SS&C Technologies Holdings (SSNC) Q3 2026 earnings call transcript

Hi, everyone. Welcome and thank you for joining us for our third quarter 2026 earnings call. I'm Justine Stone, Head of IR for SS&C. With me today is Bill Stone, Chairman and Chief Executive Officer, Rahul Kandwar, 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 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 factor section of our most recent annual report on Form 10-K, which is on file with SEC, it can also be accessed on our website.

These forward-looking statements represent our expectations only as of today, October 22, 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 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 relations is located on the investor relations section of our website at www. ssctech. com.

I will now turn the call over to Bill.

Thanks, Justine, and welcome, everyone. I'm happy to report another strong quarter for SS&C with growth in revenues, earnings, and margin expansion. We have momentum to finish the year strong. Our third quarter results were adjusted revenues of $1.691 billion, up 7.8%, and adjusted diluted earnings per share of $1.78, a 14.8% increase. We delivered record-adjusted consolidated EBITDA of $674,800,000, up 9%, and an adjusted EBITDA margin of 39.9%, 40 basis points improvement.

Adjusted organic revenue growth was 5.2%, with continued performance by our largest businesses. Throughout the quarter, we had strong sales to both new and existing customers, achieved implementation milestones, and benefited from market tailwinds. Our pipelines continue to grow, and we are bullish on several large mandates as we look into 2027. For the nine months ended September 30, 2026, cash from operating activities were $1.216 billion, up 10.4% year-over-year. This quarter, we returned $225 million to shareholders, which included 1.9 million shares, repurchased for $154.8 million, and $78.5 million in dividends.

In August, we increased our common stock dividend 11.1% to $1.20 per share annually, which reflects the strength and consistency of our cash flow. Our business keeps generating strong recurring free cash flow, and that gives us real flexibility in how we put capital to work. We can raise our dividend, keep buying back shares, pay down debt, and pursue high-quality acquisitions all at once. We don't have to choose.

On M&A, the opportunity set is growing as private equity firms look to exit some of their holdings. We continue to pursue the right deals aggressively, but we'll stay disciplined on price. Financial services technology and services M&A continue to command high valuations, making our own stock one of the most attractive investments we can make. Last month, more than 1,000 leaders from financial services and healthcare clients joined us in Orlando for SS&C Deliver, our annual client conference. The message from that room was clear. Our clients are no longer asking whether to transform. They're asking how, how fast, and with whom.

At Deliver, we unveiled a portfolio of next-generation solutions built on two SS&C platforms, AI Gateway, or AI Governance Platform, and Work HQ, or award-winning agentic orchestration platform. Together, they let our clients put AI agents to work on their most complex, highly regulated workflows. These agents work securely with governance built in from day one. Agentec AI is moving quickly from experimentation into production. We see it inside SSSE, where our customer zero program is driving innovation and efficiency across all operations. To date, over 900 agentic workflows, 200 AI agents, and over 60 digital workers have been built in the Work HQ development environment as our business units explore dozens of use cases.

We're bringing the same approach to tokenization as traditional and digital assets come together. Our clients need infrastructure that handles both, and SSSE already sits at the center of that infrastructure. Across all of this, our clients are rethinking their operating models end to end. That's a transformation, not a single technology purchase. It takes a partner with deep domain expertise, global scale, and a proven track record of executions.

Few companies can bring all three. SS&C can, and we're doing it today. I'll now turn the call over to Rahul to discuss the quarter in more detail.

Thanks, Bill. As you noted, we delivered strong third-quarter results with 5.2% organic revenue growth and 39.9% EBITDA margins. These results are driven by deep customer relationships and the critical role our products and services play. Our clients keep growing with us, and the multiple ways we deliver broad and deep solutions, including outsourcing, co-sourcing, and liftouts, are a competitive advantage.

In our technology businesses, we see a steady rate of multi-year renewals, reflecting our customers' confidence in the enduring benefit they will receive from our applications. We also see sustained interest in our new products and services, reinforcing that as a technology provider and outsourcer with scale, we are uniquely positioned to deliver the next generation of AI-enhanced applications. We handle huge volumes of trades, reconciliations, NAV calculations, investor transactions, regulatory filings, and hundreds of other functions that require expertise. Our intelligent automation and analytics business, built around the Blue Prism acquisition in 2022, is at the center of how we capture the opportunities new technologies bring.

As Bill mentioned, we have hundreds of AI-enhanced processes and agents in production, many more in development. These make us faster and more accurate and expand our capacity to take on new business as our clients grow. Externally, our new products are gaining traction. We're also bringing AI directly to clients through collaborations with frontier model companies, integrations with the leading AI platforms, and new features built into our applications. Our global footprint is growing and remains a competitive advantage. We are expanding our presence in the Middle East, Australia, and Europe, and have recently expanded our operations in Luxembourg and Thailand.

With that, I'll turn it over to Brian to walk through the financials.

Thanks, Rahul, and good day, everyone. Unless noted otherwise, the quarterly comparisons are to Q3 2025. As disclosed in our press release, our Q3 2026 gap results reflect revenues of $1.69 billion, dollars, net income of $199 million, and diluted earnings per share of 83 cents. Our adjusted non-GAAP results include revenues of $1.691 billion, an increase of 7.8 percent, and adjusted diluted EPS of $1.78, a 14.8 percent increase. The adjusted revenue increase of $122 million included acquisitions of $39 million and a small favorable impact from foreign exchange of approximately $1.7 million. As a result, adjusted organic revenue growth on a constant currency basis was 5.2%, and our core expenses increased 4.3% of $42 million, which also excludes acquisitions and impact of FX.

Adjusted consolidated EBITDA was $675 million, reflecting an increase of $56 million dollars or 9%, a margin of 39.9%, the 40 basis point expansion. Net interest expense of the third quarter was a hundred seven million dollars and increase of three million dollars compared to last year. Adjusted net income was 429 million dollars, up 9.6% resulting in the adjusted diluted EPS of $1.78. Our effective non-GAAP tax rate was 22.5% this quarter. Note for For comparison purposes, we have recast the 2025 adjusted net income to reflect the full-year effect of tax rate of 22%. The diluted share count is down nearly 5% to $20.46 million from 252.6 million shares year-over-year, primarily due to the continued impact of Treasury share purchases.

Cash flow from operating activities grew 10 largely driven by growth and earnings SS ended the third quarter with million in cash and cash equivalents and billion in gross debt SS&C's net debt was $7 billion and our last 12 months consolidated EBITDA was $2.7 billion. The resulting net leverage ratio is 2.63.

We are currently in the process of refinancing. our $2 billion of notes due next year, and we'll provide an update when that has been completed.

As we look forward to the fourth quarter and 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 to 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 and sales and marketing.

Specifically, we have assumed short-term interest rates to 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 revenues, and a stronger weighting to share repurchases versus debt reduction. For the fourth quarter of 26, we expect revenue to be in the range of $1.7 to $1.74 billion and 4% organic revenue growth at the midpoint.

Adjusted net income in the range of $454 to $470 million. Interest expense, excluding amortization of deferred financing costs and original issue discount, in the range of $103 to $105 million. and adjusted diluted EPS in the range of $1.88 to $1.94. For the full year 2026, we increased several revenue and earnings expectations as follows. Revenue to be in the range of $6.736 to $6.776 billion and 5.5% organic revenue growth at the midpoint.

Adjusted net income in the range of $1.726 to $1.742 billion adjusted diluted EPS in a range of $7.11 to $7.17, reflecting approximately 16.3% growth at the midpoint. We are now targeting EBITDA growth of 10%, EBITDA margin expansion of 90 basis points for the year, and exiting the year with 41% EBITDA margins. And now, back to Bill.

Thanks, Brian. We're pleased with our third quarter and the momentum we're carrying into the rest of the year. We exceeded expectations on revenue and margins, and we are raising our outlook for the full year. Our clients continue to invest in SS&C and expand their relationships with us, and our pipelines are healthy across our businesses and region.

As we look ahead to 2027, we're excited about the opportunities in front of us. Demand for our outsourcing solutions remains strong. Our technology keeps getting better. And the capabilities we're building are changing how we serve clients. As always, we'll stay disciplined in how we operate, invest, and allocate capital to create long-term shareholder value. And with that, we'll start taking questions.

Ben, I think in general, right, it's, again, that we have a lot of pretty big mandates in our pipelines. And while we're getting buy signals all over the place, you know, we prefer ink on contracts. You know, and so that's the thing that changes, you know, organic revenue growth, you know, 100, 150 basis points, 200 basis points. And, you know, that's just the nature of large-scale contracts.

You know, and so, you know, our contracts now could be $25, $50 million and up. And, you know, so there's a lot of lawyers out there. They haven't gone away. You know, and so it's getting that down and negotiated and signed and then getting them live. Got it. Nope, that makes total sense.

Hey, Dean, very quickly, if I could just add to the back of that. You know, the other thing is, as you will know, absolute revenue is actually up in Q4 relative to Q3, right? And very much in line with kind of, I'd say, ahead of where we thought we were going to be for the year. So most of this is really just quarter over quarter timing. So if you look back at Q3 and Q4 last year, that's probably part of the explanation. That was one of the largest growth quarters we had last year, fourth quarter of last year, as you recall. too.

Well, as you see, right, I mean, there's been a lot of fintech M&A in the last you know, 90 days even. And the multiples are pretty, pretty eye popping. You know, so we think we have very valuable businesses. You know, a number of our businesses are bigger in those areas than some of the M&A that's going on and more profitable. So, you know, we have big successful businesses and, you know, we'll probably expand. And, you know, if we could find stuff in fund administration, we would.

But, you know, we've probably bought 20 fund administration companies, you know, over the last 20 years, and, you know, we were kind of the pioneer in that, and now they drive prices to points where, you know, you wonder if that's where we should go. And we've also done really a great job of transforming our global investor and distribution services that we acquired with DST.

That's now got great momentum with Insignia. That's still a very large client with a lot of work for us to do. But on what we've done for them so far, outsourcing their business as usual to us has been a very big success. And I believe that's what's going to happen with a number of other large institutions that become somewhat constricted in what they can do and how fast they can do it.

We move a little faster. We're a little more decisive in what we do. As I've said many times, we don't dabble. As Rahul said earlier, we bought Blue Prism in 2022 for about $1.6 billion. Last year we bought Calistone, which gives us a real leg up in tokenization, and they also run about a 7,000 funds network So we don't dabble.

We get in, we get the expertise, and we distribute it on a global scale. Excellent. Thank you. Thank you.

You know, Kevin, you've been around us for a while, and you kind of understand the process we go through to kind of validate what acquisitions we want and what areas we want to get larger in. We would do a big acquisition, and there's a lot of companies out there that ever since the mass scare on SaaS businesses, some of them haven't recovered nearly like we have.

You know, I don't believe they have as strong a business as we do, but, you know, that's somewhat in the eye of the beholder. But, you know, we continue, like, earnings are up 14.8%, you know, and, you know, we generate $1.216 billion in cash flow in nine months. And, you know, as we said in our prepared remarks, you know, we don't have to choose on what we want to do. We can do all of them. We can fund them ourselves.

You know, we can execute. the capital markets are very friendly to us. They know we borrow money and we pay it back. And we work hard for our shareholders And that a constant theme with anyone you talk to at SS So you know we pretty focused We're pretty ambitious. And we're also pretty judicious. So I think that's kind of what we're looking at at M&A.

You know, I'm pretty certain there's some really big places that are for sale. And we just have to make sure that if we were to buy one, we got it at the right price.

Well, you know, Kevin, again, we have almost all of the large-scale global macro funds, you know, so – and they tend to be the ones hoovering up the most assets that are out there. So we get a very large chunk of those, and, you know, we invest heavily to make sure that we can satisfy their needs and then also branch into where they want to go, you know, whether that's Abu Dhabi or that's private markets, you know. So it's something that we invest a lot of money, and it has proven, as you've seen on how big those assets grow every quarter, to have been a pretty successful strategy. And I think, you know, Rahul's really close to that business.

Yeah, so in addition to, you know, our big clients having a lot of success in getting bigger, the other thing that's happening is with all the focus on technology, folks are starting to realize that ownership of the entire technology stack that runs the fund administration business is a huge advantage, right? And gives us the opportunity to deploy AI and new functionality at a very, very quick pace. And so that's helped us. It's helped us in the win rate.

Yeah, and it gives us, you know, we talk about across the entire fund administration tech stack. You know, we have very powerful trading systems. We have a very powerful network that's in 60, 70 countries. So we have a big fixed network. So there's not many things that we don't do. We have models that will value fixed income.

We have tons of different strategies across all the different fund-type companies. So we're pretty optimistic about where we sit, and we remain very competitive.

Well, again, right now, if you look at our stock trading in the mid-80s, we're going to generate $7.25 in cash or something like that, and we pay $1.20 dividend. So that gets you up to, say, $8.50 maybe. So $8.50 on an $85 stock is 10%. So we think buying back our stock where we say that 850 on every share is a little more attractive than paying down 6.5%, 7% debt.

No whose interest is tax deductible. So that's kind of the math we do. But we still pay down some debt all the time and we buy back shares all the time. And we look at acquisitions all the time and we raise our dividend. most of the time. So I think that's kind of how we look at the capital allocation.

And, you know, people say, so, you know, why do you talk to your debt holders? Because we might want to do a big acquisition and we're going to have to borrow money, right? So it's making sure that we have constant communications with the banks. We have constant communications with our clients, you know, as well as with, obviously, our workforce. And that's something that I think we really pride ourselves on.

I think it's two things. One, you know, the second part of what you said there is what we think. There's a fair amount of product development, new product bring into market in that process. And so I think there's probably a natural lag that is somewhat reflected in the numbers. But I think the other thing that I would highlight is that business is at the center of all the AI-related commentary that you've heard us making our prepared remarks and really the new products, the new services, the strength in our fund administration business, the strength in our technology businesses. A lot of that is driven out of that. So sometimes the growth and the success we have is reflected in different places as opposed to just in that business.

As you well know, we also – it's kind of a crossover. You know, what we think some of our smarter clients recognize that RPA works very well for them in some large sections of what they do. And, you know, ripping out your infrastructure is long, painful, breaking rocks in the desert. But if you can keep your RPA bots working for you and then add agentic agents, you get the best of both worlds because you get to transition at your speed and you still are automating and automating and automating. And that's something that we think is very attractive, and we're attracting some very big clients to our platform.

Well, you know, we had a very large renewal in the last quarter in WIT, and, you know, those things with 606, you're going to get spikes in revenue. And so there's no way around that. And, you know, I would say that, you know, what they're doing is extending their contracts, you know, for multiple years, you know, five to ten years. And that's a great big, great big flush to earnings or to revenue. which also goes to earnings pretty much.

So I would say it's not, you know, our demand in WIT is high, remains high. It remains widespread, global. And so I don't think that the reduction in organic revenue in Q3 compared to Q2 is anything other than that really big renewal.

Yeah, well, I think we really believe that the large-scale financial institutions around the world need to have a partner that can understand their business and then platform them away from where they are now so that they get a chance to improve their business. So when you think about a large-scale system going into a large-scale institution, sometimes the institution doesn't stay up with the releases, and they can get multiple releases behind. And then it becomes almost impossible to catch up.

And that means they sacrifice all the improvements in those applications when companies like us come out with new releases. So that's what's driving that. I don't think it's gonna change. I think more and more institutions are gonna recognize that SSC is a specialist firm right We have thousands and thousands of CPAs and chartered accountants and MBAs and CFAs and mathematicians So you know it specialized No we not investment bankers We're not investment professionals from the standpoint of, you know, which sector or which area of the world that you should be investing in. But wherever you're investing, we're expert and how to process them, how to make sure the regulators are satisfied, how to get information back to you very quickly, and have it in a format that you want.

Well, you know, of course, you know, really smart organizations are pushing back on price all the time. You know, this is just one more, you know, kind of arrow in their quiver about, you know, where to come at. You know, technology companies such as us, you know, and what we have to do is make sure that our offering is differentiated.

You really can't walk into the Mercedes dealership and think you're going to pay for a Volkswagen. You're not going to be able to do that, and that's what we do. We spend more money on R&D. We spend more money training our people. We spend more money making sure we have a global footprint so that companies such as yours and others can feel comfortable that we have the expertise, the broad-based knowledge of different markets and different time zones, and that we're going to be there.

And that peace of mind for senior executives is pretty important. And that's what we strive to do is to give, you know, whether it's Ted Pick or Jamie Dimon, the feeling that, hey, we're there. We're not going anywhere, and we can process volume, and we can process it globally.

Well, you know, we talked about it a little bit before, and Rahul's done a lot of work in this area, too. I just learned how to spell its organization. But, you know, we really believe that, you know, the concept that, you know, the token is like a poker chip, so it becomes very portable. And it also isn't something that you have to go do a 10Q and a 10K and everything in order to get some liquidity. So we think it's going to continue to be attractive in all kinds of different markets.

And Calistone continues to grow handsomely in the double digits.

I think maybe the one thing that I would add is what we've always tried to do across all of our services and capabilities is be ready for what our customers might need us for. This is a perfect example of that. So we've got customers at every end of the spectrum, some that are embracing it wholeheartedly, some that are experimenting, some that want to learn more. And the fact that we have this capability is yet another differentiator.

You know, Patrick, I think that there's a lot of noise. I think there's a lot of companies that are trying things. And you get some of the people that are on the front office side of asset managers and different funds that basically say, look, I can get my kid with AI, and in two weeks we could rewrite Geneva.

Yeah, good luck. I would suggest you get well-provisioned for those two weeks because at the end of the two weeks you'll go, wow, where should we get started? So the complexity, the scale, all of that comes into being able to deploy. and as you know you're highly regulated and as soon as something comes up and a genetic didn't do it right and something got duped or something like that the brakes come on so fast that you can't get it you can't get it released again so I think that's what we've tried to be is a trusted partner that can show you come into our offices we process trades to the millions every day, all kinds of transactions all over the world in every currency.

Come see how we do it. Come see how we do Work HQ. Come see how our governance and AI gateway protects us and just how we can deliver it to you so it protects you. So that's what we're doing, and we think it's a very, very sound strategy. We've won some very nice accounts, and I know we've mentioned Marsh before, but there's others that we've been adding.

But it's new technology, and you have to get people to adopt it, and they have to get comfortable. And then you have to go, go, go, go. When I started in this business, people said, I would never put my assets on a PC. Well, you're not putting your assets on a PC.

You know, kind of your dumb whatever. So your assets are a DTC, right? And this is just an accounting system. So it is something where we need to continue to teach and educate and have people be comfortable with what they're doing and how they can use AI and all the different models, which you know are coming out every week or every day, and try to make it so that you succeed with the technology. You don't drown in it. And I think we've been doing this for a long time, whether it's when they first came out with Excel or, you know, D-Base and then Novell Networks and then everything's client server.

You know, we always tried to be true client server. I never quite knew what that meant. We weren't ever false client server that I knew of. You know, and so that's how technology goes. You know, and you were around when, you know, the Internet and the bubble, and then the bubble pops. and, ooh, that hurt. So I think that's what we're trying to do is take a measured approach.

We have, I think, very slick technology that works, and we have a lot of confidence that it's going to drive a lot of revenue.

I think if you normalize the growth rates, it probably is at mid-single digits now, right? You just got to – it's what Bill said earlier, is you really do have to strip out the – and normalize the 606-related spikes and things like that. But if you – we had a really big Q2 as one example. In general, when we think about that business and we look at it in terms of, you know, annual recurring revenue and correct for some of those kinds of things, we're seeing a business pretty close to mid-single digits.

So like Black Diamond, which is our primary wealth platform, is growing at double digits, you know, and continues to show strength, you know, against all the other wealth platforms that are out there. And we think that will continue.

You know, once again, we really appreciate everybody being on our third quarter conference call. And, you know, we're working hard in the fourth quarter. And, you know, we hope to talk to you in February and discuss another strong quarter, which will be Q4 of 26. Thank you.