SS&C Technologies Holdings Inc

Previous wording

Three Months Ended March 31, 2024 and 2023. Our revenues increased $72.3 million, or 5.3%, primarily due to an increase of $63.8 million in organic revenues driven by strength in the SS&C GlobeOp fund administration and virtual data room services businesses. Our revenues also increased due to the favorable impact from foreign currency translation of $5.6 million and the 2023 acquisition, which contributed $2.9 million in revenues. Software-enabled services revenues increased $73.5 million, or 6.6%, primarily due to an increase in organic revenues of $65.5 million and the favorable impact from foreign currency translation of $5.4 million, as well as the acquisition, which added $2.6 million in revenues. License, maintenance and related revenues decreased $1.2 million, or 0.5%, primarily due to a decrease in organic revenues of $1.7 million. Those decreases were partially offset by the acquisition, which added $0.3 million in revenues, and the favorable impact from foreign currency translation of $0.2 million.

Current wording

Six Months Ended June 30, 2024 and 2023. Our revenues increased $161.2 million, or 5.9%, primarily due to an increase of $150.2 million in organic revenues driven by strength in the SS&C GlobeOp fund administration and virtual data room services businesses. Our revenues also increased due to the 2023 acquisition, which contributed $7.0 million in revenues and the favorable impact from foreign currency translation of $4.0 million. Software-enabled services revenues increased $159.4 million, or 7.2%, primarily due to an increase in organic revenues of $148.7 million, the 2023 acquisition, which added $6.0 million in revenue and the favorable impact from foreign currency translation of $4.7 million. License, maintenance and related revenues increased $1.8 million, or 0.4%, primarily due to an increase in organic revenues of $1.5 million and the 2023 acquisition, which added $1.0 million in revenue. Those increases were partially offset by the unfavorable impact from foreign currency translation of $0.7 million.

Previous wording

Three Months Ended March 31, 2024 and 2023. Our total cost of revenues increased by $2.1 million, or 0.3%, due to the 2023 acquisition, which added costs of $4.7 million, and the unfavorable impact from foreign currency translation, which increased costs by $3.1 million. These increases were partially offset by a $5.7 million decrease in organic costs. Our organic cost decrease reflects continued efficiency improvement efforts in delivering client service. Cost of software-enabled services revenues increased $2.8 million, or 0.4%, primarily due to the 2023 acquisition, which added $4.7 million in costs, and the unfavorable impact from foreign currency translation of $2.6 million. These increases were partially offset by a $4.5 million decrease in organic costs. Cost of license, maintenance and related revenues decreased $0.7 million, or 0.7%, primarily due to a $1.2 million decrease in organic costs, partially offset by the unfavorable impact from foreign currency translation of $0.5 million.

Current wording

Three Months Ended June 30, 2024 and 2023. Our total cost of revenues increased by $31.7 million, or 4.4%, primarily due to an increase of $27.4 million in organic costs and the 2023 acquisition, which added costs of $5.3 million, partially offset by the favorable impact from foreign currency translation, which decreased costs by $1.0 million. Our organic cost increase reflects continued investment in delivering client service. Cost of software-enabled services revenues increased $25.4 million, or 4.0%, primarily due to an increase of $20.9 million in organic costs and the 2023 acquisition, which added $5.3 million in costs, partially offset by the favorable impact from foreign currency translation of $0.8 million. Cost of license, maintenance and related revenues increased $6.3 million, or 6.8%, primarily due to an increase of $6.5 million in organic costs, partially offset by the favorable impact from foreign currency translation of $0.2 million.

Previous wording

Three Months Ended March 31, 2024 and 2023. Operating expenses increased $17.4 million, or 4.9%, due to an increase of $15.1 million in organic operating expenses, the unfavorable impact from foreign currency translation of $1.8 million and the 2023 acquisition, which added $0.5 million in expenses. Total operating expenses, excluding the impact of acquisitions and foreign currency translation, primarily increased due to shifting resources to support organic growth.

Current wording

Six Months Ended June 30, 2024 and 2023. Operating expenses increased $35.2 million, or 5.0%, due to an increase of $33.5 million in organic operating expenses, the 2023 acquisition, which added $1.1 million in expenses, and the unfavorable impact from foreign currency translation of $0.6 million. Total operating expenses, excluding the impact of acquisitions and foreign currency translation, primarily increased due to shifting resources to support organic growth and an adjustment recorded in the three months ended June 30, 2023 to stock-based compensation expense related to performance awards.

Previous wording

Comparison of the Three Months Ended March 31, 2024 and 2023 for Interest, Taxes and Other

Current wording

Comparison of the Three and Six Months Ended June 30, 2024 and 2023 for Interest, Taxes and Other

Previous wording

Interest expense, net. Net interest expense totaled $116.0 million for the three months ended March 31, 2024 compared to $111.9 million for the three months ended March 31, 2023. The increase in interest expense, net for 2024 as compared to 2023, is due to a higher average interest rate on debt. We had an average interest rate of 6.86% and 6.21%, respectively, for the three months ended March 31, 2024 and 2023.

Current wording

Interest expense, net. Net interest expense totaled $113.3 million and $229.3 million for the three and six months ended June 30, 2024, respectively, compared to $118.0 million and $229.9 million for the three and six months ended June 30, 2023, respectively. The decrease in interest expense, net for 2024 as compared to 2023, is primarily due to lower average debt balances partially offset by slightly higher interest rates. We had an average interest rate of 6.80% and 6.83% for the three and six months ended June 30, 2024, respectively, compared to 6.59% and 6.40% for the three and six months ended June 30, 2023, respectively.

Previous wording

Other income, net. Other income, net was $6.6 million for the three months ended March 31, 2024 compared to $5.4 million for the three months ended March 31, 2023. For the three months ended March 31, 2024, other income, consisted primarily of dividend income of $10.5 million, partially offset by foreign currency translation losses of $4.7 million. For the three months ended March 31, 2023, other income, net consisted primarily of dividend income of $10.2 million, partially offset by losses of $6.1 million related to the fair value adjustments on assets held for sale.

Current wording

Other income, net. Other income, net was $0.6 million and $7.2 million for the three and six months ended June 30, 2024, respectively, compared to $14.9 million and $20.3 million for the three and six months ended June 30, 2023, respectively. For the three and six months ended June 30, 2024, other income, net consisted primarily of dividend income of $2.1 million and $12.6 million, respectively, partially offset by foreign currency translation losses of $1.1 million and $5.8 million, respectively. For the three and six months ended June 30, 2023, other income, net included income of $13.4 million from the settlement of a dispute related to pre-acquisition matters. During the three and six months ended June 30, 2023, other income, net also included dividend income of $2.2 million and $12.4 million, respectively, partially offset by losses of $0.5 million and $6.7 million, respectively, related to the fair value adjustments on assets held for sale.

Previous wording

Equity in earnings of unconsolidated affiliates, net. Equity in earnings of unconsolidated affiliates, net totaled $2.3 million and $5.7 million for the three months ended March 31, 2024 and 2023. Our equity in earnings of unconsolidated affiliates, net in 2023 included a $4.8 million adjustment to increase the carrying value of one of our investments.

Current wording

Equity in earnings of unconsolidated affiliates, net. Equity in earnings of unconsolidated affiliates, net totaled $17.3 million and $19.6 million for the three and six months ended June 30, 2024, respectively, compared to $9.4 million and $15.1 million for the three and six months ended June 30, 2023, respectively. The increase in equity in earnings of unconsolidated affiliates, net in 2024 is primarily related to a $16.2 million and $17.4 million adjustment for the three and six months ended June 30, 2024, respectively, to increase the carrying value of one of our investments. Our equity in earnings of unconsolidated affiliates, net in 2023 included a $7.6 million and $12.4 million adjustment for the three and six months ended June 30, 2023, respectively, to increase the carrying value of one of our investments.

Previous wording

Our effective tax rates for the three months ended March 31, 2024 and 2023 differ from the statutory rate of 21.0% primarily due to the composition of income before income taxes from foreign and domestic tax jurisdictions, foreign income that is being taxed in the U.S. offset by foreign tax credits that are being limited and the recognition of windfall tax benefits from stock awards. The change in the effective tax rate for the three months ended March 31, 2024 compared to the prior year was primarily due to a proportionate change in the composition of income before income taxes from foreign and domestic tax jurisdictions. While we have income from multiple foreign sources, the majority of our non-U.S. operations are in the United Kingdom and India. We anticipate the statutory tax rates in 2024 to be 25.0% in the United Kingdom and approximately 28.0% in India. A future change in the composition of income before income taxes from foreign and domestic tax jurisdictions could impact our periodic effective tax rate.

Current wording

Our effective tax rates for the three and six months ended June 30, 2024 and 2023 differ from the statutory rate of 21.0% primarily due to the composition of income before income taxes from foreign and domestic tax jurisdictions, foreign income that is being taxed in the U.S. offset by foreign tax credits that are being limited and the recognition of windfall tax benefits from stock awards. Our effective tax rates for the three and six months ended June 30, 2024 include benefits of $40.8 million related to releases of uncertain tax positions and $5.7 million of tax refunds, both due to closed audits. The change in the effective tax rate for the three and six months ended June 30, 2024 compared to the prior year was primarily related to releases of uncertain tax positions due to closed audits and a proportionate change in the composition of income before income taxes from foreign and domestic tax jurisdictions. While we have income from multiple foreign sources, the majority of our non-U.S. operations are in the United Kingdom and India. We anticipate the statutory tax rates in 2024 to be 25.0% in the United Kingdom and approximately 25.5% in India. A future change in the composition of income before income taxes from foreign and domestic tax jurisdictions could impact our periodic effective tax rate.

Previous wording

Our principal cash requirements are to finance the costs of our operations pending the billing and collection of client receivables, to fund payments with respect to our indebtedness, to invest in research and development, to acquire complementary businesses or assets, to repurchase shares of our common stock and to pay dividends on our common stock.

Current wording

Our principal cash requirements are to finance the costs of our operations pending the billing and collection of client receivables, to fund payments with respect to our indebtedness, to invest in research and development, to acquire complementary businesses or assets, to repurchase shares of our common stock and to pay dividends on our common stock. We expect our cash on hand, cash flows from operations and cash available under our Credit Agreement to provide sufficient liquidity to fund our current obligations, projected working capital requirements and capital spending for at least the next twelve months.

Previous wording

We paid a quarterly cash dividend of $0.24 per share of common stock in March 2024 totaling $59.7 million. We paid a quarterly cash dividend of $0.20 per share of common stock in March 2023 totaling $50.7 million.

Current wording

We paid quarterly cash dividends of $0.24 per share of common stock in each of March and June 2024 totaling $119.8 million. We paid quarterly cash dividends of $0.20 per share of common stock in each of March and June 2023 totaling $101.2 million.

Previous wording

Client funds obligations include our transfer agency client balances invested overnight as well as our contractual obligations to remit funds to satisfy client pharmacy claim obligations and are recorded on the Condensed Consolidated Balance Sheet when incurred, generally after a claim has been processed by us. Our contractual obligations to remit funds to satisfy client obligations are primarily sourced by funds held on behalf of clients. We had $2,027.0 million of client funds obligations at March 31, 2024.

Current wording

Client funds obligations include our transfer agency client balances invested overnight as well as our contractual obligations to remit funds to satisfy client pharmacy claim obligations and are recorded on the Condensed Consolidated Balance Sheet when incurred, generally after a claim has been processed by us. Our contractual obligations to remit funds to satisfy client obligations are primarily sourced by funds held on behalf of clients. We had $1,624.2 million of client funds obligations at June 30, 2024.

Previous wording

Net cash provided by operating activities was $180.5 million for the three months ended March 31, 2024. Cash provided by operating activities primarily resulted from net income of $158.0 million adjusted for non-cash items of $186.1 million, partially offset by changes in our working capital accounts totaling $163.6 million. The changes in our working capital accounts were driven by decreases in accrued expenses, an increase in accounts receivable and a decrease in accounts payable, partially offset by an increase in deferred revenue and change in income taxes prepaid and payable. The change in income taxes prepaid and payable is primarily driven by the timing of tax payments.

Current wording

Net cash provided by operating activities was $565.4 million for the six months ended June 30, 2024. Cash provided by operating activities primarily resulted from net income of $348.7 million adjusted for non-cash items of $406.4 million, partially offset by changes in our working capital accounts totaling $189.7 million. The changes in our working capital accounts were driven by decreases in accrued expenses, an increase in accounts receivable and a decrease in accounts payable, partially offset by an increase in deferred revenue.

Previous wording

Investing activities used net cash of $50.6 million for the three months ended March 31, 2024, primarily related to $50.0 million in capitalized software development costs and $5.8 million in capital expenditures, partially offset by proceeds from the sale of property and equipment of $3.3 million and the collection of other non-current receivables of $2.5 million.

Current wording

Investing activities used net cash of $84.0 million for the six months ended June 30, 2024, primarily related to $100.2 million in capitalized software development costs and $15.8 million in capital expenditures, partially offset by $24.5 million in distributions received from unconsolidated affiliates, the collection of other non-current receivables of $5.0 million and proceeds from the sale of property and equipment of $3.2 million.

Previous wording

Financing activities used net cash of $835.9 million for the three months ended March 31, 2024, primarily representing a net decrease in client fund obligations of $690.0 million, $79.9 million of net debt repayments, $59.7 million in quarterly dividends paid and $52.9 million of purchases of common stock for treasury. These expenditures were partially offset by proceeds of $53.4 million from stock option exercises.

Current wording

Financing activities used net cash of $1,597.6 million for the six months ended June 30, 2024, primarily representing a net decrease in client fund obligations of $1,151.6 million, $279.9 million of purchases of common stock for treasury, $119.8 million in quarterly dividends paid, $105.1 million of net debt repayments and $30.0 million in payments of deferred financing fees. These expenditures were partially offset by proceeds of $103.7 million from stock option exercises.

Previous wording

We have made a permanent reinvestment determination in certain non-U.S. operations that have historically generated positive operating cash flows. At March 31, 2024, we held approximately $225.2 million in cash and cash equivalents at non-U.S. subsidiaries where we had made such a determination and in turn no provision for income taxes had been made. At March 31, 2024, we held approximately $111.2 million in cash that was available to our foreign borrowers under our senior secured credit facility and will be used to facilitate debt servicing of those entities.

Current wording

We have made a permanent reinvestment determination in certain non-U.S. operations that have historically generated positive operating cash flows. At June 30, 2024, we held approximately $242.3 million in cash and cash equivalents at non-U.S. subsidiaries where we had made such a determination and in turn no provision for income taxes had been made.

Previous wording

The senior secured credit facility has a revolving credit facility available for borrowings by SS&C with $600.0 million in available commitments (“Revolving Credit Facility”), of which $596.2 million was available as of March 31, 2024. The Revolving Credit Facility also contains a $75.0 million letter of credit sub-facility, of which $3.8 million was utilized as of March 31, 2024.

Current wording

The senior secured credit facility has a revolving credit facility available for borrowings by SS&C with $600.0 million in available commitments (“Revolving Credit Facility”), of which $596.9 million was available as of June 30, 2024. The Revolving Credit Facility also contains a $75.0 million letter of credit sub-facility, of which $3.1 million was utilized as of June 30, 2024.

Previous wording

The obligations of the U.S. loan parties under the amended senior secured credit facility are secured by substantially all of the assets of such persons (subject to customary exceptions and limitations), including a pledge of all of the capital stock of substantially all of the U.S. wholly-owned restricted subsidiaries of such persons (with customary exceptions and limitations) and 65% of the capital stock of certain foreign restricted subsidiaries of such persons (with customary exceptions and limitations). All obligations of the non-U.S. loan parties under the amended senior secured credit facility are secured by substantially all of our and the other guarantors’ assets (subject to customary exceptions and limitations), including a pledge of all of the capital stock of substantially all of our wholly-owned restricted subsidiaries (with customary exceptions and limitations).

Current wording

Our obligations under the Term B-8 Loans are guaranteed by our existing and future wholly-owned domestic restricted subsidiaries (subject to customary exceptions and limitations). The obligations of the loan parties under the amended senior secured credit facility are secured by substantially all of the assets of such persons (subject to customary exceptions and limitations), including a pledge of all of the capital stock of substantially all of the U.S. wholly-owned restricted subsidiaries of such persons (with customary exceptions and limitations) and 65% of the capital stock of certain foreign restricted subsidiaries of such persons (with customary exceptions and limitations).

Previous wording

The Senior Notes are guaranteed, jointly and severally, by SS&C Holdings and all of its existing and future domestic restricted subsidiaries that guarantee our existing senior secured credit facilities or certain other indebtedness. The Senior Notes are unsecured senior obligations that are equal in right of payment to all of our existing and future senior unsecured indebtedness. Interest on the Senior Notes is payable on March 30 and September 30 of each year.

Current wording

The 5.5% Senior Notes are guaranteed, jointly and severally, by SS&C Holdings and all of its existing and future domestic restricted subsidiaries that guarantee our existing senior secured credit facilities or certain other indebtedness. The 5.5% Senior Notes are unsecured senior obligations that are equal in right of payment to all of our existing and future senior unsecured indebtedness. Interest on the 5.5% Senior Notes is payable on March 30 and September 30 of each year.

Previous wording

At any time and from time to time, we may, at our option, redeem some or all of the Senior Notes, in whole or in part, at the redemption prices set forth in the following table, expressed as a percentage of the principal amount, plus accrued and unpaid interest to the redemption date:

Current wording

At any time and from time to time, we may, at our option, redeem some or all of the 5.5% Senior Notes, in whole or in part, at the redemption prices set forth in the following table, expressed as a percentage of the principal amount, plus accrued and unpaid interest to the redemption date:

Previous wording

We may also, from time to time in our sole discretion, purchase, redeem, or retire any outstanding Senior Notes, through tender offers, in privately negotiated or open market transactions, or otherwise.

Current wording

We may also, from time to time in our sole discretion, purchase, redeem, or retire any outstanding 5.5% Senior Notes and 6.5% Senior Notes, through tender offers, in privately negotiated or open market transactions, or otherwise.

Previous wording

The indenture governing the Senior Notes contains a number of covenants that restrict, subject to certain thresholds and exceptions, our ability and the ability of our domestic restricted subsidiaries to incur debt or liens, make certain investments, pay dividends, dispose of certain assets, or enter into transactions with its affiliates. Any event of default under the amended senior secured credit facility that leads to an acceleration of those amounts due also results in a default under the indenture governing the Senior Notes.

Current wording

The indentures governing the 5.5% Senior Notes and 6.5% Senior Notes contain a number of covenants that restrict, subject to certain thresholds and exceptions, our ability and the ability of our domestic restricted subsidiaries to incur debt or liens, make certain investments, pay dividends, dispose of certain assets, or enter into transactions with its affiliates. Any event of default under the amended senior secured credit facility that leads to an acceleration of those amounts due also results in a default under the indenture governing each of the Senior Notes.

Previous wording

Calculated as the ratio of consolidated net secured funded indebtedness, net of cash and cash equivalents, excluding $95.1 million of cash and cash equivalents held at DomaniRx, to Consolidated EBITDA, as defined by the amended senior secured credit facility, for the period of four consecutive fiscal quarters ended on the measurement date. Consolidated net secured funded indebtedness is comprised of indebtedness for borrowed money, letters of credit, deferred purchase price obligations and capital lease obligations, all of which is secured by liens on our property.

Current wording

Calculated as the ratio of consolidated net secured funded indebtedness, net of cash and cash equivalents, excluding $88.5 million of cash and cash equivalents held at DomaniRx, to Consolidated EBITDA, as defined by the amended senior secured credit facility, for the period of four consecutive fiscal quarters ended on the measurement date. Consolidated net secured funded indebtedness is comprised of indebtedness for borrowed money, letters of credit, deferred purchase price obligations and capital lease obligations, all of which is secured by liens on our property.