tax provision in the quarter of $60.6 million or 24.7% of pre-tax income, and expect the GAAP tax provision to be approximately 26% for the full year.
Adjusted net income was $352.9 million, adjusted EPS was $1.32, and the effective tax rate used for adjusted net income was also 26%. Diluted shares decreased from 267.6 million in the second quarter to 266.5 million. The impact of share repurchases was partially offset by an increase in the average share price and option exercises. On the balance sheet and cash flow, we ended the third quarter with $351.1 million in cash and cash equivalents and $6.2 billion of gross debt. SS&C's net debt as defined by our credit agreement, which excludes any cash and cash equivalents of $138 million held at the DomaniRx JV, was $6 billion as of September 30th.
Cash flow for the nine months ended September 30th was $944.9 million, a $189.8 million or 25% increase compared to the same period in 2020. A couple highlights for the nine months. We've purchased treasury stock buybacks of $487.9 million for purchases of 6.8 million shares at an average price of $71.74 per share. In July 2021, the board authorized a new stock repurchase program for up to $1 billion of stock buybacks. The program to date, treasury stock buybacks of $162 million for purchase of 2.1 million shares at an average price of $75.97.
Net debt payments were $317.8 million, compared to $330 million in the same period 2020. We declared and paid $122.8 million of common stock dividends, an increase of 22.9% the prior year. In the nine months, we've paid $173.2 million of interest expense compared to $212.7 million in 2020. In income taxes, we've paid $230.8 million compared to $182.5 million in the same period in 2020. Capital expenditures and capitalized software were $96.2 million or 2.6% of year-to-date adjusted revenue, compared to $80 million or 2.3% year to date in Q3 of 2020.
Our LTM EBITDA, which is used for covenant compliance, was $2.0195 billion as of September 2021, and includes $1.8 million of acquired EBITDA and cost saving related to acquisition. Based on net debt of $6 billion, our total leverage was 2.96x, and our secured leverage ratio was 1.97. Our outlook for the fourth quarter, I'll cover a couple assumptions first. You know, we'll continue to focus on delivering quality client service, and we expect our retention rates will continue in the range of our most recent results. We'll expect foreign currency exchange to be at approximately current levels. Our adjusted organic growth for the year will be in the range of 4.8%-5.9%.
Adjusted organic growth for the fourth quarter will be in the range of 1.1%-5.3%. Interest rates on our term loan will be approximately the one-month LIBOR plus the spread which is currently 175 basis points. We expect expenses to increase sequentially, due in part to the impact of higher personnel costs as a result of our annual merit increases, which took effect October 1st. We're seeing increased employee benefit costs. We'll continue to invest in our business long-term, and capital expenditures will be approximately 2.8%. We'll continue to allocate free cash flow to both stock buybacks and some debt paydown.
For the fourth quarter of 2021, we expect revenue in the range of $1.225 billion-$1.275 billion. Adjusted net income in the range of $311 million-$334 million. Diluted shares in the range of 266.2 million-266.7 million. For the full year, the range for revenue will be $4.988 billion-$5.038 billion. Adjusted net income in the range of $1.312 billion-$1.335 billion. Diluted shares in the range of 266.9 million-267.4 million.
For the full year, we expect cash from operating activities to be in the range of $1.365 billion-$1.385 billion. Now I'll turn it over back to Bill for final comments.
Bill, are you there? You might be muted.
Thanks, Patrick. We are proud of the progress we've made this year. All of our businesses are gaining momentum, capitalizing on opportunities, and continuously improving. Organic growth was up 8.2%, and we expect around 5.5% for the full year. Hopefully, we can surprise you positively. Alternative assets under administration increased another $80 billion in Q3, for a total increase of $480 billion since the first quarter of 2020. We now have $2.2 trillion in assets under administration, and we are hundreds of billions ahead of our next competitor. Our EBITDA margins were up 230 basis points, and we are operating at our highest margins since the large acquisitions we made in 2018. We have a number of strong leaders and an abundance of opportunity, which we will showcase on November 10, Virtual Analyst Day.
Please see our events on our investor relations webpage to register and reach out to Justine for additional information. I'll now open it for questions.
The floor is now open for your questions. To ask a question, simply press star then the number one on your telephone keypad. We do ask to please limit to one question and one follow-up question. Thank you. Your first question comes from Surinder Thind of Jefferies.
Congratulations on the quarter, gentlemen. My first question is related to just the margin profile. There was a significant increase in the margins quarter over quarter, and then we had a similar increase last quarter. On the call, you talked a little bit about automation being one of the drivers. Is there any additional color that you can provide in terms of what might be a normalized level? When I look at the gross margins for your software services-enabled business, it seems that's where you're realizing most of the savings.
I'll give a little crack, and then Rahul and Patrick, you guys can chime in. You know, since the pandemic, you know, we're not leasing near as much space as we did in the end of 2020. I believe that will continue into 2022. We also have had, you know, less aggressive hiring than we have had in the past. Not that we aren't hiring, we are. We have probably had some pickup because of the number of people we had versus what we had expected. I think those are two big things. I think that, you know, our pricing discipline has helped us, and I believe it will continue. Rahul?
Bill, I agree with all of that. I think the things that I would add are we've also had an opportunity to spend a fair amount of energy on R&D. You know, Bill talked about machine learning and some of the other things we're doing, and that has resulted in productivity, right? We expect those productivity gains to continue.
Just to clarify, is the current level of margins that you're generating in the neighborhood of what we should expect on a go-forward basis, subject to any kind of seasonality?
I think that's right. I mean, again, right, it's you know, we've always been around 40%, and I think the latest print's 40.6%. You know, I would say it's gonna be somewhere between 40% and 44%, you know. It will fluctuate based on investments we make. You know, we tend not to be particularly aggressive about capitalizing software and stuff like that. I think we will continue to not be particularly aggressive on that. You know, I would think that our margins will depend on you know, some of the ability, which we have proven that we can close big deals, but we have proven that we can get them live.
you know, the difference between getting them live in, say, the third quarter and getting them live in the fourth quarter, you know, can often impact margin, you know, in the 10-20 basis point range.
That's helpful. As my follow-up, Bill, in terms of just the capital allocation strategy now that you're kind of below the 3 x leverage ratio, you talked about having additional flexibility. If we were to translate that into practically, what does that mean? Is that you're gonna primarily now focus on share repurchases at this point, or is there, you know, you're willing to take leverage down further? Is there kind of a level that you're not willing to go below when it comes to leverage? Just any color you can provide there, in terms of while you wait for the right acquisition.
Yeah. You know, Surinder, if you look at what we expect in cash flow, which is, you know, around $1.35 billion, I think, and I think the share counts Patrick quoted were 266 million-267 million. You know, you're talking about $5 a share in cash. You know, obviously on a finance basis, buying back shares is a lot better than paying off 2% debt. Now, at the same time, you know, we would like to deploy that $4 billion we have in 2% debt to faster-growing assets and obviously with better margins. You know, we're constantly on the lookout to try to do that.
You know, I would tell you that primarily our outlook right now is that we have a lot of faith in our development teams, but we have a lot of excitement around DomaniRx. You know, we think that things like GoCentral and other things that we are bringing out are indicative of our development capability. I would say that we will continue to drive cash towards those things. I think, you know, on the surface, we would probably be a little more aggressive in stock buybacks than we would be in debt repayment.
That's helpful. Thank you, Bill.
Your next question comes from Michael Young of Truist Securities.
Hey, thanks for taking the question. Wanted to ask kind of a follow-up on the margin profile question, and just think about it in the context of some of the macro drivers, mainly inflation. You know, net-net, does that, you know, kinda help you guys on the pricing side and being able to push pricing higher, more so than it impacts on the cost side? Any thoughts there would be helpful.
Hey, I think that's a great question. I think that, you know, obviously in inflationary times and, you know, all of your organizations are in similar issues with the increasing wages, which, you know, I hope to pay our people more, and I know that our clients like to have continuity with the talented people that we have on their accounts. So I think they also understand that there will have to be some revenue adjustments to them, some price increases. So you know, net-net, I think you're right. We might be able to get, you know, 50 basis points, maybe 100 basis points more on the revenue side than on the expense side.
I wouldn't say it's gonna be. I mean, if inflation goes wild, then that's a lot different. If inflation stays 2%, 3%, 4%, you know, then I think it will be, you know, could be a little bit of a tailwind, but it's not gonna be massive.
Okay, that's helpful. Then maybe just a second on kind of general sales pipeline, you know, as we're kinda getting back to normal, maybe post-pandemic, more, you know, in-person sales activity, et cetera. You know, are you seeing, you know, strength or opportunities to land kinda larger deals or any update there just kind of on pipeline and progress there?
Yeah, I believe we are. We're also engaging at higher and higher levels in organizations. We have a number of very successful list outs that we have done that we are going to turn into a pitch book on how we could maybe take some of your people as well as these accounting processes and reporting processes, risk processes, compliance processes and other things that we do exceptionally well and try to be able to really streamline these large financial institutions' middle and back offices. You know, obviously we have front to back, so we can do trading and compliance and risk and ESG and other things.
You know, we're pretty optimistic about our opportunity to continue to go upscale.
Your next question comes from Andrew Schmidt of Citi.
Hey, guys. Thanks for taking my questions and congrats on a good quarter here. First I just wanna dig into the third quarter organic revenue growth performance. Really nice to see the acceleration in growth. Could you talk about just the factors that drove that acceleration from the second quarter to the third quarter, Patrick? I know you mentioned strength in a few products, but if we could dig into that a little bit more, that'd be helpful. Then, based on the momentum you have in the third quarter, how you're thinking about the fourth quarter set up from an organic growth perspective based on those factors. Because it does seem like you have some pretty good momentum here. Just curious to get your thoughts around third quarter and then, how those factors relate to the fourth quarter performance. Thanks.
Well, again, you know, we do believe we have some momentum and, you know, again, as we said in our remarks as well as in our press release, you know, our software businesses, Advent in particular and our fund administration businesses as well as our Intralinks businesses have been particularly strong. We would expect all three of those to continue that strong pattern. I think that, you know, again, as we add, you know, the tens of billions of dollars to our AUA, you know, those revenues start to flow into our financial statements, and obviously that's some tailwind as well. Rahul, could you add to that?
No, I think, you know, I'd echo all of that. I'd also say that, you know, some of what we've done in the last 18 months or so is really fostered this collaboration within SS&C, where our products and services are much more integrated and our teams are much more integrated when they go talk to large asset managers or large banks or, you know, whatever prospects they might have. That's resulted in the opportunities that we have in front of us, you know, have larger ticket sizes, and sometimes they take a little longer to sell, but if you have enough of them, you know, that's pretty additive to the revenue process. We think that that, you know, helps us drive sustainable growth.
Got it. That's helpful. Not to front-run the Q&A, but it does seem like you know the comments on the margin front are pretty constructive in terms of your runway there based on both scale and the efficiency initiatives. On the top line, it seems like you know based on your comments, Rahul, that you have pretty good visibility, or I should say better visibility based on some of the investments you've made. Is you know providing an intermediate or a longer-term outlook based on those factors something you might consider just to you know help people think about the longer-term algorithm for the business? Thanks.
Yeah. I believe that, you know, we're constantly studying how we deliver information to all of you. You know, I think over the next quarter or two, we will start being a little more granular, and try to give you a little bit longer viewpoint of where we think things are going to be. I think that might be pretty well-received by the analyst and investing community.
Got it. Thank you very much, Bill. Appreciate it, guys.
Thanks.
Your next question comes from Peter Heckmann of D.A. Davidson.
Hey, good afternoon. Just wanted to follow up on fund administration. The company continues to gain share. Can you talk a little bit about where you're gaining share and how you're gaining share? Is it primarily from the smaller and mid-tier fund administrators or is there a mix of funds outsourcing for the first time? And what other dynamics should we be thinking about? I know there's some transition going on, I think, the domicile of Malta. Don't know if that's gonna require any changes in your business. Really, how does SS&C continue to win new contracts and continue to gather AUA?
Well, you know, I believe we're somewhat by far the most innovative fund administrator in the world. You know, we use our own software in our fund administration business, as do 40 other fund administrators. You know, we're always on a current release, and we're always pushing the envelope. The kinds of products like GoCentral, you know, we will be the first to adopt and the first to demonstrate and it will create excitement. Then, you know, often, you know, larger financial institutions have more difficulty, you know, installing releases in large scale systems. Sometimes they get behind on a few releases and they don't do the training like we do the training. You know, there's a whole series of things that we do, you know.
We have a very strong sales force, very capable. Increasingly our marketing is more targeted and our audience is more interested because of the breadth and depth of what we deliver. Do you add to that, Rahul?
Bill, that covers a lot of ground. I think maybe a couple other things. You know, on some of the types of things that we're seeing that are additive are new funds for sure, but also we particularly in the private markets business with private equity and real estate, you know, we've said now for several quarters, if not years, that the larger funds are embracing outsourcing. They just happen to be doing it at their own pace. As Bill just pointed out, as we get bigger and we make more investments, and we get, you know, more recognized out in the marketplace, that pace of change for them and the rate at which they're able to embrace our services is just accelerating. I think we're seeing acceptance, greater acceptance into larger players.
We continue to be very, very strong in the startups. Then we have a large, and prestigious client base that continues to raise assets and add new funds, and all of those things work together.
Okay, maybe just as a follow-up, has there been much change in pricing on a net basis? I mean, you would think as the more illiquid assets and the more complex assets might help raise the overall, but can you comment on how pricing has trended the last couple of years?
Pricing has been pretty stable. The thing that changes the baseline is we have more products and services to sell into any individual manager that we're speaking with. Overall deal size is larger, but the prices for, you know, kind of the same kinds of services is pretty comparable to what it was.
Okay, I appreciate it.
Your next question comes from Mayank Tandon of Needham & Company.
Thank you. Good evening. Bill, just given your comments around demand, and it sounds like decision-making also is improving. I was just curious, as you look out into 2022 and beyond, and maybe you'll talk about this at the Analyst Day, but just wondering, is the trend line growth for SS&C potentially better? What I mean by that is, I think in the past you've talked about, say, mid-single digit organic growth and then supplement that with M&A, but obviously you're growing a little bit faster right now. Is that sustainable or do you think growth reverts back to trend as you look out a little bit longer term?
Well, Mayank, we like the current trends, you know. Going back to previous seasons doesn't enthrall us. But, you know, as I said before, you know, when we deployed $8.4 billion in capital in 2018, you know, we got something like, you know, $2.9 billion in revenue and, you know, probably close to $1 billion in EBITDA. You know, if you try to do that in 2021, you know, who knows how much you would have to pay. We feel pretty good about when we gathered assets and the discipline that we have shown. Again, trying to, you know...
We still like to make money, you know, and we want everybody to, you know, to also understand that we're good citizens in all of our communities, and we pay well and all those things. But you know, our earnings are, you know, $1.33, $1.64, you know, $1.94 to something like $2.92, $3.83, and last year we did $4.30, and now we're saying we're gonna do, you know, somewhere around very close to $5. I think, you know, that focus is gonna stay the same. You know, I think our opportunity to grow faster is because of, you know, the breadth and depth of what we're offering.
The size of our current client base, you know, in particular, you know, it's the largest hedge funds, you know, the biggest banks, the biggest mutual fund companies, the most complex issues. You know, as I say, you know, if you wanna double your capacity in a server, you pull out one wire and stick in another wire. You wanna do derivative mortgage-backed securities on a retrospective or prospective basis, you better get deep into an accounting book, right? I think the complexity of the world, the complexity investing world, the drive for increasing information across the number of different analytics isn't gonna change. All of you are insatiable. All we have to do is make sure that what we deliver to you is stuff that you want.
I think as long as we do that and keep our, you know, our size and our strength and our expertise, I think the future does look bright for us.
Right. There seems to be plenty of runway, no question. Bill, as a quick follow-up on the health, I don't think I caught anything in terms of an update on the health business. Any updates on that in terms of positioning, competition, how that's faring, and maybe your longer-term thoughts on how core that is to your business versus maybe, I know you've talked about it in the past, potentially looking at it as part of the core, but just curious on what the latest is on the health side.
Well, I mean, we announced DomaniRx, I think, last quarter and, you know, that's capitalized with $1 billion and, you know, PBM is a pretty hot area, pharmacy benefit management, and in particular the capabilities of your technology, you know. We have a really bright team that are building out our new platform for DomaniRx. You know, we have obviously some pretty sophisticated partners with us, with Anthem and Humana. We expect others to convene with us, large scale, sophisticated healthcare providers and healthcare plans. We believe that it is a very big opportunity for us. You know, how you ultimately monetize that, Mayank, I think is still, you know, in the formative stages.
You know, we're now, you know, our nose to the grindstone and getting the product done and getting excitement, adding new customers. I think the healthcare business will perform well over the next several years.
Got it. That's helpful. Thank you so much.
Your next question comes from Jackson Ader of JPMorgan.
Great. Thanks for taking my questions, guys. The first one, State Street bought Brown Brothers, or the accounting and fund administration piece. I was just curious whether, you know, you had any comments on that. That seems like it would be right up your alley. You know, SS&C's alley, I should say. $3.5 billion wouldn't have topped your former largest deal. I'm just curious, your thoughts on the deal and whether you guys were also interested.
We would have been. You know, I think that was maybe baked already. You know, both of them are good clients, and we wish them well. Hopefully, there's another large financial institution that wants to get out of the fund administration business. They hopefully create a little bit more of an auction.
Yep. Okay. Understood. Bill, I think you mentioned that one of the things that helps margins is big go lives that happen to fall into a particular quarter. Was there anything in this third quarter that maybe pulled forward from the fourth quarter that would explain the organic revenue growth decel as we look out to 4Q?
Well, you know, I think, you know, again, we wanna make sure we don't get ahead of ourselves, we don't get over our skis, and you know, if there's gonna be a surprise, we prefer it to be positive. You know, we have been circumspect on how aggressive to be on guidance. I think it has, you know, at least over the last few quarters, has served us well. You know, I think as our sales and marketing organizations get increasingly sophisticated, our ability to really you know, have a higher growth rates and feel very comfortable about hitting those. I think we'll be, we'll be emerging for you.
I think that, you know, right now we have pipeline that's bigger than we've ever had. You know, pipeline's nice, but that doesn't count for revenue. You gotta close that pipeline. We have a really strong sales force, and we're pretty excited about what we can do.
All right. Thank you.
Okay, your next question comes from James Faucette of Morgan Stanley.
Hey, this is Jonathan on for James. Thanks for taking our questions. There's been a flurry of capital markets activity around higher growth assets in the investment management solution space. With that in mind, I think you touched on this earlier, how are you thinking about your acquisition strategy around growth-oriented assets? You know, what are you seeing in the market? What types of assets are you looking for?
Less expensive ones than are in the market right now. You know, it when you start looking at 10x and 12x revenue, it becomes, you know, the math, it becomes pretty tough. Particularly when you have as talented development teams as we have. You know, the trade-off is, you know, we don't really want to have the elapsed time, you know, and risk of developing software if we could buy some of that functionality at, you know, only a moderately ridiculous price. But when it's a completely ridiculous price, then we get a little more circumspect. I think, you know, we like the wealth management sector. We like RegTech. We think InsurTech looks pretty good. You know, we will almost always be in the bidding for fund administration businesses.
Those things, and we also think that we have, you know, a growing and strong presence in Asia that we would like to buttress as well.
Thanks for that, Bill. You know, you mentioned development teams and the skill sets that you have there. On the topic of hiring, are you seeing any headwinds as it relates to finding and hiring that talent for those development teams, given the constrained talent environment?
Yes. What we have figured out is to pay people more.
Your next question comes from Chris Donat of Piper Sandler.
Thanks for taking my questions. One, just to ask another one on the category of fourth quarter guidance and revenue, just because the revenue guidance is down 3% or up a range of down 3% to up 1% from the third quarter. Just can you remind us what the swing factors can be in your revenue besides the timing of onboarding, you know, how much like services work you can have or other factors that can affect the revenue recognition quarter to quarter, especially with your 96.5% revenue retention level, you're in a pretty predictable world.
Well, I think that's a good question too. I would say that the two things that come to my mind is, you know, the fourth quarter is usually our biggest licensed revenue quarter. In general, licenses are a little more difficult to predict than recurring revenue increases. The second thing is that the fourth quarter is not a particularly strong quarter for adjacent services in our fund administration businesses, you know, like tax work and other things like financial statements. Almost all of that work comes in the first quarter and second quarter. Those are a couple of things, and Rahul probably has some other comment.
I think those are. You hit the big ones. It's the seasonality of the special services that we do in fund administration. It tends to be a bigger license quarter. I think sequentially, the difference between the midpoint of our guidance for Q4 and our actual for Q3 is something like $15 million, right? We're not really that far off, and I think well ahead of anything we've said for Q4 during the course of the year.
Okay, got it. Then, Rahul, I just want to make sure I heard you correctly. I thought you said you had a $30 billion hedge fund client that was running Axys for 20 years. Is that right? How many other clients are out there running Advent's legacy Axys software, or did I hear it wrong?
No, you heard it right. You know, that's a great question, right? There exists within that client base opportunities like that. I think, you know, that opportunity resulted in a sort of a 10x revenue pickup, right? Lots of value to that particular customer. We have others where, you know, some of these products that have been around for a while are very functional, and people really like them. Invariably, they start investing in things or have new requirements, and they need to upgrade, and we've got a natural upgrade path. When that happens, it can be pretty positive for them and for us from a revenue standpoint.
Okay. Understood. Thanks very much.
Your next question comes from Patrick O'Shaughnessy of Raymond James.
Hey, good evening. This topic was kind of touched on earlier, but there's been a couple of recent IPOs of firms that compete against SS&C in certain areas, and those competitors are pitched as cloud-native or they're SaaS-based. Curious about how comfortable you are with your competitive positioning, particularly on the software side of the business?
Yeah, that's a great question, Patrick. I think that we are very competitive on the software side. In particular, to just name a few products would be our Singularity platform, our Geneva platform, our Eze Eclipse platform, our Intralinks platforms, Precision LM. Those are all best in class. And I think, relative to, say, Enfusion or Clearwater, I think this quarter we added $110 million in revenue, which is about half of Clearwater's annual revenue. And I think it's more than maybe double what Enfusion does. Competitively, I think they have some good technologists at both of those companies.
You know, when they get into bigger and bigger companies, they're gonna find that, you know, being able to do syndicated bank loans, interest rate derivatives, compliance and risk, and other functional requirements, I think is going to really start to tip the scale towards us. Plus, we have a new product called Aloha that has IBOR and all kinds of other neat features in it. We're, you know, we're pretty proud of our development teams, and we're looking to step on the gas on the sales and marketing.
Got it. That's helpful. Thank you. You guys have obviously been pretty aggressive on the share repurchase front over the last several quarters. Like, on a year-over-year basis, your fully diluted share count is essentially flat. Is the impact of the repurchases has been offset by a lot of dilution, stock-based compensation-related dilution. Obviously, there's variables at play, you know, in terms of your capital allocation opportunities and the stock share price. At a high level, would you expect to start making a bigger dent in your diluted share count going forward?
Well, you know, again, I think the answer to that is yes. You know, although I think that our. You know, one of the stated goals of our board and our comp committee is to make sure we have adequate, you know, equity awards for our staff. You know, that's a balancing act. You know, I think that, you know, it's, you know, we go from a few years back having $250 million in authorization, then a $750 million in authorization, now we have $1 billion. You know, and I think that, yeah, we would like to make a bigger dent in that.
I think we will continue to be quite aggressive when it comes to buying back stock. You know, we're just way bigger, Patrick. You know, we're $5 billion in revenue now. I mean, three years ago, we were, you know, $3 billion in revenue, so $3.5 billion. Things take time.
Gotcha. Appreciate it. Thank you.
Your next question comes from Jackson Ader of JP Morgan.
Thanks. Jump back in. Patrick, could we get the organic revenue growth by segment, you know, fund administration as Intralinks, et cetera?
Yeah, sure. In Q3?
Yes.
The fund administration business was up, I think, 14.8% organically in the quarter. Intralinks was up 23.5% in the quarter. Our DST Financial Services segment was up 3.7%. Our core software business plus, you know, some other of the smaller products, but mostly Advent and our institutional businesses in this segment was up 6.9% in the quarter.
Okay, awesome. Just quick follow-up on that Intralinks number. How much of that was driven by you know M&A activity in the market that might be outside of your control? Like more market factors versus like SS&C's own execution.
Hey, we're really proud of our team's execution. They're gaining market share, and I believe you know, they're innovating, and we're very pleased with all the aspects of that team.
Okay. All right. Thank you very much.
At this time, there are no further questions. I will now turn the floor back over to Bill Stone for any additional or closing remarks.
Again, thanks everybody for being on this call, and we look forward to talking to you after the fourth quarter. You know, please stay safe and we'll see you next quarter. Thanks a lot.
Ladies and gentlemen, this concludes today's event. You may now disconnect. Thank you for your participation.