SS&C Technologies Second Quarter 2026 Earnings Call

Good day, and welcome to the SS&C Technologies Second Quarter 2026 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Justine Stone, Head of Investor Relations. Please go ahead.

Hi, everyone. Welcome and thank you for joining us for our Q2 2026 earnings call. I'm Justine Stone, Investor Relations for SS&C. 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'll need to review the 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 the purposes of the Safe Harbor provision 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 at the SEC and can also be accessed on our website. These forward-looking statements represent our expectations only as of today, July 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 relationships is located in the investor the relations section of our website at www.ssctech.com. I will now turn the call over to Bill.

Thanks, Justin. Welcome, everyone. Q2 was record-setting for SS&C. Our strong quarter resulted in setting quarterly records for second quarter in revenue, adjusted EBITDA, earnings per share, and shares repurchased. We continue to demonstrate success in an uncertain backdrop, underscoring the resilience of our diversified business model and the value clients place on our technology, expertise, and innovation. Our second quarter results were adjusted revenue of $1,696.9, up 10.3%, and adjusted diluted earnings per share of $1.76, an 18% increase. We delivered adjusted consolidated EBITDA of $670.7 million, up 12% or over $70 million, and an adjusted consolidated EBITDA margin, 39.5%. The dollar figures are all records. Adjusted organic revenue growth was 7.6%, with performance driven by our largest businesses, new business wins, strengthened multi-year renewals, and market and transaction tailwinds. For the six months ended June 30, 2026, cash from operating activities was $716 million, up 11% year over year. This quarter, we returned $499 million to shareholders, which includes 6.4 million shares repurchased for $435.2 million, the highest quarterly buyback in our history. Primarily, a result of our repurchase program, diluted shares outstanding are down 4% over the last year. Share repurchases remain our top capital allocation priority as we are projected to earn $7.29 in operating cash per share for the year. We have lots of flexibility. The acquisitions we completed at the end of 2025 are both tracking ahead of expectation. Kiro has given us additional exposure in EMEA, and revenues are growing nicely. Calistone continues to perform ahead of expectations as well. We expect 2026 growth to be in the mid-teens, and we have added 431 clients to the network. Although through Calistone, we are investing in solutions to support the future of our clients, including digital investment markets. As interest in tokenized investment products continue to grow, our clients and prospects are looking forward towards the infrastructure needed to support digital transactions. Combining our servicing capabilities with Calistone Technologies, which already supports the issuance and distribution of tokenized funds, our innovation rollback now extends to the next stage of digital investment lifecycle. The new capabilities will enable digital investment transactions to settle using regulated forms of digital cash, including stable coins and tokenized commercial bank deposits. This will help reduce settlement risk, improve operational efficiency, and simplify cross-border investment transactions. We look forward to capturing more market share. The highly anticipated Medicare GLP-1 bridge program launched on July 1. Since launch, nearly 3 million claims have been processed using SS&C's DomaniRx platform to support our client, Humana. We believe this demonstrates our technology's scale, reliability, and flexibility and underscores the critical role DomaniRx plays in enabling innovative healthcare programs. We're proud to expand access to these important therapies for millions of Americans. I'll now turn the call over to Rahul to discuss the quarter in more detail.

Thanks, Bill. Our second quarter results came in ahead of expectations with strong sales and renewal performance and continued margin expansion. We are on track to meet our margin objectives for the year. These results demonstrate the strength of SS&C's customer relationships and the criticality of our products and services. Outsourcing, co-sourcing, and lift-outs combined with industry-leading technology continue to enhance our revenue growth. Rapid technological innovation is pushing customers towards SS&C as they look for a partner to help them take advantage of the latest technologies. Our front, middle, and back office technology business, including Geneva, delivered a strong quarter. We are seeing momentum in multi-year technology license renewals across our client base, reflecting the confidence clients have in our platforms and long-term roadmap. Several of our largest pipeline opportunities are anchored by tech. Our global footprint remains a competitive advantage, with offerings spanning markets and asset classes worldwide, and we are seeing robust demand and healthy pipelines internationally as well as here in North America. We're deploying AI across our products and operations, and it is one of the drivers of the growth and margin expansion you see in these results. Our approach is governance first and proven internally before it reaches customers. In one example we announced this morning, a global leader in risk, reinsurance, and capital chose our WorkHQ platform to scale agentic automation across its business. This is one example of a trend we are seeing. established enterprises choosing SS&C to move their automation efforts to agentic AI. With that, I'll turn it over to Brian to walk through the financials.

Thanks, Rahul. Good day, everyone. Unless noted otherwise, the quarterly comparisons are Q2 2025, or Q2 2025. As disclosed in our press release, our Q2 2026 GAAP results reflect revenues of $1.696 billion, net income of $235 million, and diluted earnings per share of $0.97. As Bill noted, at the beginning of our call, our adjusted non-GAAP results set several records for SS&C, including revenues of $1.697 billion, an increase of 10.3%, and adjusted diluted EPS of $1.76, an 18.1% increase. The adjusted revenue increase of $159 million is primarily driven by incremental revenue contributions from organic growth of $118 million, acquisitions of $36 million, and a favorable impact in foreign exchange of approximately $5 million. As a result, adjusted organic revenue growth on a constant currency basis was 7.6%, and our core expenses increased 6.1%, or $58 million, which also excludes acquisitions and impact of FX. Adjusted Consolidated EBITDA, also a record, was $671 million, reflecting an increase of $70 million, or 11.7%, and a margin of 39.5%, a 50 basis point expansion. Net interest expense for the second quarter was $107 million, an increase of $1 million year over year. Record adjusted net income was $426 million, up 13.3%. And adjusted delivered EPS of $1.76 was up 18.1%. Our affected non-GAAP tax rate was 22.5% this quarter. Note, for comparison purposes, we have recast the 2025 adjusted net income to reflect the full year effective tax rate of 22%. Also note that diluted share count is down to $242 million from $252.2 million year-over-year, primarily due to the size and continued impact of share repurchases and, to a lesser extent, lower diluted share. Cash flow from operating activities grew 11.1%, driven by growth and earnings. SS&C ended the second quarter with $435 million in cash and cash equivalents and $7.6 billion in gross debt. SS&C's net debt was $7.2 billion, and our last 12-month consolidated EBITDA was $2.6 billion. Resulting net leverage ratio is 2.75 times. In addition, we are actively exploring refinancing opportunities for our bonds, maturing in 2027 to further optimize our capital structure. As we look forward to the third quarter in the full year, 2026, With respect to guidance, we will continue to focus on client service and expect that 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 and AI tools to improve our operating margins, and strategically 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% of revenue, and a stronger weight in the share repurchases versus debt reduction. In the year of 26, we expect revenue to be in the range of $1.657 to $1.697 billion and 5% organic revenue growth at the midpoint. Adjusted net income in the range of $413 to $429 million dollars. Interest expense, excluding amortization, deferred financing costs, and original issue discounts in the range of 103 to 105 million dollars. And adjusted diluted EPS in the range of $1.73 to $1.79. For the full year of 2026, we increased our expectations to revenue to be in the range of 6.672 to $6.832 billion and 5.5% organic revenue growth at the midpoint. Targeted EBITDA growth of 9.3%, EBITDA margin expansion of 50 basis points with the goal of a 40% margin in Q4. Cash from operating activities in the range of $1.717 to $1.817 billion. Adjusted net income in the range of $1.67 to $1.77 billion. dollars, adjusted diluted EPS in the range of $6.93 to $7.25, reflecting approximately 15.5% growth at the midpoint. And now, back to Bill.

Thanks, Brian. We believe our results speak to the strength of our business and consistency of our execution. Our clients continue to invest in SS&C and expand their relationships. discipline and how we operate invest in allocate copper capital in ways that create long-term shareholder value welcoming our clients at our deliver conference in Orlando Florida we have a lot of great sessions demos and speakers lined up and in partnership with NASDAQ will be we will be hosting a remote opening bell ringing during our time there with that I will now open it up to questions.

Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, press star one one again. Due to time restraints, we ask that you please limit yourself to one question and one follow-up question. You may then return to the queue. Please stand by while we compile the Q&A roster. And our first question will come from the line of Dan Perlin with RBC Capital Markets. your line is open.

Thanks. Good evening, everyone, and fantastic quarter. So the organic growth, I mean, it was a couple hundred basic points above guidance. I would just love to get a little bit more color in terms of the context around that. It sounds like there was some big license renewals in the quarter. I'm wondering, you know, oftentimes, though you talk about like you'll sell whatever you need, right?

So it's a license quarter or it's a big recurring. you just want to make that make the sale so I'm wondering how how these deals are kind of flowing right now because it feels like there's a pretty big tilt towards maybe some of these license renewals well then you know we get those license renewals when the contract runs out right so if we have a seven year contract and it runs out generally when they were new they want to renew for another seven years so then you know obviously with the accounting pronouncements on 606 that that creates somewhat of a somewhat of a of a rush on revenue. So it depends when these things hit. I think one hit in, in, in June this year. And, and so, you know, I just think that, you know, that's a little bit of the lumpiness of the business. But, you know, as we get larger, we have more and more of these big clients with big, big renewals. And so in some ways, it kind of smooths out. But we did have a couple of big renewals in Q2, and that's why organic revenue was up a couple hundred extra basis points.

Got it. And then just a quick follow-up, also, I guess, in the context of organic growth, you mentioned kind of market and maybe some transactional activity, but I'm really thinking more market, and maybe it probably falls heavy in the globe op, I think. But, you know, can you just remind us, like, market volatility, directional moves in the market, strength or otherwise, and how much that can play into any one given quarter. Obviously, you don't predict that into your guidance, but just trying to understand directionally how that might have impacted your organic growth as well. Thank you.

Yeah. So, you know, we produce our capital movements index and our performance index for our hedge fund business every month. And, you know, this past month, the redemption index was at 135, which is about the lowest we've had in the history of having this thing, and we've done it since, I think, 2009. So I think that's indicative of how strong, you know, that hedge fund business is and the strength of that, you know, kind of asset manager type. You know, they have a lot of flexibility. They're very good risk managers, and they have the full range of product capabilities. You know, if you look at our assets under administration and our fund administration business, over the last two years, it's up $581 billion. I think that's pretty indicative of the strength that we have in that space.

Excellent. Thank you.

One moment for our next question. That will come from the line of Jeff Schmidt with William Blair. Your line is open.

Hi. Thank you. Another question on Lobop. Are you seeing demand for outsourcing just kind of pick up in general just as AI raises the need for companies to modernize so, you know, they're turning to third-party vendors just to do that more easily?

I do think that that's a big part of what's happening. You know, at a baseline, we've got strong demand just because, you know, we're tech forward and we're the biggest player in this business and we have a lot of referenceability. But then the other kind of thing that's happening is customers are looking around and they want to take advantage of AI. They want to take advantage of some of the agent capabilities we have. And rather than try to put that all internally and build it from scratch, the fact that we can deploy it in a very scalable way has been positive for us.

Great. And then a question on kids, what's the underlying growth there when you exclude the recent liftouts like Insignia? and, you know, how does your pipeline for additional liftouts look? I mean, those seem to be pretty accretive transactions, I would think.

Well, certainly, ultimately, they are very accretive. You know, at the same time, you know, it's competitive. We have to win and we have to deliver a great service, which we have been doing. But, hey, these are large, sophisticated organizations that require a lot of attention, and we give them that attention. So I think we have a great pipeline in our global investor and distribution services business, and I think that will continue. You know, once again, you know, I think one of our prospects is, well, you know, you guys have 65% market share. I'm pretty certain you probably have. And I think that, again, that goes to the strength and size of our business and that we win mandates from Australia and we win mandates in Europe and we win mandates in North America. I just think we have a very...

What's that underlying growth, I guess, if you just back out insignia?

Still in excess of five.

Great. Thank you.

One moment for our next question. And that will come from the line of Kevin McVeigh with UBS. Your line is open.

Congratulations again. Just really, really strong results and it feels like a little bit of a choppy environment. Bill, I think you'd mentioned the claims launch. Any way to think about what that contributed in the quarter and how that scales over the course at 20 cents?

Yeah, we get in excess of double of the 20 cents. But, you know, I think this is a trial program of the government, but it so far has been very popular, and we'll see. It's a six-month program, Kevin, so, you know, knock on wood, it's the government, so will they stick with a very successful program? That's probably 50-50, but we do believe that there's a lot of great collaboration between us and Humana and the CMS that manages Medicare and Medicaid. So we're optimistic, and again, it's a reason why we're in healthcare. When it comes, it will come in large waves. And, you know, if we can deliver a great service and the government likes what we do, it seems to me they spend a lot of money. We just want our fair share.

No doubt. And then you talked a little bit about AI governance in terms of starting to see it in the organization. Is that still through Blue Prism? Are you starting to see other avenues? And any way to think about, you know, from a margin perspective, philosophically, how much will go to reinvestment versus, you know, just margin growth overall, things like that?

Well, you know, again, Kevin, we made the upfront investment, right? We bought Blue Prism that had AI and had ML and had RPA, you know, and had natural language processing. So, I mean, we made the investment. It's been a billion six. Same thing as you read about tokenization and about some other fintech companies that are getting into tokenization. Well, we spent a billion dollars and we bought Calistone. And we didn't buy Calistone so that we could be an also-ran. We bought Calistone so that we can be a leader in technologies that our customers want. And I think that's been our attitude the whole time is that, look, we don't want to dabble. We don't want to have three licenses of automation anywhere or UI, whatever it is. So it is something where we got 1,400 people when we got Blue Prism, and we got another 250 and probably added another 25 with Calistone. So we're optimistic about where we're putting our investments, how we're using it, why we, you know, we focus on governance and protection for our customers because they're in highly regulated businesses and, you know, black eyes in highly regulated businesses are not good.

Thank you.

Thank you. And our next question will come from the line of Alexi. Gogolev with J.P. Morgan. Your line is open.

Hi, this is Bella Kamajan for Alexi. Thanks for taking the question and congrats on the quarter. So given the organic growth performing so positively this quarter, especially the callout from those large license renewals, how should we think about 3Q organic growth implying a step down? Is that mainly renewal timing rolling off and potentially are there any other similarly sized renewals in the second half that could be potentially offering some upside?

Our pipeline is full of opportunities. There are some renewals coming up as well. So we have opportunities to outperform. We're being our consistent self of great revenue growth, great earnings, and not getting ahead of our skis. So that's the same thing we're going to do for Q3 and Q4, but we're not going to, we're not going to, you know, pre-beat the drum. We'll let the drum beat itself.

Got it. That makes sense. And just a quick follow-up. So looking at your capitalized software spend, where would you say that investment is mostly concentrated today? Is that mainly a function of the recent Work HQ launch, implementation tooling, or perhaps other platforms? And should we expect that level to persist into, you know, second half of this year into 2027?

You know, we brought out a number of new systems. We brought out Genesis and asset management. We have a new release of Eclipse. We brought out, we'll bring out a new release of DVC. We're bringing out, we brought out Domani RX and we're bringing out a new release of our medical claims. We brought out, like you said, Work HQ and our guide rails, our AI guard rails product that we have brought out as well. And I think there's a number of other initiatives that we're doing, building out our private cloud and making sure that our cybersecurity is very redundant. So I think we're going to have similar capitalized software and investment in R&D, but at the same time, I think we're going to have some, you know, very material ways to improve our margins through, you know, adaptation of AI agents and other technologies that are available today.

Got it. That's very helpful. Thank you again.

Thank you. And our next question will come from the line of Pete Heckman with DA Davidson. your line is open.

Hey, good afternoon. Most of my questions have been answered. I was just curious on the, on the interlink side, you know, virtual data room saw a nice sequential increase in organic growth, but it was on a relatively easy comparison.

I guess, how much do you attribute that to, you know, an uptick in, in larger M&A or, or that's and getting new clients, you know, versus just, just benefiting from, from, you know, what appeared to be the easiest comparison of the year for that business we're having we're having some success in terms of so the metrics we track you know whether that's the opportunities that we have in our pipeline or those opportunities getting converted into bookings and then eventually those bookings getting converted into revenue all those things are are positive so you know the the comps only work if you can improve on the comps right and and so that's I think that's what we are doing we are seeing the business strengthening and and we expect that to continue through the remainder of the year.

That's great. So would you attribute it in terms of areas that you've been winning a bit? I think you mentioned private assets, private equity, any other areas that have been seeing some adoption in the virtual data room area?

Yeah, it's a little bit of, you know, so there's two components to that, two big components to that interlinks business, right? It's the virtual data rooms and we've been having success and that's a little more linked to the M&A markets. But then there's the alternatives LP communication part of that business, and that's been growing steadily throughout.

Okay, that's helpful. I appreciate it.

Thank you. As a reminder, if you would like to ask a question, please press star 1-1. Our next question will come from the line of James Fawcett with Morgan Stanley. Your line is open.

Hi, guys. It's Michael and Fonte on for James. Thanks for taking our question. just one from us. Just on the larger renewals that you guys are having and the sort of second half slate of renewals that are coming, like how is AI factoring into these conversations? Do you view the agentic monetization and the Work HQ opportunity as really like a call option in the future from a monetization perspective?

Or are you seeing customers, you know, sort of use AI as a mechanism to push back on your own price realization doesn't sound like that's the case but just wanted to ask there thanks guys well as you know it at Morgan Stanley and other organizations of your size and complexity you know you're constantly looking at upgrading your your infrastructure and and you know we we are proud to have more Stanley as a client and you know that the AI is something that's on everyone's tip of their tongue, right? And you're bored, right? So all your executives are very attuned into what are we doing with AI? And I think our approach has been very effective in showing people that our technology is better, the way we're rolling it out is better, the more protected you are, and the more that we are really a partner in making sure that your transition from traditional software products to then RPA products where you have bots helping you do pretty simple processes, but things that take a lot of time, cost a lot of money, and now you can have a bot do, whether it's statement review or other things like that. And now there's agentec agents that can do more complex tasks, that can make some decisions. You have to have the guardrails around what those decisions are. But if you can get real processes and build an orchestration layer like we have, then you can get very sophisticated workflows that are not people-intensive. and that's our that's our approach and it's been pretty effective thank you I'm showing no further questions in the queue at this time I would now like to turn the call back over to mr. stone for any closing remarks again we appreciate everybody on this call and we appreciate you owning our shares or following our shares at the same time we work hard for shareholders and we will continue to do so and we look forward to seeing you at the end of next quarter or this quarter I guess. Thanks.

This concludes today's program. Thank you all for participating. You may now disconnect.