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SS&C Technologies Climbs to New Highs on a Solid Quarter, Another Big Acquisition

SS&C Technologies Holdings (NASDAQ: SSNC) announced strong second-quarter 2018 results on Thursday after the market closed, marking the financial services software company's first full quarter of consolidated results following its $5.4 billion acquisition of DST. If that weren't enough, SS&C detailed another large acquisition to further bolster its reach.

With shares up more than 4% and closing at a fresh 52-week high to end the week, let's take a closer look at how SS&C ended the first half, as well as what investors should expect in the coming months.

SS&C Technologies results: The raw numbers

What happened with SS&C this quarter?

  • On a non-GAAP basis -- which adjusts for recently adopted accounting standards and purchase accounting adjustments to deferred revenue from acquisitions -- revenue increased 119.4% to $908.5 million. This pronounced growth was largely driven by contributions from the DST acquisition.
  • Adjusted net income went up 60.7% year over year to $154.6 million, while adjusted net income per share grew 34.8% to $0.46.
  • By comparison, SS&C's guidance provided in May called for lower adjusted earnings in the range of $131.6 million to $140.8 million and adjusted revenue of $895 million to $915 million.
  • Within the top line, adjusted software-enabled services revenue grew 173.1% to $908.5 million, while license and maintenance revenue rose 16.1% to $164.3 million.
  • Adjusted consolidated EBITDA jumped 78.3% to $291.8 million.
  • Subsequent to the end of the quarter on July 31, 2018, SS&C announced a definitive agreement to acquire financial services software company Eze Software for $1.45 billion in cash. The purchase will add 1,050 employees in 15 offices and over 2,500 clients across five continents.

What management had to say

SS&C chairman and CEO Bill Stone stated:

Looking ahead

For the third quarter of 2018, SS&C expects adjusted revenue ranging from $992 million to $1.012 billion, which should translate to adjusted net income of $162 million to $168 million. Based on its anticipated diluted share count, that should mean adjusted earnings per share in the range of $0.64 to $0.66.

SS&C modestly increased its full-year 2018 guidance to call for adjusted revenue to be in the range of $3.356 billion to $3.396 billion (up from $3.344 billion to $3.404 billion previously) and adjusted net income of $607 million to $617 million (up from $546.7 million to $575.3 million before).

All things considered, this was a straightforward quarterly beat-and-raise scenario from SS&C, followed by the extension of its successful pursuit of substantial acquisitive growth. And I think investors were justified in driving the stock to new heights in response.

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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.