Earnings Call Transcript - SSNC Q3 2023

Operator, Operator

Good afternoon, ladies and gentlemen, and welcome to the SS&C Technologies Q3 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode, and please be advised that this call is being recorded. After the speakers' prepared remarks, there will be a question-and-answer session. Now at this time, I would like to turn the call over to Ms. Justine Stone, Head of Investor Relations. Please go ahead, ma'am.

Justine Stone, Head of Investor Relations

Welcome and thank you for joining us for our Q3 2023 earnings call. I'm Justine Stone, Investor Relations for 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 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 with the SEC and can also be accessed on our website. These forward-looking statements represent our expectations only as of today, October 26, 2023, 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 section of our website at www.ssctech.com. I will now turn the call over to Bill.

William Stone, Chairman and CEO

Thanks, Justine, and thanks everyone for joining. Let's all welcome Brian to his first SS&C earnings call. He has been with us for two months and has found his bearings. We're excited about the ideas and intellect he brings to the organization, and I encourage all of you to get to know him. Results for the third quarter are record adjusted revenue of $1,366.7 million, up 3.4% and adjusted diluted earnings per share of $1.17. We also achieved our second-highest adjusted consolidated EBITDA in our history at $533.9 million. Our EBITDA margin was 39.1%, a 230 basis point increase from Q2 2023. Our third-quarter adjusted organic revenue was up 2.3%, driven by strength in our alternatives, particularly private markets, Intralinks, Retirement, and Blue Prism. Our recurring revenue growth was amidst the license and professional service revenue streams was up over 5%, which we think is an indicator of our underlying business' strength. The Financial Services retention rate for Q3 2023 was 97.3%, the highest level in SS&C history. SS&C generated cash from operating activities of $826.7 million for the nine months ended September 30th, up 8.1% over the same period last year. In Q3 2023, we bought back 1.7 million shares for $96.9 million at an average price of $55.82. We also raised our common stock quarterly dividend of 20% to $0.24 per share, delivering $156.6 million in total cash return to shareholders in the quarter and $501.9 million year-to-date. SS&C paid down $54.7 million in debt in Q3 2023, bringing our net leverage ratio to 3.18 times consolidated EBITDA attributable to SS&C. In the near term, we believe SS&C's common stock is undervalued, and we expect to maintain a higher level of stock repurchases versus debt paydown. We've made a lot of progress within the firm while Blue Prism's digital worker deployment. We have 2,000 full-time equivalent headcount savings year-to-date, which is 7% of our January 1, 2023 employee base. Conservatively at $50,000 per FTE, this is $100 million in run-rate savings. So far, the biggest successes have been within our large outsourcing businesses, GIDS, and Alternative Fund Services. One example is a GIDS client asked us to run a campaign to contact over 20,000 customers to clear their small cash balances. We programmed 25 Blue Prism Digital Workers to perform the follow-on processing, saving about $140,000 on contractors that would have been required to process the responses manually. Within Alternatives, operational functions such as manual statement downloads, reconciliation and break investigation and resolution, investor statements in contract notes, and loan closing and compliance have benefited from digital workers. We believe we have just begun to reap the benefits from this initiative. I'll now turn the call over to Rahul to discuss the quarter in more detail.

Rahul Kanwar, President and COO

Thanks, Bill. Our core businesses continued to grow nicely with Alternatives, Intralinks, and Retirement accelerating from last quarter. Our Alternatives business grew 8.4% in the quarter, boosted by the strength of our private markets business. We signed a very significant private credit client in Q3 and see opportunities to sustain and accelerate growth for the foreseeable future. Intralinks also accelerated in the quarter, growing over 10% despite M&A deal volume remaining low. The growth can be attributed to an increase in contract values, longer due-diligence timelines, and more large deals won. We released new tools to help us drive these large deals in contract values. DocuAI uses generative artificial intelligence to proactively deliver document summaries, suggest document classifications, document translations, and identify potential risks. Intralinks DealVault, a cloud-based storage solution designed for streamlined access to archives and efficient deal data management, recently launched and has attracted interest from corporate clients. In Q3, the largest new Black Diamond sales to date was closed. This client chose the Black Diamond platform to power their newly-launched Wealth Management business created through the acquisition of multiple RIAs and broker-dealers. We continue to invest in R&D and support our customers. We won four awards from Waters Technology, including Best Buy-Side Order Management System, Best Execution Management System, Best Portfolio Management System, and Best Accounting Provider. SS&C Blue Prism was also recognized by Gartner as a leader in the 2023 Magic Quadrant for robotic process automation for the fifth year in a row. We believe these recognitions are indicative of our market-centric approach to R&D. I'll join Bill and the rest of our management team in welcoming Brian to SS&C. And now I'll turn the call over to him to run through the financials.

Brian Schell, CFO

Thanks, Rahul, and thank you, Bill, for those kind remarks. I'd like to start by saying I'm excited to be part of the SS&C leadership team and looking forward to help build on the strength of SS&C today with the ultimate goal of delivering long-term shareholder value. As noted in our press release, our Q3 2023 GAAP results reflect revenues of $1,365.9 million, net income of $156 million, and diluted earnings per share of $0.61. As Bill noted earlier in the call, our adjusted revenues were $1,366.7 million, up 3.4%. Adjusted operating income increased 6.4% and adjusted diluted EPS was $1.17, a 1.7% increase over Q3 2022. Adjusted revenues increased $44.7 million, or 3.4% over Q3 2022. Our acquisitions contributed $2.4 million or approximately 20 basis points. Foreign exchange had a favorable impact of $13.2 million or 1%. As a result, adjusted organic revenue growth on a constant-currency basis was 2.3%. Adjusted operating income for the third quarter of 2023 was $517.4 million, an increase of $31.3 million or 6.4% in the third quarter of 2022. Adjusted operating margins were 37.9% in the third quarter of 2023, as compared to 36.8% in the third quarter of 2022. The 110 basis point margin expansion reflects the positive impact of both revenue growth and disciplined expense management. While our cost structure has been impacted by general inflation, higher personnel costs, and increased professional fees compared to 2022, our core expenses only increased 30 basis points or $2.6 million, excluding acquisitions and on a constant currency basis. Acquisitions added $2 million in expenses and foreign currency increased costs by $8.4 million. Note that our expenses calculated on a similar basis are down $28.6 million or 3.3% sequentially. Adjusted consolidated EBITDA attributable to SS&C, defined in Note 3 in the earnings release was $533.9 million, or 39.1% of adjusted revenue, an increase of $32.2 million, or 6.4%, from Q3 last year. The 39.1% EBITDA margin reflects both a sequential and year-over-year improvement of 230 basis points and 110 basis points, respectively. Net interest expense for the third quarter of 2023 was $117.3 million, an increase of $35.1 million from Q3 2022. The Q3 2023 net interest expense excludes $3.4 million of non-cash amortized financing costs and OID. The average interest rate in the quarter for the amended credit facility, including the senior notes was 6.87% compared to 4.55% in the third quarter of 2022. Adjusted net income, as defined in Note 4 in the earnings release was $295.9 million and adjusted diluted EPS was $1.17. The effective tax rate used for adjusted net income was 26%. Share repurchases of 1.7 million drove the diluted share count down to 253.9 million from 255 million in Q2. SS&C ended the third quarter with $447.6 million in cash and cash equivalents and $6.9 billion in gross debt. SS&C's net debt as defined in our credit agreement, which excludes cash and cash equivalents of $106.1 million held at DomaniRx LLC, was $6.6 billion as of September 30. Our LTM consolidated EBITDA used for covenant compliance was $2,063.8 million as of September 2023. Based on net debt of approximately $6.6 billion, our total leverage ratio was 3.18 times. Our secured leverage ratio was 2.21 times as of September 30. As we look forward to the fourth quarter and establishing our guidance, note that we will continue to focus on client service and assume that our retention rates will continue to be in the range of our most recent results. We will continue to manage our expenses with a cost-discipline approach by controlling and aligning variable expenses to ensure efficiency, increasing productivity, to improve our operating margins. We will leverage our scale effectively and invest in the business through marketing, sales, and R&D to take advantage of future growth opportunities. Specifically, we have assumed adjusted organic growth for Q4 in the range of 1.8% to 4.8%, resulting in adjusted organic growth for the year in the range of 2.1% to 2.9%. FX rates will be at current levels. Interest rates are expected to remain flat through the end of the year, compared to the ending rate in the third quarter. GAAP tax rate of approximately 26% on an adjusted basis, which is unchanged from prior guidance. Capital expenditures are expected to remain at 3.9% to 4.1% of revenues, which is unchanged from prior guidance, with a more weighted emphasis on share repurchases similar to what we did in Q3. For the fourth quarter of 2023, we expect revenue to be in the range of $1,370 million to $1,410 million. Adjusted net income in the range of $305 million to $327 million. Interest expense, excluding amortization of deferred financing costs and original issue discount in the range of $116 million to $119 million, diluted shares in the range of 252 million to 254 million, and adjusted diluted EPS in the range of $1.21 to $1.29. For the full year 2023, we expect revenue to be in the range of $5,463.5 million to $5,503.5 million. Adjusted net income in the range of $1,159.9 million to $1,181.9 million. Diluted shares in the range of 254.5 million to 255 million. Adjusted diluted EPS in the range of $4.55 to $4.64 and cash from operating activities to be in the range of $1,180 million to $1,230 million. Now, I'd like to turn it back over to Bill for final comments.

William Stone, Chairman and CEO

Thanks, Brian. Earlier this week, we hosted nearly 1,000 clients and prospects at our SS&C Deliver Conference in Austin, Texas. Delivering the Future was the theme of the conference, with a big emphasis on the power of AI and robotics process automation. We showcased over 40 solutions across the key market segments we serve, and initial feedback has been positive. I'll now open it up for questions.

Operator, Operator

Thank you, Mr. Stone. We will go first this afternoon to Dan Perlin at RBC Capital Markets.

Daniel Perlin, Analyst

Thanks. Good evening. I just had a question on the revenue retention rates, as we kind of went back and looked at them, I mean, I know it's a modest uptick, it's actually pretty reasonable, but it looks like to be maybe the highest level we've certainly seen back to 2019, maybe ever, quite frankly. So can you just talk about some of the metrics that are driving that and how that might play into your thinking as we go into next year around organic growth? Thanks, and I have a follow-up.

William Stone, Chairman and CEO

You know, Dan, I think the retention rates really reflect the concentration we've put on customer service and making sure that we run these customer satisfaction calls every month and we keep track of them. We're really putting a tremendous amount of emphasis there. We also believe that the ability for us to cross-sell and up-sell into our current client base is much stronger than we may have looked at it before. I think the renewed emphasis on that and our customer relationship management programs is starting to pay off.

Daniel Perlin, Analyst

Bill, can you discuss the current deal pipeline and conversion cycles you are experiencing? I know Rahul mentioned specific successes in private markets, which have been strong. Additionally, with the Black Diamond, I'd like to know how those discussions are progressing. Are you feeling more optimistic about the conversion cycles now compared to six or nine months ago? Thank you.

William Stone, Chairman and CEO

Yes, I would say that our pipeline in our fund administration businesses is over $400 million, which represents significant revenue. However, it's important to note that we still need to close these deals and implement them successfully. This process isn't easy, but it does reflect our strong position in several areas. Intralinks is experiencing an increase in lead generation and our capability to secure additional M&A opportunities in that market. I believe the private markets will continue to be robust until the end of the year. We were slightly behind on license revenue, but recognizing 606 and renewals can be uncertain. Q3 was particularly weak, but we expect a rebound in Q4 and into 2024.

Operator, Operator

Thank you. The next now to Peter Heckmann at D.A. Davidson.

Peter Heckmann, Analyst

Hi. Good afternoon, everyone. I wanted to follow up on a couple of pieces. Now you noted that a little bit light on software revenue. I assume that was primarily the legacy software businesses. Just trying to clarify if there was a particularly tough comparison there. I know you don't do it in your filings, but if you could quantify roughly the amount of software license revenue in the quarter, that would be helpful.

Rahul Kanwar, President and COO

I think the difference in what we expected versus where we ended up from a software license revenue was in the order of magnitude of about $20 million to $25 million in the quarter.

Peter Heckmann, Analyst

Okay. But it does appear that it was concentrated within the legacy software businesses.

Rahul Kanwar, President and COO

Yes, that's right. Primarily institutional and investment management business and some impact in Advent as well.

Peter Heckmann, Analyst

Okay. And then just on the retirement side, you know, 15% up in the quarter, sequential acceleration. I'm sorry if I missed it, but does that reflect the go live of some of the large clients in the conversion pipeline?

Rahul Kanwar, President and COO

Yes, it does. We're continuing to make progress. As you know, we did win a few large deals. I want to say about 18 to 24 months ago that we've been working hard on implementing. Where we are right now is we have one of them fully live and another one scheduled to go live in early 2024. You're starting to see really the revenue benefit of that happening.

Operator, Operator

Thank you. We go next now to Andrew Schmidt at Citi.

Andrew Schmidt, Analyst

Hey guys, thanks for taking my questions and welcome Brian. Brian, maybe I could put you on the spot for a second. I know it's a little bit early, but talk about just initial observations and maybe some early priorities you have as you hit the ground here. That would be helpful. Thanks a lot.

Brian Schell, CFO

Yes. No, thanks for the question. The priorities we have are continuing to try and build on the momentum here. As I said in my opening comments, one of the things the finance group and our leadership is looking to do is continue to enhance some of the tools that the leaders at the front lines are using with respect to the contracts to help make better decisions, more timely decisions. What they're looking at around pricing, around implementing investment, and expenses to drive future revenue growth. This has been important. I think the team has always been focused on looking at expenses and ensuring that the expense level and spend, variable and fixed, adjusts in accordance with the revenue outlook. So that revenue growth is obviously very important, but so is making sure that we have an appropriate margin that we're bringing to our shareholders. I would say it's continuation along those lines. The team will continue to try and drive some incremental metrics to give increasing visibility to continue to help understand what's driving the business and the strength that we see in it, which sometimes may be masked by the aggregate numbers and some of those trends. Lastly, I would say on the capital allocation piece, again, putting that in perspective of how we view things, we’re going to be a little bit more proactive around what we're doing with respect to that cash flow. We've indicated a heavier lean toward share buyback and continue to be transparent about where we think we're going to put the capital to work.

Andrew Schmidt, Analyst

Got it. Appreciate that, Brian. Very helpful. And then if I could pick up on the margin comment, the implied fourth-quarter margin looks pretty good. It looks like, if my math is right, up at least 200 basis points year-over-year. As we look ahead, can you talk about an opportunity for maybe above-trend margin expansion, just given all the opportunities you have in front of you, whether it's digital workers, cost efficiency, and obviously some top-line scale? Anything around that would be helpful? Thanks a lot.

William Stone, Chairman and CEO

Yes, I think that, as we've said on a number of these calls, that driving our margins up, we don't find to be particularly difficult. We have great clients, we have great people, and we continually look at productivity enhancements. Blue Prism has been a great addition to that, not only in deploying 1,700 or 1,600 digital workers by the end of this year but also allowing us to grow and not add FTEs into our workforce. We're pretty excited about that opportunity and even as a business itself, we have some talented people running that business, and they have driven margins from a little bit negative when we acquired them in the second quarter of 2022 to probably going to end the fourth quarter at above 30% margins at Blue Prism, which is kind of a hallmark of SS&C is that we manage our businesses, we drive high EBITDA, we pay down debt quickly, and we're buying back stock. We're pretty bullish.

Andrew Schmidt, Analyst

Yes. Thank you very much, Bill.

Operator, Operator

Thank you. We go next now to Alex Kramm at UBS.

Alex Kramm, Analyst

Yes. Hey, good evening everyone. Just wanted to go and look at the fourth-quarter organic growth guidance. If my memory serves me right, I think last quarter the cadence that was implied was something more in the mid-single digits for the fourth quarter. So it seems like there's a bit of a downdraft in your expectation here by about 1.5 or so. Can you just maybe help us understand what has changed in the last three months relative to prior expectations and what the swing factors could be still into year-end?

William Stone, Chairman and CEO

Yes, Alex, there are many factors at play in the current environment. Similar to licensed businesses, people can become hesitant about making significant capital investments. We saw this trend soften in the third quarter, and we are optimistic for a recovery in the fourth quarter, although we are cautious about predicting license revenue. As we mentioned earlier, our recurring revenue growth in the third quarter exceeded 5%, which includes all our fund administration and other recurring revenue sources. We have possibly adopted a slightly conservative outlook for the fourth quarter, but we aim to provide our best estimate while continuing to grow the business.

Alex Kramm, Analyst

Fair enough. And then maybe just more specifically, I don't think the GIDS business has come up, but obviously that's a very sizable business for you and an area of pain in the last few years, but seems to really be stable here in this 3% or so range. Do you feel pretty good about the outlook there and continue in this kind of environment at that range? Is there still the ability to maybe even accelerate that into something more in the mid-single digits? Or is that business just too mature, and the end markets are too tough that you're happy with what you're seeing?

Brian Schell, CFO

I think that, one, we're happy with the progress, right? At the same time, we do believe there's more opportunity. If you think about the end markets, the end markets include wealth managers in Europe, wealth managers in Australia. We're selling a comprehensive array of services and software. As we think through our pipeline, that GIDS business has some of the biggest deals that we have as a company. We are reasonably optimistic that we can accelerate the growth rate from where we are currently.

William Stone, Chairman and CEO

I would just add a little bit, Alex, that we're a technology company, right? We need to make these products better, and we compete against big gigantic financial institutions that you guys are very familiar with. We believe our ability to out-innovate is one of our greatest strengths. Some of GIDS, as you're well aware, is in a pretty mature business. However, if we can continue to innovate, then when we go up against our competitors, they don’t have a chance. That's our real opportunity, and that's why we've stuck with the knitting. That's what we're doing both in GIDS and across everything we're doing. We remain reasonably bullish.

Operator, Operator

Thank you. We go next now to Ella Smith at J.P. Morgan.

Ella Smith, Analyst

Hi. This is Ella Smith on for Alexei Gogolev from J.P. Morgan. So my first question is for you, Bill, surrounding M&A. Are you seeing anything for sale in the market? If you were to pursue a tuck-in acquisition in the next six to 12 months, what products or businesses do you think could enhance or complement SS&C's existing offerings?

William Stone, Chairman and CEO

We're constantly in the marketplace, and it all depends on what's for sale, at what price, and can we sell our stuff to their client base. We really like the Australian market, the Canadian market, the US market, and we have a few other things in the UK that we think are interesting. I think we might deploy $100 million in the next three to six months on acquisitions, but we don't have anything right now that we would close on in that range. We think we're good at M&A, we think we can drive margins and give people a good place to work, but you've got to get them at the right price and be disciplined about it. That’s how we operate.

Ella Smith, Analyst

Great. Thank you very much, Bill. I think this next question would be for Rahul or whoever wants to take it, but you've alluded to this—that retirement did quite well in the third quarter, growing 15%, much higher than in the first and second quarters. I was hoping you could speak more to what's driving the growth there?

Rahul Kanwar, President and COO

I think it's primarily we’ve been working on a number of large deals and bringing them live. As they come live, we see our revenue take up. There was some backlog on that revenue that showed up in the quarter, which we were happy to see. We do think that we have some more opportunity to have these kinds of step changes in 2024 as well.

Operator, Operator

Thank you. We will now hear from James Faucette at Morgan Stanley.

James Faucette, Analyst

Thank you very much. Just a quick question on Azus. It was great to see the press release on ES Eclipse earlier today. Can you share any insights on how the new client figure of 60 compares to last year? What does a more stable hedge fund formation market look like? I'm trying to understand the growth trajectory and potential for indiscernible, particularly regarding ES Eclipse.

William Stone, Chairman and CEO

I think there’s two things going on in that business; however, as it relates to Eclipse, the number of new clients we have this year is maybe 1.5 times what we had in kind of a similar period last year. We are accelerating and seeing a lot of acceptance. It's not just new hedge funds; we continue to add fixed income workflows, derivative workflows, and other operational workflows. The kinds of organizations that this suite of software and services appeal to keep getting bigger. Our markets are expanding, and our sales progress is strong. However, there is a little bit of an impact of market volatility and equity volumes that shows up in the numbers.

James Faucette, Analyst

Got it. And then I think in the last couple of years, pricing has been an issue across the industry. How should we think about what the contribution of price has been to the growth this year, at least your outlook for this year?

Brian Schell, CFO

As we look at this and we factor this in, this is kind of a mix relative to the flows, inflows, and outflows. I think we kind of talked about the $130 million to $150 million range. It’s sometimes hard to disaggregate a single factor, and that builds over time. We’re seeing nice price increases, and a lot of them already have CPI adjustments or automatic adjustments, so they kick in. We’re seeing adoption, putting this in place. It's not an insidious contributor to incremental revenue growth. Expect to see more on a go-forward basis.

William Stone, Chairman and CEO

Yes. What you're seeing in price, the numbers that Brian just talked about, still represents maybe a third to half of our client base in a given year. As we get more automatic on these escalators and have conversations in 2024, we do expect that'll continue to help us.

Brian Schell, CFO

And James, we will continue to innovate, allowing our clients to feel good about what we're spending their money on. If you look at our R&D spend, it goes up every quarter, it goes up every year. This year, we'll spend close to $500 million, and that's in addition to what we spend on Blue Prism or other investments. This gives our clients a more robust offering across all the different segments we serve.

Surinder Thind, Analyst

Thank you. Bill, just one big picture question here, just in terms of how are you thinking about automation technologies in general, such as RPA, and the grander scheme of productivity enhancements. There's a lot of hype around generative AI. Is there complementary stuff here? Is there competition between the newer technologies or different technologies? How should we think about the market opportunity?

William Stone, Chairman and CEO

The whole key to this kind of business is how efficient can you be? You need to be in balance. Some of our customers do millions of trades a day. They want us to process, balance, and get ready to trade the next day. That's a big part of what we do and how we’re using the new technologies. It allows us to spot problems before they become a crisis while being there for our clients. When COVID hit, we had all kinds of clients coming to us because we stood up and kept processing all through that time. These new technologies allow us to do things faster and easier, but you have to have the right controls, procedures, and processes as you add sophisticated technology.

Surinder Thind, Analyst

That’s helpful. Turning to the health care business here, just as we look over the next year in DomaniRx and the investments that you've made, any update on progress? How should we think about the cadence? It looks like the healthcare business has stabilized in its current format. Any color there, please.

William Stone, Chairman and CEO

It is stabilizing. We've improved our relationships with our clients. We have huge opportunities with DomaniRx and are on schedule to put tens of millions of lives under DomaniRx in the first quarter of 2024. We're optimistic, and we think healthcare is an excellent segment to be in with a lot of opportunity.

Surinder Thind, Analyst

Just in terms of the investments you've made, does healthcare operate relatively independently within the organization? Or how should we think about that business in terms of the amount of investment, and your ability to leverage internal resources?

William Stone, Chairman and CEO

Most of these healthcare organizations have insurance backgrounds in them. A big singular client is Aetna, CVS, and Cigna. We also pitch to other major healthcare and insurance organizations like Anthem. The health and wealth process is pretty important. As you have an aging population, those working may have a relative that gets ill, so you need to take care of them and understand the provider networks, which allows us to add value to our clients across segments. We've made the investment and faced challenges, but perseverance is key in large system developments.

Rahul Kanwar, President and COO

To add to that, there is a fair amount of overlap internally on the compute that we're using in the data centers and operational processes, so the businesses are helping each other.

Operator, Operator

Thank you. We'll take a follow-up question now from Peter Heckmann at D.A. Davidson.

Peter Heckmann, Analyst

I apologize if I missed it. Did you provide an updated target date for the first big conversion on Domani?

William Stone, Chairman and CEO

Yes. We're going to convert and have a big drug discount card business that will begin in the first quarter of 2024, affecting tens of millions of lives.

Peter Heckmann, Analyst

Okay. 2024. Regarding carryover investments from DST, could you remind us what's left in the unconsolidated affiliates? I would have expected that investment number to be falling and moving into the cash column, but we still have a number of fairly illiquid investments in that category.

Brian Schell, CFO

Yes, there's still more there. I would say the most illiquid are a lot of real estate that we are continuing to market. That's a tough market right now, particularly in properties located in downtown centers. Some investments yield positive results, but we're not pulling those into earnings on an active basis, even though it is a positive number. We are winding it down. Those real estate assets are probably going to take some time.

Operator, Operator

Thank you. And gentlemen, it appears we have no further questions this afternoon. Mr. Stone, I'd like to turn things back to you for any closing comments.

William Stone, Chairman and CEO

Well, again, we appreciate all of you being on. We appreciate the questions we got, and we value where we stand. We look forward to talking to you after the end of the year. Thanks.

Operator, Operator

Thank you, Mr. Stone. Ladies and gentlemen, that will conclude the SS&C Technologies Q3 2023 Earnings Call. Again, I would like to thank you all so much for joining us and wish you all a great day. Goodbye.