SS&C Technologies Holdings Inc

Previous wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is intended to provide readers of our Condensed Consolidated Financial Statements with the perspectives of management. It presents, in narrative form, information regarding our financial condition, results of operations, liquidity and certain other factors that may affect our future results. It should be read in conjunction with our 2024 Form 10-K and the Condensed Consolidated Financial Statements included in this Form 10-Q. We use the term organic to refer to the businesses and operations that are included in the comparable prior year period on a constant currency basis. Organic excludes the impact of any business which we acquired for the time period which would impact the comparable prior year period.

Current wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is intended to provide readers of our Condensed Consolidated Financial Statements with the perspectives of management. It presents, in narrative form, information regarding our financial condition, results of operations, liquidity and certain other factors that may affect our future results. It should be read in conjunction with our Annual Report on Form 10-K and Form 10-K/A for the year ended December 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on March 3, 2025 and March 4, 2025, respectively (the “2024 Form 10-K”) and the Condensed Consolidated Financial Statements included in this Form 10-Q.

Previous wording

Ongoing macroeconomic conditions, such as increases in interest rates and inflation, volatility in capital markets, and changes in foreign currency exchange rates, could have impacts on our results that are uncertain and, in many respects, outside our control. The situations remain dynamic and subject to rapid and possibly material change, which ultimately could result in material negative effects on our business and results of operations. We will continue to evaluate the nature and extent of the potential impacts to our business, consolidated results of operations, liquidity and capital resources.

Current wording

Ongoing macroeconomic conditions, such as changes in interest rates and inflation, volatility in capital markets, global trade issues, geopolitical tensions, foreign currency exchange rate fluctuations, and other similar factors, could have impacts on our results that are uncertain and, in many respects, outside our control. The situations remain dynamic and subject to rapid and possibly material change, which ultimately could result in material negative effects on our business and results of operations. We will continue to evaluate the nature and extent of the potential impacts to our business, consolidated results of operations, liquidity and capital resources.

Previous wording

We derive our revenues from two sources: software-enabled services revenues and license, maintenance and related revenues. As a general matter, fluctuations in our software-enabled services revenues are attributable to the number of new software-enabled services clients as well as total assets under management in our clients’ portfolios and the number of outsourced transactions provided to our existing clients. Software-enabled services revenues also fluctuate as a result of reimbursements received for “out-of-pocket” expenses, such as postage and telecommunications charges, which are recorded as revenues on an accrual basis. Because these additional revenues are offset by the reimbursable expenses incurred, there is no impact on gross profit, operating income and net income, however the reimbursements billed and expenses incurred can lead to fluctuations in revenues, cost of revenues and gross margin percentage each period. License, maintenance and related revenues consist primarily of term and perpetual license fees, maintenance fees and professional services. Maintenance revenues vary based on customer retention and on the annual increases in fees, which are generally tied to the consumer price index. License and professional services revenues tend to fluctuate based on the number of new licensing clients, the timing and terms of contract renewals and demand for consulting services.

Current wording

We derive our revenues from two sources: software-enabled services revenues and license, maintenance and related revenues. As a general matter, fluctuations in our software-enabled services revenues are attributable to our customer retention, the number of new software-enabled services clients as well as total assets under management in our clients’ portfolios and the number of outsourced transactions provided to our existing clients. Software-enabled services revenues also fluctuate as a result of reimbursements received for “out-of-pocket” expenses, such as postage and telecommunications charges, which are recorded as revenues on an accrual basis. Because these additional revenues are offset by the reimbursable expenses incurred, there is no impact on gross profit, operating income and net income, however the reimbursements billed and expenses incurred can lead to fluctuations in revenues, cost of revenues and gross margin percentage each period. License, maintenance and related revenues consist primarily of term and perpetual license fees, maintenance fees and professional services. Maintenance revenues vary based on customer retention and on the annual increases in fees, which are generally tied to the consumer price index. License and professional services revenues tend to fluctuate based on the number of new licensing clients, the timing and terms of contract renewals and demand for consulting services.

Previous wording

Three Months Ended March 31, 2025 and 2024. Our revenues increased $78.9 million, or 5.5%, primarily due to an increase of $72.8 million in organic revenue growth driven by strength in the SS&C GlobeOp fund administration, Wealth and Investment Technologies, Global Investor and Distribution Solutions and virtual data room services businesses. Our revenues also increased due to acquisitions, which contributed $13.0 million in revenues which was offset by the unfavorable impact from foreign currency translation of $6.9 million. Software-enabled services revenues increased $82.2 million, or 6.9%, primarily due to an increase in organic revenues of $74.3 million and acquisitions, which added $13.0 million in revenues, offset by the unfavorable impact from foreign currency translation of $5.1 million. License, maintenance and related revenues decreased $3.3 million, or 1.3%, due to a decrease in organic revenues of $1.5 million and the unfavorable impact from foreign currency translation of $1.8 million.

Current wording

Three Months Ended June 30, 2025 and 2024. Our revenues increased $85.3 million, or 5.9%, primarily due to an increase of $50.9 million in organic revenue growth driven by strength in the SS&C GlobeOp fund administration, Wealth and Investment Technologies, Global Investor and Distribution Solutions and Intelligent Automation & Analytics businesses. Our revenues also increased due to acquisitions, which contributed $20.9 million in revenues and the favorable impact from foreign currency translation of $13.5 million. Software-enabled services revenues increased $75.3 million, or 6.3%, primarily due to an increase in organic revenues of $43.9 million as well as acquisitions, which added $20.9 million in revenues, and the favorable impact from foreign currency translation of $10.5 million. License, maintenance and related revenues increased $10.0 million, or 3.9%, due to an increase in organic revenues of $7.0 million and the favorable impact from foreign currency translation of $3.0 million.

Previous wording

Cost of software-enabled services revenues consists primarily of costs related to personnel utilized in providing our software-enabled services and amortization of intangible assets. Cost of license, maintenance and other related revenues consists primarily of the costs related to personnel utilized in servicing our maintenance contracts and to provide implementation, conversion and training services to our software licensees, as well as system integration and custom programming consulting services and amortization of intangible assets.

Current wording

Cost of software-enabled services revenues consists primarily of costs related to personnel who deliver our software-enabled services and amortization of certain intangible assets. Cost of license, maintenance and other related revenues consists primarily of the costs related to personnel utilized in servicing our maintenance contracts and to provide implementation, conversion and training services to our software licensees, as well as system integration and custom programming consulting services and amortization of intangible assets.

Previous wording

Three Months Ended March 31, 2025 and 2024. Our total cost of revenues increased by $39.0 million, or 5.4%, primarily due to an increase of $34.2 million in organic costs and acquisitions, which added costs of 9.3 million in costs, offset by the favorable impact from foreign currency translation, which decreased costs by $4.5 million. Our organic cost increase reflects continued investment in delivering client service. Cost of software-enabled services revenues increased $33.5 million, or 5.3%, primarily due to an increase of $28.0 million in organic costs and acquisitions, which added $9.3 million in costs, offset by the favorable impact from foreign currency translation of $3.8 million. Cost of license, maintenance and related revenues increased $5.5 million, or 5.9%, primarily due to an increase of $6.2 million in organic costs offset by the favorable impact from foreign currency translation of $0.7 million.

Current wording

Three Months Ended June 30, 2025 and 2024. Our total cost of revenues increased by $46.7 million, or 6.2%, primarily due to an increase of $30.9 million in organic costs as well as acquisitions, which added $10.5 million in costs, and the unfavorable impact from foreign currency translation, which increased costs by $5.3 million. Our organic cost increase reflects continued investment in delivering client service. Cost of software-enabled services revenues increased $39.9 million, or 6.1%, due to an increase of $24.9 million in organic costs, acquisitions, which added $10.5 million in costs, and the unfavorable impact from foreign currency translation of $4.5 million. Cost of license, maintenance and related revenues increased $6.8 million, or 6.9%, due to an increase of $6.0 million in organic costs and the unfavorable impact from foreign currency translation of $0.8 million.

Previous wording

Selling and marketing expenses consist primarily of the personnel costs associated with the selling and marketing of our products, including salaries, commissions and travel and entertainment. Such expenses also include amortization of intangible assets, the cost of branch sales offices, trade shows and marketing and promotional materials. Research and development expenses consist primarily of personnel costs attributable to the enhancement of existing products and the development of new software products. General and administrative expenses consist primarily of personnel costs related to management, accounting and finance, information management, human resources and administration and associated overhead costs, as well as fees for professional services.

Current wording

Selling and marketing expenses consist primarily of the personnel costs associated with the selling and marketing of our products, including, but not limited to, salaries, commissions and travel and entertainment. Selling and marketing expenses also include amortization of certain intangible assets, trade shows and marketing and promotional materials. Research and development expenses consist primarily of personnel costs attributable to the enhancement of existing products and the development of new software products. General and administrative expenses consist primarily of personnel costs related to management, accounting and finance, information management, human resources and administration and associated overhead costs, as well as fees for professional services.

Previous wording

Three Months Ended March 31, 2025 and 2024. Operating expenses increased $14.9 million, or 4.0%, due to an increase of $14.8 million in organic operating expenses and acquisitions, which added $3.8 million in expenses, offset by the favorable impact from foreign currency translation of $3.7 million. Total operating expenses, excluding the impact of acquisitions and foreign currency translation, primarily increased due to resource needs to support organic growth.

Current wording

Three Months Ended June 30, 2025 and 2024. Operating expenses increased $21.7 million, or 5.9%, due to an increase of $14.4 million in organic operating expenses, the unfavorable impact from foreign currency translation of $3.9 million and acquisitions, which added $3.4 million in expenses. Total operating expenses, excluding the impact of acquisitions and foreign currency translation, primarily increased due to resource needs to support organic growth.

Previous wording

Comparison of the Three Months Ended March 31, 2025 and 2024 for Interest, Taxes and Other

Current wording

Comparison of the Three and Six Months Ended June 30, 2025 and 2024 for Interest, Taxes and Other

Previous wording

Interest expense, net. Net interest expense totaled $105.2 million and $116.0 million for the three months ended March 31, 2025 and 2024, respectively. The decrease in interest expense, net for the three months ended is primarily due to lower average interest rates. We had an average interest rate of 6.09% and 6.86% for the three months ended March 31, 2025 and 2024, respectively.

Current wording

Interest expense, net. Net interest expense totaled $105.5 million and $210.7 million for the three and six months ended June 30, 2025, respectively, compared to $113.3 million and $229.3 million for the three and six months ended June 30, 2024, respectively. The decrease in interest expense, net for 2025 as compared to 2024 is primarily due to lower average interest rates. We had an average interest rate of 6.14% and 6.11% for the three and six months ended June 30, 2025, respectively, compared to 6.80% and 6.83% for the three and six months ended June 30, 2024, respectively.

Previous wording

Other income (expense), net. Other income (expense), net was $7.2 million and $6.6 million for the three months ended March 31, 2025 and 2024, respectively. For the three months ended March 31, 2025, other income (expense), net consisted primarily of dividend income of $11.2 million offset by foreign currency translation losses of $2.2 million and investment losses due to mark-to market adjustments of $1.8 million. For the three months ended March 31, 2024, other (expense) income, net consisted primarily of dividend income of $10.5 million, partially offset by foreign currency translation losses of $4.7 million.

Current wording

Other (expense) income, net. Other (expense) income, net was $(1.1) million and $6.1 million for the three and six months ended June 30, 2025, respectively, compared to $0.6 million and $7.2 million for the three and six months ended June 30, 2024, respectively. For the three and six months ended June 30, 2025, other (expense) income, net consisted primarily of dividend income of $2.5 million and $13.7 million, respectively, offset by foreign currency translation losses of $1.9 million and $4.1 million, respectively, and investment losses due to mark-to market adjustments of $1.7 million and $3.5 million, respectively. For the three and six months ended June 30, 2024, other (expense) 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.

Previous wording

Equity in earnings of unconsolidated affiliates, net. Equity in earnings of unconsolidated affiliates, net totaled $2.3 million for each of the three month periods ended March 31, 2025 and 2024.

Current wording

Equity in earnings of unconsolidated affiliates, net. Equity in earnings of unconsolidated affiliates, net totaled $1.6 million and $3.9 million for the three and six months ended June 30, 2025, respectively, compared to $17.3 million and $19.6 million for the three and six months ended June 30, 2024, respectively. The equity in earnings of unconsolidated affiliates, net in 2024 is primarily related to adjustments of $16.2 million and $17.4 million for the three and six months ended June 30, 2024, respectively, to increase the carrying value of one of our investments.

Previous wording

Our effective tax rates for the three months ended March 31, 2025 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, 2025 compared to the prior year was primarily related to an increased recognition of windfall tax benefits from stock awards in the current year 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 2025 to be 25.0% in the United Kingdom and approximately 25.3% 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, 2025 and 2024 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 and six months ended June 30, 2025 compared to the prior year was primarily driven by the releases of uncertain tax positions in the prior year due to closed audits, increased recognition of windfall tax benefits from stock awards in the current year and a proportionate change in the composition of income before income taxes from foreign and domestic tax jurisdictions. 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. 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 2025 to be 25.0% in the United Kingdom and approximately 25.3% 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

In 2021, the OECD (“Organisation for Economic Co-operation and Development”)/G20 Inclusive Framework on Base Erosion and Profit Shifting released Model Global Anti-Base Erosion rules under Pillar Two. Further guidance has been released throughout 2022 and 2023. Certain aspects of Pillar Two are effective January 1, 2024 and other aspects are effective January 1, 2025. Many non-U.S. tax jurisdictions in which we operate have either recently enacted legislation or are in the process of enacting legislation to adopt certain components of the Pillar Two Model Rules beginning in 2024 or in future years. The provisions effective in 2024 and 2025 were not material to our financial position and cash flows.

Current wording

In 2021, the OECD (“Organisation for Economic Co-operation and Development”)/G20 Inclusive Framework on Base Erosion and Profit Shifting released Model Global Anti-Base Erosion rules under Pillar Two. Further guidance was released throughout 2022 and 2023. Certain aspects of Pillar Two were effective January 1, 2024 and other aspects were effective January 1, 2025. Many non-U.S. tax jurisdictions in which we operate have either recently enacted legislation or are in the process of enacting legislation to adopt certain components of the Pillar Two Model Rules. The provisions effective in 2024 and 2025 were not material to our financial position and cash flows.

Previous wording

Our principal cash requirements are to finance the costs of our operations, 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.

Current wording

Our principal cash requirements are for the costs of our operations, to make 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 quarterly cash dividends of $0.25 per share of common stock in March 2025 totaling $61.6 million. We paid quarterly cash dividends of $0.24 per share of common stock in March 2024 totaling $59.7 million.

Current wording

We paid quarterly cash dividends of $0.25 per share of common stock in each of March and June 2025 totaling $122.5 million. We paid quarterly cash dividends of $0.24 per share of common stock in each of March and June 2024 totaling $119.8 million.

Previous wording

Client funds obligations include our transfer agency client balances invested overnight, claims administration funds due to our customers, 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 $4,560.4 million of client funds obligations at March 31, 2025.

Current wording

Client funds obligations include our transfer agency client balances invested overnight, claims administration funds due to our customers, as well as our contractual obligations to remit funds to satisfy client pharmacy claim obligations and are recorded on the unaudited 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 $2,997.8 million of client funds obligations at June 30, 2025.

Previous wording

Net cash provided by operating activities was $272.2 million for the three months ended March 31, 2025. Cash provided by operating activities primarily resulted from net income of $213.2 million adjusted for non-cash items of $206.3 million, partially offset by changes in our working capital accounts totaling $147.3 million. The changes in our working capital accounts were driven by a decrease in accrued expenses.

Current wording

Net cash provided by operating activities was $645.1 million for the six months ended June 30, 2025. Cash provided by operating activities primarily resulted from net income of $394.3 million adjusted for non-cash items of $429.9 million, partially offset by changes in our working capital accounts totaling $179.1 million. The changes in our working capital accounts were driven by increases in accounts receivable, prepaid expenses and contract assets, as well as a decrease in deferred revenue and changes in income taxes prepaid and payable due to the timing of tax payments.

Previous wording

Investing activities used net cash of $63.3 million for the three months ended March 31, 2025, primarily related to $47.0 million in capitalized software development costs, $12.7 million in capital expenditures and $6.2 million paid for business acquisitions, net of cash acquired, partially offset by the collection of other non-current receivables of $2.5 million.

Current wording

Investing activities used net cash of $148.1 million for the six months ended June 30, 2025, primarily related to $99.8 million in capitalized software development costs, $35.6 million in capital expenditures, $9.8 million contributed to unconsolidated affiliates and $5.8 million paid for business acquisitions, net of cash acquired, partially offset by the collection of other non-current receivables of $5.3 million.

Previous wording

Financing activities provided net cash of $935.3 million for the three months ended March 31, 2025, primarily representing a net increase in client fund obligations of $1,200.4 million and proceeds of $201.8 million from stock option exercises, offset by $206.9 million of purchases of common stock for treasury, net repayments of debt of $155.0 million, $61.6 million in quarterly dividends paid and $43.4 million in withholding taxes paid related to equity award net share settlements.

Current wording

Financing activities used net cash of $987.8 million for the six months ended June 30, 2025, primarily related to $477.2 million of purchases of common stock for treasury, a net decrease in client fund obligations of $391.2 million, net repayments of debt of $190.0 million, $122.5 million in quarterly dividends paid and $47.4 million in withholding taxes paid related to equity award net share settlements, offset by proceeds of $240.5 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, 2025, we held approximately $264.2 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.

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, 2025, 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 $597.2 million was available as of March 31, 2025. The Revolving Credit Facility also contains a $75.0 million letter of credit sub-facility, of which $2.8 million was utilized as of March 31, 2025.

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 $596.6 million was available as of June 30, 2025. The Revolving Credit Facility also contains a $75.0 million letter of credit sub-facility, of which $3.4 million was utilized as of June 30, 2025.