SS&C Technologies Holdings Inc Q1 FY2026 Earnings Call

Good day and thank you for standing by. Welcome to the SSNC Technologies First Quarter 2026 earnings call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star R11 again. I would now like to hand the conference over to your speaker today, Justine Stone,

Head of Investor Relations. Welcome, and thank you for joining us for our Q1 2026 earnings call. I'm Justine Stone, Investor Relations for SSNC. 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 the 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 year 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, April 23rd, 2026. 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. I will now turn the call over to Bill.

Justine, and welcome, everyone. The first quarter of 2026 included a war in Iran, spiking oil prices, and other macro headwinds. Nevertheless, we delivered strong first quarter results, underscoring SS&C's resilience. Based on our performance and visibility today, we are raising 2026 guidance. We recently rang the NASDAQ closing bell to celebrate SS&C's 40-year anniversary and rely on every day. Our business is built on deep domain expertise, strong, trusted client relationships, and constant innovation guided by what we call our customer zero strategies. These strengths position us well as our industry enters the next phase of technology transfer driven by AI. Updating the name of our largest revenue line item to better reflect the deeply embedded technology framework, technology-enabled services encompasses our proprietary data streams, domain expertise, software, private cloud, data center infrastructure with ISO and the redundancy and multi-layered cybersecurity of our sophisticated clients. Adjusted revenue of $1,648,000,000, and adjusted diluted earnings per share of $1.69, a 14%. We delivered adjusted consolidated EBITDA of $651,000,000, up 10%, and an adjusted consolidated EBITDA margin of 39.5%. The dollar figures I just said are all Q1 records. Adjusted organic revenue growth was 5% with performance driven by GIDs, which grew 10.4%. Globop was grew 6.7%. Recent acquisitions are executing ahead of expectation, strengthening our global capabilities and expanding our addressable markets. Interlink grew 3.2% with positive leading indicators and an increasing adoption of its next-generation AI-enabled deal-center platform. The resilience of our business is highlighted by the $581 billion in assets under administration we have added to our fund administration business since Q1 of 2024. Across SSC, we are leveraging AI to enhance software development, increase our speed to market, accelerate implementations, improve customer experience, and drive efficiencies. These initiatives support both revenue opportunities and cost leverage over time. All of our teams are partnering closely with Blue Prism to scale our AI operations in a governed and secure manner. For the three months ended March 31, 2026, cash from operating activities was $300 million up 10% year over year. In Q1, we returned $233 million to shareholders, which included 2.3 million shares repurchased for $168 million at an average price of $7260 and $65 million in common stock dividends. Through share repurchases and our dividend policy, 98% of our allocated capital in Q1 was returned directly. At current levels, our conviction around share repurchases has strengthened, prioritizing repurchases absent high-quality accretive. We remain bullish on our opportunities and continue to be AI as a structural tailwind. Farms are deeply embedded in our client's day-to-day operation, serving as systems of record and execution. That That positioning makes SSNZ a natural partner as clients look to advance their A1 strategy.

We had a strong first quarter. Gids and Globok built on last year's sales performance with additional new logo wins and continued upsell and cross-sell activity. Across the business, disciplined attention to our clients is generating new opportunities. SSNZ's pipelines are robust, and as always, execution remains the priority. Our AI capabilities, including agents and workflow orchestration, are accelerating how services are delivered. Our customer zero strategy is working as intended. Internal adoption of agentic capabilities is driving product maturity, credibility, and faster time to market. Deep product expertise is the prerequisite for harnessing these tools, and we are well positioned. We serve the largest and most sophisticated firms in the world. And as their businesses grow more complex, our platforms grow with them. We sit at the center of their operating models with deeply embedded workflows. These workflows form the natural foundation for further innovation. As Bill mentioned, we've renamed our largest revenue line to technology-enabled services. Our clients are buying services such as NAB computations, tax returns, regulatory filings, investor interactions, risk calculations, and hundreds of others. These services are usually tied to contracts for services rather than software license agreements. Delivery requires deep domain knowledge, expertise operating complex workflows refined over decades, the networks we operate across counterparties, and secure, resilient infrastructure. We estimate that software, largely in the form of subscriptions, represents 11% of this category. With that, I'll turn it over to Brian to walk through the financials.

Thanks for holding. Good day, everyone. Unless noted otherwise, the quarterly comparisons are to Q1 2025. As disclosed in our press release, our Q1 2026 gap results reflect revenues of $1.647 billion, net income of $226 million, and diluted earnings per share of $0.91. Our adjusted non-gap results include revenues of $1.648 billion, an increase of 8.8%, and adjusted diluted EPS, of $1.69, a 14.2% increase. The adjusted revenue increase of $133 million was primarily driven by incremental revenue contributions from GIDS of $38 million, Globop of $29 million, and a favorable impact from foreign exchange of $22 million. As a result, adjusted organic revenue growth on a constant currency basis was 5%, and our core expenses increased 2.9%, or $27 million, which also excludes acquisition and impact of FX. Adjusted Consolidated EBITDA was a first quarter record of $651 million, reflecting an increase of $59 million, or 10%, and a margin of 39.5%, 40 basis point expansion. Netage expense for the first quarter of 26 was $105 million, flat year-over-year. Adjusted income was $418 million, up 11.1%. Our effective non-GAAP tax rate was 22.5% this quarter. Note for comparison purposes, we have recast the 2025 adjusted net income EPS to reflect the full year effective tax rate of 22%. Also note the Q1 diluted share count is down 247.6 million from 254.9 million year over year, primarily due to lower dilutive shares and continued impact of treasury share. Cash flow from operating activity growth of 10% was driven by growth and earnings. SSSC ended the first quarter with $421 million in cash and cash equivalents and $7.5 billion in gross debt. SSSC's net debt was $7.1 billion, and our last 12 months consolidated EBITDA was 2.5. Resulting net leverage ratio was 2.76 times. Forward to the second quarter and full year of 2026, with respect to guidance, we will continue to focus on client service and assume their retention rates will be in the range of our most recent results. We will continue to manage our business, support our long-term growth, and manage our expenses by controlling and aligning variable expenses, increasing productivity, and leveraging technology to improve our operating margins, and effectively investing in the business, especially with respect to R&D, sales, and marketing. Specifically, we have assumed short-term interest rates remain at current levels, an effective tax rate of approximately 22.5% on an adjusted basis. capital expenditures to be 4.4 to 4.8 percent of revenues and a stronger weighting to share repurchases versus debt reduction second quarter of 26 we expect revenue to be in the range of 1.64 to 1.68 billion dollars and 5.6 percent organic revenue growth at the midpoint adjusted net income in the range of 408 to 424 million dollars interest expense excluding amortization deferred financing costs and original issue discount and the range of $102 to $104 million and adjusted diluted EPS in the range of $1.64 to $1.70. For the full year of 2026, we increased our expectations to revenue to be in the range of $6.664 to $6.824 billion and 5.3% organic revenue growth in the midpoint. Adjusted net income in the range of adjusted net income in the range of $1.665 to $1.765 billion, adjusted dilute EPS in the range of $6.74 to $7.06, reflecting approximately 12% growth at the midpoint, and maintaining our targeted annual EBITDA expansion of 50 basis points with a goal of 40% margin in Q4. And now, back to Bill.

Thanks, Brian. Next week, SS&C will launch Blue Prism Work HQ, our agentic workflow orchestration platform designed to coordinate automation, AI agents, and human decision-making across enterprise workflows. Feedback from early adopters has been positive, and we're excited to share more at our launch event, which will be open to virtual attendees, and registration right now is over 2,000 people. It's also available at blueprism.com or by reaching out to Justine. Now open it up.

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please limit yourself to one question and one follow-up. One moment for questions. Our first question comes from Kevin McVeigh with UBS. You may proceed.

Great. Thanks so much, and really just exceptional results given the environment we're in. Bill, I mean, you beat on everything. I mean, would the results have been even stronger if not for the environment that we're in? I mean, I know the business is pretty predictable, but is there anything to kind of hold it back just given the environment?

Well, you know, you get hesitancy, Kevin, as you well know, right, when you have tariffs flying out at billions and billions and billions. And then you have war, you know, and then you have spiking oil prices, which, you know, generally is going to. So, you know, there's a lot of macro headwinds. But, you know, at the same time, you know, I think people need to have the technology to run their businesses. And, you know, we just had the GAIN conference, which is a big hedge fund conference in Cayman Islands. And we had a bunch of our clients there. and, you know, it was a spectacular event for us. You know, they were happy. They were investing in us and buying more services and products, and, you know, we're pretty bullish.

And the results speak to that. And then just maybe you remind us, because one question we get a lot is on the AUA growth, just in different market environments. It obviously continues to grow. And is that just client balances increasing or just the way they're running their asset allocation? It's just, again, just been another terrific part of the story.

As we said, we grew AUA $581 billion in 2024. I don't know where $581 billion would put you in the league tables, but probably pretty high. And that's just our growth. Appreciation, which obviously the NASDAQ and the S&P 500 hit new records, I think, this past week. And the equity markets have been pretty robust. You know, we also have almost all of the large global macro funds, and they have been getting increasing allocations, large-scale pension funds and insurance companies that are investing in hedge funds for the past couple quarters.

Thank you. Our next question comes from Dan Perlin with RBC Capital Markets. You may proceed.

Thanks, and good evening, everyone. I had a question around private credit. Obviously, it's incredibly topical these days. I think that falls into your globe operations. So I'm wondering, you know, from what you can tell and what you see and hear, you know, specifically around potential redemptions, how does that impact your business? Is that a – do you see that as any kind of perceived risk? And to the extent the assets do get redeemed, like what kind of recapture rate do you historically see in other areas of your portfolio?

You know, like a lot of things in the news, you know, some of these maybe fears might be a little bit overblown, but I think we've got some structural things that do protect us in any event. And the primary one being most of our, you know, by far the vast majority of our private credit funds are closed end fund structures, which generally means that our fees are predicated on things that are, you know, fairly static, whether that's committed capital or, you know, some volume based metric like number of investments or investors or something like that. So we're not, you know, we're pretty immune from day-to-day fluctuations, and that's probably the biggest one. But to be honest, you know, most of our big clients that are private credit managers are still continuing to grow with us.

No, that's great color. On GIDS, another really strong performance here. I'm just trying to think through the cadence throughout the year. I feel like in the past you talked about first half obviously being kind of in the high single digits or maybe even better, certainly given the one-two performance. And then you got more difficult comps heading into the back half. Does that still hold true that you're expecting kind of a mid-single digit in the back half embedded or are things changing in and around, let's say, the Australian market that's given you maybe more conviction that that might actually prove to be too conservative?

I think that, you know, we are making great strides. You know, you mentioned Australia, which we're up to over 3,000 people in Australia, and, you know, we obviously, everyone knows we signed Insignia, which has about $321 billion in assets, but the superannuation market in Australia is $4 trillion. So there's a lot of room to grow, and we're the new kid on the block, and, you know, we're, and in Europe.

That's great. Thank you so much, and great results.

Thank you. Our next question comes from Jeff Schmidt with William Blair. You may proceed.

Hi, good afternoon. What segments do you think have the most risk from AI, and what segments do you feel most confident you're protected against disintermediation?

I don't, you know, we have some very businesses that are not large, maybe $100 million in revenue. But, you know, we are so embedded in the things that we do. don't really look at AI as a threat you know with yes there can have some disruption but you know the internet had disruption and client server had disruption and you know lots of things have disruption but you know people still have to get their work done they still have to file a tax return they still have to file their funeral statements and and it's not just in the United States it's everywhere around the world and so you know we do that everywhere whether it's the Australian Stock Exchange and they have some rules about short sales that you have to give them notification and the Ministry of Finance and Tokyo has all kinds of requirements and OSFI up in you know and we have regulatory bodies here in the United States as well so you know we are very in that and and it's you know it's pretty it's pretty detailed it's pretty arcane, and the regulators can change it whenever they want.

Thank you. And then share buybacks were lower than they've been since, I think, 23 or 24. Is there a potential for you to get more aggressive there with the stock down, I guess, so much over the last few months?

Yes, we generate our favorite investment. I think we bought $160.

Thank you. Our next question comes from Surrender Thin with Jeffrey. You may proceed.

Thank you. Bill, can you maybe expand upon the Blue Prism offering and the new platform offering? I guess it's something you guys have been working on for a while now. Is the idea here that it's a game changer where maybe we begin to see a material inflection in the growth rate within that segment? Or how should we think about the rollout, the cadence, the initial feedback that you've been getting here?

Well, again, we're very vertical. when we go out and talk to people that large-scale places and others, you know, everyone is in the market and trying to figure out with governance. You know, my talks at these different conferences, I'm always saying, look, AI is not just a gas, you know, and you better understand what you're doing. And if you don't, you can get hurt. And I think it's pretty important that, you know, You know, you have a, you know, so we are nerdy when it comes to internal controls. We think they're important. Some silly people ought to reconcile their checking account. We reconcile all you're going to be able to use. It's different things that are primarily mundane. You know, it will get increasingly sophisticated over time, but it's very difficult to replace human judgment, to replace human trust years.

And then maybe turning to the expense side of the equation here, I think you talked about maybe some investments in R&D and sales. Can you maybe provide a bit more color on the scale of those investments that you're thinking at this point? And then maybe how do we think about the potential impact on the range of outcomes on the margin for that? I think the target is the 50 basis points, but is that kind of fully loaded with all of the investments? Is there some flexibility there that maybe there's a bit more, a bit less? any color there would be.

Well, you know, I think, Trinda, there's a lot of opportunities for us to drive margin.

You know, and what we've done

over the last number of years is try to plow money back into our ability to deliver, you know, new services and new products quickly and efficiently, and that's expensive. And so we've been able to maintain our margins at you know really close to 40% and I think I've spoken for a few years that if we want to move it up to 41 or 42 you know that's certainly within our grasp enough money to R&D or we have a lot of flexibility I think last year we generated seven dollars a show we have a lot of flexibility with buying back shares looking at acquisitions and and paying down debt so you know we have opportunities to use our cash thank you thank you our next question comes from

Peter Heckman with DA Davidson you may proceed good afternoon thanks for taking

the question I wanted to talk about the emerging developments around tokenization of different asset classes, where do you see the pain points for your customers? And how do you view as a preparedness to have some portion of different asset classes being tokenized and processed versus some of your competitors?

So, you know, like a lot of these things, we're really viewing the technology itself as an enabler, right? And so we want to make sure, and look, that's true for the broader AI question too, right? We want to make sure it helps us get whatever our clients are looking to have happen faster. So we're fully prepared. We have customers that are tokenized today. We have customers that are in the process of becoming tokenized. We're helping them get on the right digital platforms and chains. We're maintaining the IDs. We're doing all the work that's associated with it. And, you know, the primary impact that we've seen is in those instances, and we're talking about still a pretty limited subset of examples that we have, you know, the onboarding process for investors is obviously simpler, but the rest of the work stays exactly the same, right? But we're fully prepared to be part of the process and help them any way we can, and Calistone is a big part of that for us. Which we spend a billion dollars, of course.

We believe in, you know, we don't dabble. we go get it and then we deliver it to our clients and we have several very happy clients

with our Calistone. What we were thinking, did Calistone outperform in the quarter or is there

a bit of seasonality for them to the first quarter? Yeah, they did. This is Brian. They continue to perform well and so that was a strong quarter by them, yes. Okay, thank you very much.

Thank you. Our next question comes from Alexia Gokula with JP Morgan. You may proceed.

you. Hi, this is Bella Kamaj on for Alexei. Thanks for taking our question. So just looking at interlink sequential improvement, would you say that's driven more by the market or by share gains? And are there any metrics such as win rates or room volumes or retention that you feel

best evidenced that? I think it's a little bit of, you know, one, there's maybe three or four

things. One, you know, the market has come back a little and it's helping us and you're starting to see that show up in the numbers but we're seeing it even more in kind of the early indicators that we have of what it might be you know a quarter two quarters from now I think we have also invested a fair amount in the product itself some of that is building out services capability around the data rooms and things like that some of that is putting more AI enabled modules within the data

room itself and that's helped us gain some market share interested and looking at healthcare, that segment posted a nice turnaround this quarter. How sustainable do you view this growth throughout 2026, and what are the largest points of excitement that give you

optimism throughout this year? Well, you know, I think the biggest thing we like about healthcare is how big the market is. It is really enormous. And as more medicine and therapies come out, you know the more people are going to use those you know GLP ones obviously are a big deal and in the government's Humana which to administer that program for the government we're excited about that we have Domani making some inroads at places you know it's you know it's big healthcare places you know and so you know it does not move if you know with with extreme rapidity you know they testing oriented and very and very detailed tremendous similar as financial technology a lot of it that runs Wall Street is getting people to take the leap to change you know a lot of people in their 40s don't want to change systems because they want to wait until they retire keep thinking that's 20 years 20 years away let's go you know but but that's very difficult for people and people had a bigger aversion to risk. We think there's a lot of opportunity in health care, and we think that we could be a winner.

Great. That's very helpful. Thanks for taking our questions.

Thank you. Our next question comes from James Fawcett with Morgan Stanley. You may proceed.

Thanks very much. A lot of our questions have been answered, but I wanted to quickly touch on the wealth business and just wondering if you can help us unpack a little bit of what was driving the growth there. And I guess really kind of what we want to be cognizant of is going into Q2. Is there any deal slippage there into Q2 or any tough license comps we should be aware of from the first quarter?

Our wealth business primarily is, you know, we did the Morningstar. Now, that gave us more RIAs. And so Black Diamond...

Got it. And then I wanted to ask, just it's a topic that's increasingly been coming up with investors, not just about assistency, but generally. But I wanted to ask about your AI efforts specifically and how do you think about kind of what you're doing there and how much may be aimed at external revenue generation or AI-driven products versus in internal productivity? And are we getting much benefit internally today versus what you may be able to charge or monetize later? Just love to hear from you how you're thinking about that as an enabler.

Well, you know, James, in 2022 we bought Blue Prism, and Blue Prism got us deep into robotic process automation, machine learning, natural language processing. You know, so with that, we have deployed, you know, close to 4,000 digital workers, improving them into AIH. Deployment of all these digital workers is $10 a year. Now, you say, well, why isn't that all dropping into margin improvement? I don't know if you're aware, but, you know, getting compute and larger data instruments is not cheap. and so even though we've done all that you know we've maintained our margins and and we've gone in and we built new systems that we're rolling out now and so we're pretty comfortable with what we're doing and you know Rahul's running a number of projects so you know it's the it's a speed of software

development we are seeing a positive impact there we're also seeing you know we have deep domain expertise right so it's 40 years of processing things in very, very complicated, very regulated ways were very deeply embedded in our customers and their operating models. So taking that, taking sort of that knowledge and turning that into skills, right, and having those skills be things that AI agents can run, we think is a massive opportunity. So, you know, not to kind of give too much away from our event next week, but I think one of the things we're going to do is preview some of what we've built already in a very short period of time, and we're pretty excited about what else we're going to be able to

and it's taken, you know, it has so there's real opportunity here and it's orchestrating it right teams install it and train.

That's great, Keller. Thanks, guys.

Thank you. Our next question comes from Patrick O'Shaughnessy with Raymond James. You may proceed.

Hey, good evening. How are you thinking about the application of blockchain technology from the perspective of services that your GIDs business provides, such as Transfer Agency. Is there any disintermediation risk that you're thinking about?

I think it's mostly an opportunity. You know, at least one, you know, just in terms of context. Right now, the number of examples we're seeing of folks that are interested in sort of blockchain and tokenization is, you know, still fairly small. Like I said, we've got a few up and running. We've got a few that are doing it. But, you know, in the examples we have and the data we have, not only are we a big part of enabling them, which is a revenue stream for us, but it simplifies our work, which is a cost opportunity for us and the rest of our work, you know, which is probably 95% of the work being done stays exactly the same or grows a little. So net-net, we think it's actually beneficial.

Got it. That's helpful. Thank you. And then Globop, organic growth, 6.7% in the quarter, down from 9.6% last quarter. Anything to read into that or just kind of the natural ebbs and flows of the business?

Yeah, I think, you know, it just depends on, you know, when you win some of these very large global macros, you've got to get locked, you know. And then, you know, we get paid when they're not live, but, you know, we're getting paid like, you know, maybe an eighth. So if we're getting, say, $2 million, and when we get them live, we get $16 million, timing-wise, on renewals.

Thank you.

Thank you. I would now like to turn the call back over to Bill Stone for any closing remarks.

Well, hey, we really believe we had a strong quarter. We believe we have really a lot of momentum. We believe we're bringing out stuff that's going to give us more momentum, and we look forward to talking to you at the end of the second quarter. So thanks for dialing in, and thanks for your questions, and we'll talk to you in about 90 days, I guess.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.