Earnings Call Transcript - SSNC Q2 2023

Operator, Operator

Thank you for being here. My name is Bailey and I will be your conference operator today. I would like to welcome everyone to the SS&C Technologies Q2 2023 Earnings Call. All lines have been muted to eliminate any background noise. After the speakers' remarks, there will be a question-and-answer session. I will now hand the call over to Justine Stone, Head of Investor Relations. You may begin.

Justine Stone, Head of Investor Relations

Welcome and thank you for joining us for our Q2 2023 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 Patrick Pedonti, 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 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 be accessed on our website. These forward-looking statements represent our expectations only as of today, July 27th, 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 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.

Bill Stone, Chairman and CEO

Thanks, Justine, and thanks everyone for joining. Results for the second quarter are $1.363 million in adjusted revenue, up 2.5%, and our adjusted diluted earnings per share were $1.08, an increase in interest expense which was $118 million in Q2 2023 compared to $68 million in Q2 2022, and general expenses have put some pressure on our bottom line. Adjusted consolidated EBITDA was $502.4 million, and our EBITDA margin was 36.8%, up 103 basis points from Q2 2022. Our second quarter adjusted organic revenue was up 2.5%, driven by strength in our alternatives business, particularly private markets, which was up over 20%, Intralinks, and retirement businesses. SS&C generated cash from operating activities of $584.2 million for the six months ended June 30, up $132 million or 30.5% over the same period last year. We paid down $125 million in debt in Q2, bringing our consolidated net leverage ratio to 3.27 times and our net secured leverage ratio to 2.28 times consolidated EBITDA. In Q2, we bought back 2 million shares for $111.9 million at an average price of $56.17 per share, and we will continue to target 50% of our cash flow to stock buybacks and 50% to debt pay down. Our M&A strategy remains disciplined and we have yet to see movement on any large assets. We do think that there will be opportunities to do some tuck-in acquisitions in the near term. Expense management will be a priority for the remainder of the year. Our internal deployment of Blue Prism digital workers is well underway, and we are on track to meet our targets. We currently have over 500 digital workers deployed across all business units. We believe this is one of the fastest deployments of digital workers in Blue Prism's history. Currently, the largest use of Blue Prism is in our goods and fund administration businesses, but we see significant opportunities in retirement, health, regulatory, and tax reporting. Operational functions in production with digital workers include reconciliation, break investigation and resolution, statement downloads, daily price files, investor contract notes, and statements and reporting. We expect the FTE savings to accelerate in the back half of the year as these live processes are embedded in the business and the full benefits are realized. I'll now turn it over to Rahul.

Rahul Kanwar, President and COO

Thanks, Bill. Our business continues to strengthen as we prioritize innovation and new product rollout. Intralinks rebounded with 9% growth in Q2. Average deal sizes are up, and price increases have been implemented. Deal services, which offer redaction and NDA services, have become Intralinks' fastest-growing product. In our investor portal business, we launched InView, a purpose-built portal designed for investors to aggregate all of their fund reports into a single view and make data-driven decisions. Initial client feedback has been positive. As Bill mentioned, private markets continue to accelerate with strong growth in Q2. Private credit, in particular, is a big opportunity for us, and our offering has made significant advancements as we go live on the SS&C private cloud environment. GoCheck integration, loan platform integration, and our robust data platform are all key functionalities to manage complex fund structures. Retirement, which grew 7% in Q2, has several multimillion-dollar opportunities in the pipeline. We recently surpassed $1 billion on our retirement income clearing and calculation platform and have grown the number of participants 42% since January. Sales remained strong in Q2, with headline wins in fund services, Advent, and GIDS. Some key attributes that our prospects cited were strong functionality, the ability to purchase both software and services from a single vendor, and our commitment to innovation. Sales priorities remain disciplined execution, offering holistic and comprehensive solutions for customers, and paying close attention to their onboarding experience. As one example, we recently announced that Blue Prism has partnered with the National Health Service's Shared Business Services team to provide additional services to the NHS in England. Using Blue Prism's intelligent automation platform, NHS organizations can improve patient care, expedite patient processing, and transform standardized services, contact center communications, HR, finance, and other corporate functions. These new capabilities mirror the needs of our pharmacy and healthcare customers in SS&C Health and review our health care products and services, including DomaniRx, along with Blue Prism to be a powerful solution. I will now turn it over to Patrick to run through the financials.

Patrick Pedonti, CFO

Thanks. Results for the second quarter were GAAP revenues of $1,362.6 million, GAAP net income of $130.7 million, and GAAP EPS of $0.51. Adjusted revenues were $1,363.4 million. Adjusted revenues were up 2.5%, adjusted operating income increased 6.7%, and adjusted diluted EPS was $1.08, a 1.8% decrease from Q2 2022 due to the impact of higher interest rates on our debt. Adjusted organic revenue increase on a constant basis was 2.5%. Acquisitions contributed $5.8 million. Foreign exchange had an unfavorable impact of $3.4 million. We had strength across several product lines, including alternatives, GIDS transfer agency services, Blue Prism, and the Intralinks businesses. Adjusted operating margins expanded in Q2 2023 as we manage expense growth. Adjusted operating income for the second quarter of 2023 increased $30.5 million or 6.7% from the second quarter of 2022. Adjusted operating margins were 35.6% in the second quarter compared to 34.2% in the second quarter of 2022. Excluding acquisitions, expenses increased 0.6% on a constant currency basis. Acquisitions added $3.8 million of expenses, and foreign currency decreased costs by $6.2 million. Net interest expense in the second quarter was $118 million, an increase of $50.3 million or 74% from Q2 2022. Q2 2023 net interest expense includes $3.4 million of non-cash amortized financing costs and OID. The average interest rate in the quarter was 6.59% compared to 3.45% in the second quarter of 2022. Adjusted net income, as defined in Note 4, was $274.6 million and adjusted EPS was $1.08, and the effective tax rate was 26%. Diluted shares decreased to $255 million from $257 million in Q1. Higher share repurchases during the first and second quarters led to the decrease. On the balance sheet and cash flow, we ended the second quarter with $439.7 million in cash and cash equivalents and $7 billion of gross debt. SS&C's net debt, which excludes cash and cash equivalents of $114.4 million held at DomaniRx, was $6.6 billion as of June 30. Operating cash flow for the six months was $584.2 million, a $136.7 million or 30.5% increase compared to the same period in 2022. And for the six months ended June 30, we purchased treasury stock for a total of $246.6 million or 4.3 million shares at an average price of $57.78. We declared and paid a dividend of $101 million in common stock compared to $102 million last year. Net debt payments for the six months were $169.8 million. And for the six months, we paid $226.9 million of interest compared to $112.6 million in 2022. In the six months, we paid income taxes of $159 million, comparable to $156.5 million in 2022, and our accounts receivable DSO was 53.1 days compared to 55.9 days as of June 2022. Capital expenditures and capitalized software totaled $121.4 million or 4.5% of revenue on a year-to-date basis. Our LTM consolidated EBITDA, which we use for covenant compliance, was $2,031.6 million as of June 30. Based on net debt of $6.6 billion, the total leverage ratio was 3.27%, and our secured leverage ratio was 2.28%. On the outlook for the remainder of the year, I'll cover a few assumptions. First, we'll continue to focus on client services. Retention rates will continue to be in the range of our most recent results. We have assumed foreign currency exchange will be at current levels. Our outlook assumes software license business will have lower growth in the second half of the year compared to previous expectations. Adjusted organic growth for the year will be between 2% and 4%. Adjusted organic growth for Q3 will be in the range of 1.5% to 4.5%. We have assumed interest rates will stay consistent with current rates for the remainder of the year, and we will manage expenses and personnel costs to improve our operating margins. We'll continue to invest in our business long-term with capital expenditures in the range of 4% of revenues, and I would expect our GAAP tax rate to continue to be approximately 26%. For the third quarter of 2023, we expect revenues in the range of $1,355 million to $1,395 million. Adjusted net income in the range of $287 million to $309 million and diluted shares in the range of $254 million to $256 million. For the full year, we expect revenues in the range of $5,469 million to $5,575 million. Adjusted net income in the range of $1,160 million to $1,225 million and diluted shares in the range of $254 million to $257 million. For the full year, we expect cash from operating activities to be in the range of $1,165 million to $1,335 million. The DST Arista 401(k) settlement, which we recently announced, is excluded from these cash flow estimates. If the court approves the settlement in 2023, we expect the impact on cash flow to be approximately $40 million net of taxes. And I'll turn it over to Bill for final comments.

Bill Stone, Chairman and CEO

Thanks, Patrick, and congratulations on your retirement. Patrick has been with SS&C since 1999, witnessing over 60 acquisitions, the go-private transaction, and our 2010 IPO. We appreciate your achievements and dedication. I also want to welcome Brian Schell to SS&C as our new CFO. Brian will start with us on August 7th, coming from his role as CFO of another company. He holds an MBA from George Washington University and has completed a Graduate Degree from the University of Notre Dame. In addition, SS&C has spent the past 37 years developing and acquiring a wide range of leading technology and adding world-class service to these products. We have consistently defended our intellectual property against misappropriation with success. Occasionally, our professional fees may increase as we engage costly legal expertise. Now, I will open the floor for questions.

Operator, Operator

Your first question comes from Kevin McVeigh with Credit Suisse.

Kevin McVeigh, Analyst

Thanks so much, and let me add my congratulations to Patrick as well, and welcome to Brian. It looks like you continue to see real nice momentum in the organic growth came in at about 2.5%, and the guide for Q3 and the full year is 3%. If I do the math, I think that implies 5% for Q4. I just want to confirm that, number one. And then that's a really nice acceleration from the beginning of the year. Maybe if I'm right on that 5%, could you maybe just help bridge from the 1% to the 5% or maybe the 2.5% that you just put up to the 5%, maybe start there?

Bill Stone, Chairman and CEO

Well, I think that we did 2.5% in Q1, in Q2 2.6%, maybe. I think in Q3, we're expecting somewhere between 1.5% and 4.5%. And for Q4, I think Patrick, what do we have for Q4 on the organic revenue growth?

Patrick Pedonti, CFO

Q4 at the midpoint in Q4 at about 4.8%, so close to 5%.

Bill Stone, Chairman and CEO

Yes. Does that answer your question, Kevin?

Kevin McVeigh, Analyst

It does, Bill. And any sense that the professional fees on IT. Just any additional thoughts around that? Because it seems like the delta on the EPS was interesting; it sounded like some medical. And then I think those professional services that you just alluded to, is that right?

Bill Stone, Chairman and CEO

Medical claims, obviously, interest expense is by far the biggest thing to impact EPS. But on an operating basis, medical claims and professional fees were more than expected in Q2. And we have no choice but to see these things through to the end. But if you don't protect your IP, then we're not protecting the shareholders' assets. And so we will continue to do that. And like I said, we've been successful a number of times.

Kevin McVeigh, Analyst

Makes sense. Thanks so much.

Operator, Operator

Your next question comes from Dan Perlin with RBC Capital Markets.

Dan Perlin, Analyst

Thanks. Bill, could you please take a moment to discuss some of the investments you mentioned in the release? You seem quite confident that they will contribute to incremental revenue growth, specifically regarding the organic growth.

Bill Stone, Chairman and CEO

We've invested significantly in building new systems, and despite challenging financial markets, we've noticed an improvement since last quarter. Our assets under administration increased by about $15 billion in Q2, which indicates positive developments for our clients that differentiate us from competitors. The technology advancements in our services make our offerings appealing to clients and prospects, allowing us to gain business from rivals. While growth can be uneven, especially with top funds, we acknowledge that some deals take time to close, particularly the larger funds. Additionally, our Aloha products and singularity have shown strong performance, and we're seeing real momentum with Black Diamond. By integrating Black Diamond with our trust accounting services, we've enabled registered investment advisors to retain assets across generations, which has proven popular. Geneva continues to excel in the large-scale hedge fund sector, and private markets saw a growth of over 20% in Q2. We have several areas of strength currently, and our focus is on executing efficiently and pursuing opportunities. We remain a profitable company generating substantial cash flow, and our competitiveness is intact. Our goal is to ensure all aspects of our operations are in harmony. Dan, do you have a follow-up?

Justine Stone, Head of Investor Relations

Sounds like maybe we lost the operator.

Patrick Pedonti, CFO

I think we lost the operator. Yes.

Bill Stone, Chairman and CEO

I thought it was a really good answer though.

Justine Stone, Head of Investor Relations

I believe we have Andrew Schmidt from Citi as our next question. The operator should be joining again soon.

Bill Stone, Chairman and CEO

Go ahead, Andrew. We must not be connecting with the speaker.

Justine Stone, Head of Investor Relations

No, they can still hear us.

Bill Stone, Chairman and CEO

Can Andrew hear us?

Justine Stone, Head of Investor Relations

I think so. I just can't open his line from where I am.

Patrick Pedonti, CFO

Yes. Yes.

Justine Stone, Head of Investor Relations

Andrew, your line should be open. Can you hear us?

Bill Stone, Chairman and CEO

Well, some of the things that we're working on as we have this lull in our conference call, we're excited about bringing Brian Schell on, and he brings a lot of experience and expertise. You obviously have big shoes to fill with Patrick. But I think our opportunity to grow is going to be tied to continuing to up our talent and execute. We have full pipelines. We have leading positions in lots of segments of financial services. We have a real opportunity in DomaniRx, and it's really bringing all that to fruition. I think that's the challenge that we have. And I think we're up for that challenge. And we're generating $502 million in EBITDA. That kind of gives you a feeling that you have enough resources to get it done.

Operator, Operator

Your next question comes from the line of Peter Heckmann with D.A. Davidson. Please go ahead.

Peter Heckmann, Analyst

Okay. Glad to be back online here. Bill, can you discuss the trade settlement process—specifically shortening the settlement cycle to one day and eventually to T? This has been a topic of discussion for quite some time. Do you see it as a potential catalyst for your clients to consider upgrading their older systems?

Bill Stone, Chairman and CEO

I think that if they have to, then they will. And if they can continue to mandate it, like a lot of them have done so far, I think they'll continue to do that. So for it to be a mad dash to get new technologies in, I don't foresee that. But there will be some that want to take advantage of the increased capability of the newer systems, the security, the speed, and then also the reconciliation parts of that stuff and making sure that everything gets processed in a very timely fashion. So, there will be some disruption, but I don't think there will be a tremendous amount of incremental revenue. Like, I don't think there's a few hundred million or something like that, right? And to move the bar on SS&C, you got to do $100 million or $200 million.

Peter Heckmann, Analyst

Right. Okay. Okay. And then Intralinks up 9% is particularly impressive given that M&A continues to be down by 25%, 30% year-over-year. I know you mentioned one area and I didn't quite catch it, but can you talk about some of the areas outside of M&A where Intralinks is outperforming and allowing that business to continue to grow?

Bill Stone, Chairman and CEO

Do you want to take that, Rahul?

Rahul Kanwar, President and COO

Sure. I think the biggest area outside of M&A is the alternatives area. That's the InView portal that I mentioned in my comments. It's the LP communication, capital call distribution, and statement distribution, those kinds of things. And as we continue to bring our businesses closer together, develop joint solutions, we're finding lots of opportunities to sell that web and LP communication system to our fund administration clients and going to market as sort of a joint package. And that's been attractive. So, that's another area where that alternatives business is growing even faster than the M&A business right now.

Bill Stone, Chairman and CEO

And I think we have like redacting services and other investments in the core offerings that have also been pretty attractive.

Peter Heckmann, Analyst

Okay, that's helpful. And then just last question. Just in terms of the way you report in this quarter, you talked about a couple of tough comps from software license fees. On an annual basis, I don't believe you're still disclosing this as a separate line item, but software license fees, are we kind of talking around $65 million, $80 million a year? Is that about the right level if we just delayed the provincial licenses?

Bill Stone, Chairman and CEO

I don't really have that off the top of my head, Pete. I would guess that we sell, yes, probably something like $20 million, $25 million a quarter.

Peter Heckmann, Analyst

Okay, all right. I appreciate it. I will get back in the queue.

Operator, Operator

Your next question comes from the line of Andrew Schmidt of Citi. Please go ahead.

Andrew Schmidt, Analyst

Hey guys. Thanks for taking my questions and let me extend my congratulations to Patrick, and look forward to working with Brian when he comes forward. I wanted to ask on the operating expense base. Obviously, it's been a volatile couple of years, and there's been more variability there than historically. Maybe just talk about just your visibility when it comes to the expense base in terms of just what to expect? On one hand, you may have had a few things; labor costs for the past year. Now, you have these legal fees picking up a little bit. On the other side of this, we also have Blue Prism benefits. So, just wondering just how will this balance out in terms of your overall margin structure and visibility going forward? Thanks a lot guys.

Patrick Pedonti, CFO

If you examine our expenses adjusted for constant currency and excluding acquisitions in Q2, they increased by 0.6%. Maintaining expense growth below 1% is quite impressive. While we've made some progress with Blue Prism, it feels like we're just in preliminary stages and won't fully hit our stride until the middle of the year. We see many opportunities to enhance our cost and expense management through the use of digital workers. This will allow our human employees to focus on more engaging tasks while digital workers handle repetitive functions. There’s considerable potential there. Occasionally, we face situations where we need to address issues regarding our IT resources, which can be costly but necessary. Additionally, we experienced some higher-than-expected medical claims in the second quarter. Given our large workforce, we want to ensure they have excellent health care, so we're willing to cover those costs.

Andrew Schmidt, Analyst

Got it. Thank you for that. And to be clear, you're still expecting operating margin in the back half. Is that correct?

Patrick Pedonti, CFO

We are.

Andrew Schmidt, Analyst

Okay. Fantastic. And then, just lastly, it sounds like growth sort of expected some slowness in terms of license revenues. What's the expectation for just license revenue pull-through in the back half, just given that, that can be more variable relative to kind of the other sources of revenue? Just curious to get your visibility around that. Thanks a lot guys.

Bill Stone, Chairman and CEO

License revenues are akin to capital expenditures for our customers. Increasingly, they are opting for outsourced services and longer-term contracts, reducing their large steel capital commitments. Therefore, I believe the license business will continue to shift towards more term licenses, possibly longer ones, which may help counterbalance the trend since longer-term licenses allow for 606 recognition. There are many factors at play, and the complexities of accounting and reporting, including GAAP and adjusted GAAP, can be quite challenging. My main focus is on cash flow and how much cash we are receiving, as cash provides a clear picture. Understanding how accounting rules are interpreted can indeed be a complicated process.

Andrew Schmidt, Analyst

Got it. Thank you, Bill.

Operator, Operator

Your next question comes from the line of James Faucette with Morgan Stanley.

Unidentified Analyst, Analyst

It's Michael for James. Thanks for taking our question. Bill, I think at a conference in late May, you were talking to buyback potential in the $700 million range. And then we have the buyback announcement for roughly $1 billion. Is there anything we should be reading into in terms of the higher quantum there just in terms of your use of free cash flow?

Bill Stone, Chairman and CEO

I mean, I don't think so. I think if we find acquisitions that we want to buy that we can get at a price where we feel like we can make some money, then I think we will go after acquisitions first. But after that, we're going to pretty much split it between stock buybacks and debt repayment. If interest rates alleviate, we'll probably allocate more to stock buybacks than we would to debt pay down. But we're not going to go 100% either way. And we view it as art more than we view it as science because we're going to try to be wise.

Unidentified Analyst, Analyst

Makes sense. Appreciate that. Maybe just a follow-up on the organic revenue cadence throughout the rest of the year. It seems like a scaling on the organic revenue side with exit rates close to 5% in Q4. But is there anything in the pipeline and/or what you guys are planning on doing from a pricing perspective that gives you visibility into that 5% number in Q4?

Bill Stone, Chairman and CEO

It's a combination of factors, including price increases and securing large-scale deals that will generate revenue in Q4, along with efforts to sell new business. I believe it's a mix of elements, and there's still work to do. However, it’s only July, so we have plenty of time and many talented individuals on our team. We anticipate results, and generally, they meet expectations.

Unidentified Analyst, Analyst

Thanks, Bill.

Operator, Operator

Your next question comes from Terry Tillman with Truist. Please go ahead.

Joe Meares, Analyst

Hey guys, this is Joe Meares on for Terry. Extend my congrats to Patrick and to Brian. It's always nice to see a fellow claim in the corporate. I have a question about Blue Prism. I think at the end of last year, you had expected about 100 digital workers, and you have 500 now. Do you expect to get to 1,000 by the end of 2023?

Bill Stone, Chairman and CEO

I think the numbers we gave at the last conference call were between 1,350 and 2,700. And I think Rahul can correct me if I'm wrong, but we would expect to have close to 2,000 by the end of the year.

Rahul Kanwar, President and COO

I think that's right.

Joe Meares, Analyst

And just a follow-up. I think in the past, you've noted about a $50,000 savings per role that's migrated to Blue Prism. Is that still accurate? Or are you seeing better savings as you've implemented more of these workers?

Bill Stone, Chairman and CEO

I would say that's still a rough estimate of where we are. As we automate different processes, there may be a wider range of what we define as a digital worker. However, we still believe the average is around $50,000, plus or minus 10%.

Joe Meares, Analyst

Great. Thanks so much guys.

Operator, Operator

Your next question comes from the line of Patrick O'Shaughnessy with Raymond James. Please go ahead.

Patrick O'Shaughnessy, Analyst

Hey good evening. Can you speak to which part of the company where your intellectual property litigation is targeted? And has the potential effect of your IP had any impact on that business at this point?

Bill Stone, Chairman and CEO

Yes, it's mainly in our fund services business. We believe it affects our operations. That's why we oppose these matters, Patrick, because competing against others who are using your own technology doesn't seem fair.

Patrick O'Shaughnessy, Analyst

Got it. Makes sense. And then what are you seeing out there in terms of deal multiples? Obviously, SimCorp sold recently at a pretty lofty multiple as data. Are there pockets where multiples are starting to come in? Or is it all still pretty frothy?

Bill Stone, Chairman and CEO

I don't really grasp either of those deals completely. However, it’s clear that the people involved are knowledgeable, and they know what they're doing. From my perspective, we're generating significant revenue, and if we remain focused, we’re likely to achieve great results. I understand that we aim for total shareholder value and prefer our stock to appreciate rather than depreciate, but the market operates on a quarterly basis. In contrast, technology and major clients don’t adhere to that timeline. They can take up to six months before finalizing a contract, and the terms can remain unchanged during that period. Our challenge is to align with our customers’ cycles and ensure we have a robust pipeline so that when delays occur, we can speed up other opportunities. As a company valued at $5.5 billion, aiming for 10% growth without attrition still means we need to generate $550 million in sales. With a 4% attrition rate, we actually need to sell $750 million, which is a substantial amount compared to many of our competitors.

Patrick O'Shaughnessy, Analyst

Understood. Thank you.

Operator, Operator

Your next question comes from the line of Alex Kramm with UBS. Please go ahead.

Alex Kramm, Analyst

Yes, good evening, everyone. I wanted to revisit the topic of organic growth for a moment. Previously, the midpoint was 3%, and it remains at 3% now. You mentioned the software licenses, which makes sense, but is there anything else that could explain the reduction? You performed better in the second quarter as well, correct?

Patrick Pedonti, CFO

I can take it.

Bill Stone, Chairman and CEO

Go ahead, Patrick.

Patrick Pedonti, CFO

I believe the outlook we provided last quarter is largely reflective of our software business. Advent is performing well as an institutional asset management platform, and we are seeing improvements in some of our other outsourcing sectors, such as alternatives, Intralinks, and our health business, compared to our expectations. Overall, while the software business continues to grow in the latter half of the year, the growth is not as strong as we had anticipated.

Alex Kramm, Analyst

Okay. And then maybe on a more positive note, the GIDS business, I don't think is kind of on this call at all to pretty solid back-to-back quarters. I mean, so in the context of the normal growth in that business, 3.5%, but seems sustainable. So just wondering if there's any incremental color if that's a good growth rate for the time being? Or if you're hopeful that it's not only stabilized, so we can actually accelerate from here?

Bill Stone, Chairman and CEO

Well, I think we've done a pretty good job of repositioning that entire business. And I think that we have some optimism about being able to close big deals. But in the business, they are very large, tens of millions annually. So, it's a long sales process. And so it is fraught with delays. So, while we have some optimism, I would say that we're watching that very closely. Rahul, any color?

Rahul Kanwar, President and COO

Well, I think I agree with everything you said. I think the other thing that I would highlight is some of our largest opportunities in the company globally are in this business, right? So to Bill's point, the sales cycle is a little bit longer. We have to keep our eye on it at all times. But in terms of a medium-term outlook, if you kind of look out even a couple of years, we do think that this business is capable of growing a lot faster than kind of low single digits than it is right now.

Alex Kramm, Analyst

All right. Very good. Thanks, guys.

Operator, Operator

There are no further questions at this time. I will turn the call to Stone.

Bill Stone, Chairman and CEO

Thank you, Bailey. Again, thanks everybody for being on the call. I can assure you that we are pretty focused, and we look forward to talking to you at the end of October. And Patrick, thanks again. See you.

Patrick Pedonti, CFO

Thank you.

Operator, Operator

This concludes today's conference call. Thank you for joining. You may now disconnect your lines.