SS&C Demonstrates the Fruits of Its Acquisitions
SS&C Technologies Holdings (NASDAQ: SSNC) released exceptional fourth-quarter 2018 results on Thursday after the market closed, handily beating its guidance yet again and capping a year in which it spent more than $8 billion in pursuit of acquisitive growth. But that wasn't the only bright spot in SS&C's report.
With shares up 6.3% on Friday in response, let's take a closer look at how the financial-services software leader finished 2018, as well as what investors should be watching in the year ahead.
SS&C Technologies results: The raw numbers
What happened with SS&C this quarter?
- On a non-GAAP basis, which adjusts for new accounting standards and purchase accounting adjustments to deferred revenue from acquisitions, SS&C's revenue grew 157.8%, to $1.133 billion, driven by its acquisition of DST early last year.
- Adjusted net income jumped 112.2%, to $243 million, and climbed 75.9% on a per-share basis, to $0.95.
- Both the top and bottom lines arrived above the high ends of SS&C's guidance provided in November, which called for adjusted revenue of $1.075 billion to $1.085 billion and adjusted net income per share of $0.82 to $0.86.
- Adjusted software-enabled services revenue increased 234.3%, to $935.2 million.
- Adjusted license and maintenance revenue rose 13.1%, to $175.8 million.
- Adjusted consolidated EBITDA grew 132.5%, to $444.8 million.
- On November 16, 2018, SS&C closed on its previously announced $1.5 billion acquisition of Intralinks Holdings, comprised of $1 billion in cash and $500 million in SS&C stock.
- On February 12, 2019, SS&C approved a 25% increase in its quarterly dividend to $0.10 per share.
What management had to say
SS&C chairman and CEO Bill Stone stated:
Looking ahead
For the first quarter of 2019, SS&C expects adjusted revenue of $1.132 billion to $1.162 billion and adjusted net income of $217 million to $233 million. Based on the company's expected diluted share count next quarter, that should translate to adjusted earnings per share in the approximate range of $0.83 to $0.89.
Finally, for the full-year 2019, SS&C sees adjusted revenue climbing to a range of $4.69 billion to $4.79 billion, with adjusted net income of $970 million to $1.015 billion. Adjusted net income per share should be in the range of $3.65 to $3.82. By comparison -- and though we don't usually pay close attention to Wall Street's demands -- most analysts were modeling 2019 earnings of only $3.57 per share on revenue near the midpoint of SS&C's guidance range.
In the end, from SS&C's strong quarterly beat to its higher-than-expected profit targets for the coming year, there was nothing not to love about this report -- and SSNC shares are responding accordingly.
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Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends SS&C Technologies Holdings. The Motley Fool has a disclosure policy.