Operator
Good afternoon. My name is John and I will be your conference operator today. At this time, I would like to welcome everyone to the SSNC Technologies 4th Quarter and Full Year 2024 Earnings Call. All lines have been placed in mute to prevent background noise. After the speaker's remarks, there will be a Q&A session. If you would like to ask a question during that time, simply press star followed by 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 Chand Madaka of Investor Relations. You may now begin your conference.
Welcome and thank you for joining us at our Q4 and Full Year 2024 Earnings Call. I'm Chand Madaka, Investor Relations at SS&C Technologies. With me today is Bill Stone, Chairman and Chief Executive Officer, Rahul Kanwar, President and Chief Operating Officer, and Brian Schell, our Chief Financial Officer. Before we get started, we need to review the Safe Harbor Statement. Please note that various remarks we make today about future expectations, plans, and prospects, including the financial outlook we provide, constitute forward-looking statements for 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 factors 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, February 6, 2025. While the company may elect to update these forward-looking statements, it specifically disclaims any obligation to do so. During today's call, we will be referring to certain non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to comparable GAAP financial measures is included in today's earnings release, which is located in the Investor Relations website, Investor Relations section of our website at ssctech.com. I will now turn over the call to Bill.
Thanks, Sean, and welcome, everyone. I want to welcome Sean to the investor relations team as she steps in while my daughter, Justine, is on maternity leave, who I'm sure she's listening in, probably maybe with my grandson, who's now 10 days old. Anyway, our fourth quarter results were strong as we set several quarterly records, including a record for adjusted revenue of $1.531 million, up 8.4%. Our earnings also set quarterly records with adjusted diluted earnings per share of $1.58, up 25.4%, and adjusted consolidated EBITDA of 599.1 million, up 6.5%. Our quarterly adjusted consolidated EBITDA margin was 39.1 our fourth quarter adjusted organic revenue growth was seven percent performance was driven by continued strength in globeop our wealth and investment technology business and our global investor distribution systems systems businesses services businesses globeop saw new business growth would experience strength in the wealth focused software like Black Diamond and Gids outperform due to large client volumes and continued growth in its non-transfer agency services. Additionally, the health business finished the quarter above expectations with two deals that were pushed from Q3 into Q4. Our recurring revenue growth rate for financial services was 7.4% for Q4 and 7.2% for full year 2024, which includes all software-enabled services and maintenance revenue. Fourth quarter cash from operating activities was $486.6 million, up 25.3% from Q423. Our cash flow conversion percentage was 101%, and we bought back 4.9 million shares for $365 million at an average price of $74.46 takes per share. We continue to believe share repurchases are the best use of our capital absent high-quality accretive acquisition. In December, we announced an initial strategic lift-out agreement with Insignia Financial to deliver superannuation member administrative services in Australia. We're in the final contract stages with Insignia and expect a lift out of team members in Australia to occur early in the second half of this year. We are bullish about our opportunity in Australia where we have a 5% market share of the 22 million superannuation fund accounts. I'll now turn it over to Rahul to discuss the quarter in more detail.
Thanks Bill. We had another strong quarter with organic revenue growth of 7% reflecting the underlying strength of our business turning to some business highlights wealth and investment technologies grew 6.8 percent for the quarter the black diamond wealth platform is growing in the mid-teens in the investment management industry Genesis had a year of milestones we modernized accounting reconciliation and trading capabilities and merged development efforts for Aloha into the develop into the Genesis development team our fund administration business, Globop, saw many new business wins in 2024, contributing to organic growth of 8%. Batea contributed an additional $21 million in revenue for the year. In 2025, we see continued opportunity driven by retail alternatives and private markets industry growth. Q4 was also a record bookings and revenue quarter for interlinks due to solid deal count trends, greater deal length, and technological advancements in our offering our global investor and distribution solutions business had another strong quarter and brought in greater revenue at our largest clients in addition to new business wins I'll now turn it over to Brian to run through the financials thanks Rahul and good day everyone as noted in our press release our Q4 24 gap results reflect revenues of 1.53 billion dollars net income of 248 million dollars and diluted earnings per share of 98 cents.
Our adjusted non-GAAP results include record revenues of $1.531 billion, an increase of 8.4% over Q423, and record adjusted diluted EPS of $1.58, a 25.4% increase over Q423. The adjusted revenue increase of $118 million over Q423 was primarily driven by incremental revenue contributions from the WIT, Lobot, GITS, and Interlinked businesses. The acquisition of Betea contributed $17 million, and foreign exchange had a favorable impact of approximately $2 million. As a result, adjusted organic revenue growth on a constant currency basis was 7%. Our core expenses increased 8.3%, or $72 million, which excludes acquisitions and on a constant currency basis. The primary driver of the increased expenses was increased incentive compensation, commissions, and wages. Adjusted consolidated EBITDA was $599 million, or 39.1% of adjusted revenue, an increase of $37 million, or 6.5% from Q423. On a full-year basis, adjusted consolidated EBITDA was $2.281 billion, an increase of $173 million, or 8.2%. This resulted in a margin of 38.8%, an improvement of 50 basis points compared to last year. Net interest expense for the fourth quarter of 2024 was $113 million, a decrease of $6 million from Q4-23. Adjusted net income was $402 million, up 26.2%, and adjustability EPS was $1.58, the increase of 25.4%. An increase in the average share price drove the diluted share count up to $254.5 million from $254.1 million at Q324. As Bill mentioned several quarters ago, we continue to strategically evaluate our tax rate, which has been at 26% for several years. We looked at what our adjusted tax rate represents and believe that it is appropriate to make changes to the way we have computed the rate. The revised effective rate more closely aligns with how we evaluate our financial performance and is more consistent with our peers. As a result, we've revised our full year 2024 non-GAAP effective rate to 23.1%. Our new effective tax rates are attributable to increased deductions related to equity awards, implementation of prudent tax planning strategies domestically and internationally, and the mix of earnings in our business jurisdictions. This change increases our reported adjusted EPS by approximately 21 cents in 2024. We will continue pursuing appropriate tax strategies to realize additional benefits going forward. SSSC ended the fourth quarter with $567.1 million in cash and cash equivalents and $7 billion in gross debt. SSSC's net debt, as defined in our credit agreement, which excludes cash and cash equivalents of $155 million held at Domani RX, was $6.6 billion. Our last 12 months consolidated EBITDA used for covenant compliance was $2.3 billion. Based on net debt of approximately $6.6 billion, our total leverage ratio was 2.89 times. As we look forward to the first quarter and full year 2025 with respect to guidance, note that we will continue to focus on client service and assume that retention rates will remain in the range of our most recent results. We will continue to manage our expenses with a cost-discipline approach by controlling aligning variable expenses to ensure efficiency, increasing productivity to improve our operating margins, leverage our scale and create capacity, and effectively investing in the business through marketing, sales, and R&D to take advantage of future revenue and earnings growth opportunities. Specifically, we have assumed foreign currency and interest rates to remain at current levels. we anticipate our full year adjusted tax rate to be 23 to 25 percent and as we previously indicated we will continue to evaluate our tax strategy going forward as we release our quarterly results in 2025 we will display 2024 adjusted eps results using the lower adjusted tax rate for the sake of comparability capital expenditures to be 4.1 to 4.5 percent of revenues which is consistent with 2024 guidance and actual results and a stronger weighting to share with purchases versus debt reduction subject to changes in market conditions or financing needs for the first quarter of 25 we expect revenue to be in the range of 1.474 to 1.514 billion dollars and four percent organic revenue growth at the midpoint adjust the net income in the range of 348 to 364 million dollars interest expense excluding amortization to deferred financing costs and original issue discount in the range of 104 to 106 million dollars diluted shares in the range of 254.6 to 255.6 million and adjusted diluted eps in the range of a dollar 37 to a dollar 43. for the full year 2025 we expect revenue to be in the range of 6.085 to 6.245 billion dollars and five percent organic revenue growth at the midpoint. Adjusted debt income in the range of $1.431 to $1.531 billion. Diluted shares in the range of $253.7 to $256.7 million. Adjusted diluted EPS in the range of $5.64 to $5.96. And cash from operating activities to be in the range of $1.448 to $1.548 billion dollars. And now, back to Bill.
And we close out a strong 2024 with a record fourth quarter. Record revenues, record earnings, record cash flows, and a record amount of share repurchases. We have a lot of momentum carrying on into 2025, and we're excited to execute on our plans for investment and growth to deliver long-term shareholders.
Operator
Ladies and gentlemen, we will now begin our question and answer session. If you have dialed in and would like to ask a question, Again, as a reminder, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. We kindly ask everyone to limit themselves to one question and one follow-up. We will pause for a moment to compile the Q&A roster. Thank you. Your first question comes from the line of Jeff Schmidt with William Blair. Please go ahead.
Hi, good afternoon. In the healthcare business, clearly the tailwind is gone. but could you provide us with more details on client wins in the quarter, and how does the pipeline look for 25?
Hopefully you meant headwinds are gone.
That's right, headwind. That's right. I'm sorry.
Good. I hate to get confused this early, but we won a couple of big license deals in Q4 that really improved Q4 revenues, and we have a lot of momentum there you know it's still it's you know it's big healthcare companies and you know they they can tend to be very you know very deliberate in their in their purchases but you know we have some great technology and and we have some great great pipelines and and we have some huge healthcare companies that we're making progress with so I think that we have a lot of opportunity You know, it is difficult in healthcare to be able to really project on a 90-day basis on these enormous, you know, insurance and healthcare companies. So, you know, we try to be as prudent and not too conservative, and we try not to stick our neck out too far. So we're optimistic, and we're very optimistic on a longer-term basis.
And then could you provide us with an update on the cross-selling efforts with Bataea, and how big do you think that revenue opportunity could be?
I think we currently have 75 opportunities, you know, active opportunities that we have with our current clients. I believe we have already closed somewhere 15 20 of them or 15 or 20 others and so I think it could be a pretty large opportunity I have read some stuff in the industry that says class action lawsuits doubled in 2024 so that would tend to be opportunity for us and you know we're looking at at the business, you know, to grow, you know, high single to low double digits. And so it should, you know, in 2025, be upwards $100 million, $110 million in revenue.
Operator
Your next question comes from the line of Alexei Gogol of J.T. Morgan. Please go ahead.
Hello, everyone. Hi, Bill. Three months ago, when you provided us with the fourth quarter guidance, expectations for organic growth at the midpoint was below 3%, and you delivered around 7% organic. It sounds like, based on what you said in the prepared remarks, there was some deals that slipped from 3Q into 4Q, but I was wondering if there were any other surprises in the quarter, maybe better demand environment, or perhaps some deals that closed earlier than expected?
Hi, Alexi. I think the business, a number of the businesses performed very well, and I think that that the close rates on the opportunities we had was maybe a little bit better than we expected and you know as we said the the health care business also brought in a couple of pretty large license deals so I think overall the whole business was uh was a little stronger than we expected and and uh you know when things start hitting on on on a number of cylinders the business looks pretty strong.
Perfect. Thank you, Bill. And also, kind of directionally, have you had a chance to maybe consider within the team with Raul and with the rest of the team around the recent decision by the European Commission to cut the corporate reporting requirements by almost a quarter. Do you view regulation or deregulation as a risk to your regulatory business or filing business? And what sort of long-term view do you have for where the industry is heading?
You know, Alexei, I think there's puts and takes on all of this kind of stuff. And the less regulation there are of our clients, the faster they grow.
The faster they grow, the better for us you know do we make some money by helping them with regulation of course we do but but we would much prefer them to grow than them to be over regulated makes a lot of sense thank you bill your next question comes from the line of dan perlin with rbc capital markets please go ahead thanks uh good evening correct congrats on a good quarter and uh and obviously on your your grandchild bill um i wanted to spend a moment if i could just um you know in terms of thinking through the investment cycle you know you've invested a lot in products and solutions over the past 12 to 18 months um and that's obviously starting to play out in the organic growth i'm
trying to understand kind of the building blocks that you have for the five percent organic growth at the midpoint for 25 um i know healthcare turned positive and like you said there's some lumpiness to the license deals but um it seems like it's going to be just a lot more sustainable at those levels and i just want to uh kind of get your thoughts on on what your uh your view is there and maybe the key key components to that yeah i mean dan you've been around ssnt for a while and you understand that you know when when we are heavily weighted towards licenses then it's pretty lumpy you know when we are bringing in you know large-scale services business it tends to grow as more and more of their accounts more and more of their portfolios you know more and more of the services we provide start going live so we can have a client that's going to pay us 20 million a year and it doesn't ramp up for you know two three four quarters you know it might start at two three million a quarter and six eight million and then 10 15 million and then gets 20 and so you know it's that kind of a business it's just a you know we have increasingly larger footprint around the world and you know five six years ago you know we were spending 200 to 250 million on sales and marketing and now we're spending 550 to 600 million on sales marketing
we we think some of it works you know sometimes we wonder but we think some of it works yep totally totally seeing the results so one of the just quick thing if i could bill i've heard your The conferences also speak about, you know, the superannuation opportunity in Australia. You've got this lift out. Would you mind just maybe spending just a minute kind of level setting what you think of that market, how big it could be? I know you said you get 5% market share, so there's a huge opportunity. But I'm just not as familiar with who the major players are there and what that competitive dynamic is and therefore what your real opportunity is.
Yeah, again, you know, we've been in the Australian market for quite a while. And I think that the superannuation has been built based on some acquisitions that we've done, like IRIS, and then also about the capabilities that we've built out in our own development cycles. And, you know, they call superannuation the wall of money, you know, so I think it really is a pretty brilliant national program that Australia has put in. And it's something where, you know, we think we have the best technology, we think we have a really good team, we have some really great customers, you know, and those are the kinds of things that really are the ingredients of increased growth, increased client access to our technology, and increased profitability for us. Excellent.
Operator
Your next question comes from the line of Peter Heckman with DA Davidson. Please go ahead.
Hey, good afternoon, everyone. Sorry, someone poked their head in, so I hope someone hasn't already asked my question. But in Insignia Financial, can you talk about that deal a little bit, whether you've included anything in your 2025 guidance, and then if you could, maybe size it a little bit in terms of what you would be thinking about in terms of like an annual revenue contribution?
Well, you know, P, I don't know if we want to get, you know, quite as granular as an individual client's contribution, but it's a very large deal. It would be probably in the top 20 in our client base, and, you know, top 20 at SS&C is a pretty big fish in our book, but there's a lot of work to be done, you know, and we need to focus on that client satisfaction and giving them increased capabilities as they become an increasingly large money manager and retirement manager for a bunch of Australians. And that's what we're focused on. And, you know, they've been a really great prospect, and we've moved a very long way. And, you know, like I said, it should be a very significant client for us. And, you know, we're going to get most of the revenue from them in the second half of 25 as we you know we hope to get contracts finalized by the end of this quarter and and begin the entire implementation process in Q2 just in terms of this most recent package yet I hadn't got any ideas in terms of like sizing or price that would you characterize that is that relatively small tuck-in deal or or something a bit bigger it is a small tuck-in deal but but it also gives us a real capability that allows us to really leverage what we've done with TrustSuite and other things of the merging of some of the stuff with, you know, the intertrust acquisition and Black Diamond and other things where we have really had a focus and are getting quite...
Operator
Your next question comes from the line of Kevin McVeigh with UBS. Please go ahead.
Great. Thanks so much. And let me add my congratulations to you as well, Bill, So on your grandson, I guess if the midpoint of 2025 is 5%, what would be the low end of that organically and what would be the high end of that? And any kind of factors as to what gets to the low end as opposed to the high end?
You know, I think in general, the way we bookmark these things is, you know, roughly $80 million in revenue on either side of the number. So I think that $160 million is probably a reasonable range. I think, as Bill said earlier, what we feel good about is, you know, we have all of our businesses performing reasonably well, right? And so there's a lot of strength in that combined business. And as we're bringing solutions together across the company, we think that we have more sales opportunities, both for new clients as well as, you know, getting deeper with current client base. So there's a lot of positive, but really, to answer your question, the things that make us go a little bit towards the lower end of the range versus a little bit towards the higher end of the range really does come down to new sales, timing of implementations, and making sure we get those converted and live fast enough for them to make a meaningful difference during the course of the year. and a little bit organic things or macroeconomic things like deal volume and interlinks and, you know, fund flows in fund administration. But those are, generally speaking, not as important as the first two.
Super helpful. And then just real quick, obviously the healthcare business looks terrific. It sounds like that was some software sales. Is that a pretty good proxy?
Like is there any type of leading indicator that that leads to maybe larger contracts or if you think about 2020 ever you know going into 26 years that you've kind of independent that's probably mostly independent Kevin but I do think that what it what is going on in health care is is that you know that they're under pressure because the loss ratios in medical have have have gotten you know more expensive for them and you know that they're looking for ways in which to have uh lower operating expenses and and domani rx and a few other of our technologies are are quite good at being able to manage your expenses and and that's something where they're going to have to do it because you know the entire you know healthcare ecosystem is going to be you know probably turned a little bit upside down as this new administration starts to make changes to the medicare and medicaid systems and you know i don't think they're going to lower them lower the expenses but i do think they're going to focus on efficiency and effectiveness thanks a lot of sense congratulations on that just really terrific results as a reminder if you are dialed in and would like to ask a question please press star
Operator
one your next question comes from the line of andrew schmidt with cd please go ahead Hey, guys.
Thanks for taking my questions, and congrats on the organic growth here. It's great to see. Maybe just dig into Globop for a second. Nice to see the acceleration there. Maybe we could just unpack the drivers this quarter over the past few quarters across private markets, hedge funds, real assets, any call-outs in terms of the growth drivers, and obviously middle and back office where the opportunities are. Thanks, guys.
I think a lot of it is just a continuation of what we've seen the last couple of years. So private markets, private credit, real estate continues to be very strong for us. And in that space in particular, it's both opportunities with existing very large funds that are letting us in now and giving us more and more, as well as new funds that for the most part outsource on day one. And we still think there's a lot of new opportunity in that market. Our hedge fund business is also performing and performed really well in 2024, and that's a combination of new client wins, as well as we're now fortunate in the sense that we have some of the biggest names in the industry, and they have tended to attract almost a disproportionate share of the fund allocation. So our clients are getting bigger. That helps us. We're winning more, and we have a pretty broad opportunity across both hedge and private markets.
That's great, Carol. Appreciate that. And then maybe just two other questions, separate areas, I'll ask them up front. Just, you know, GlobeUp, how to think about the range of outcomes for 25 in terms of banking in. And then just separately, obviously, you know, automation continues to be a big opportunity for you guys. Just maybe give us an update in terms of where you're at in terms of automating key functions. And I know some of that is, you know, reinvesting in products, et cetera, but where we're at in terms of that initiative. Thanks a lot, guys. Really appreciate it.
Yeah, just building on what Rahul said, I mean, you know, we honestly believe that we're the best, you know, fund administrator in the world, both for hedge assets as well as, you know, private assets, whether it's equity or credit or others. You know, so having the expertise that we have and the clients that we have who are demanding, you know, which improves us, you know, when you play in the biggest games, you get better or you don't get to play in the biggest games anymore. So, you know, most of the large-scale, you know, macro hedge funds are our clients, and I believe we will continue to have them as our clients, and as Rahul said, as they get bigger, they get some real star portfolio managers, and those star portfolio managers sometimes spin out, and that helps us a lot. again you know that's why we always say that we much prefer that our clients grow than that they get over regulated you know we we are much more in really helping our clients you know access new markets you know have the range of what they want to invest in always at the broadest level if there are clients and and that there are no geographic limitations if you're a client of us. So we think those are very valuable to people. And I think that we have won a lot of business because we have invested very heavily in being able to deliver those capabilities.
Got it. Thanks so much, Bill. And then just on the automation side?
You know, that's primarily been driven by Blue Prism. I think we're up to, you know, about 1,550, uh you know what we call digital workers and you know that the savings for us are you know moving above 150 million towards 200 million dollars in in savings and you know another thing we've done if you look at us you know um i think about five six years ago we we spent you know like i said 200 250 million dollars on sales marketing now we spend you know 550 to 600 million on sales market. If you look at R&D, it's very similar, where we're spending way more than we did five and six years ago. And it's a little bit because we decided to, you know, rather than drive up our margins, we wanted to reinvest in the business and try to drive organic revenue growth. And you got to do that with new products, new services. And it's not without risk of its own. You know, not that we don't build great software and oftentimes we're successful in building great software and other times we're not quite as successful in building great software so you know it it's a um it's a difficult business and we focus on it and we think that's something that gives us competitive advantage and will continue to give us competitive advantage got it thanks so much bill as there are no further questions at this time that concludes the q a session for today I would now like to turn the call over to Bill Stone for closing remarks. Again, we really appreciate you all being on the call. And, you know, I knew I had to bring up my new grandson so you wouldn't pick on me. But I think we had good enough numbers that we didn't have to worry about that too much. I'm going to have to have another one soon. So anyway, I really appreciate you being on. And I think that, you know, it's always amazing when it's only Rahul and I that have to answer and Brian doesn't. That must mean he had really good numbers this quarter.
Operator
This concludes today's meeting. Thank you for your participation. You may now disconnect.
