Shares of SS&C Technologies Holdings (NASDAQ: SSNC) jumped nearly 8% Thursday, touching a fresh 52-week high after the investment management technology specialist reported strong fourth-quarter 2016 results. It's been a busy year for SS&C, punctuated by several significant acquisitions that have positioned the company for continued success.
Let's take a closer look at how SS&C Technologies finished 2016.
SS&C Technologies results: The raw numbers
|Metric||Q4 2016||Q4 2015||Year-Over-Year Growth|
|GAAP revenue||$400.9 million||$300.9 million||33.2%|
|GAAP net income||$57.0 million||$12.1 million||371.1%|
|GAAP earnings per share (diluted)||$0.28||$0.06||366.7%|
Data source: SS&C Technologies.
What happened with SS&C this quarter?
- On an adjusted (non- GAAP ) basis -- which includes $3.7 million in purchase accounting adjustments to deferred revenue related to acquisitions -- revenue increased 24.2% year over year, to $404.6 million.
- Adjusted net income increased 29.3% year over year, to $95.2 million, and adjusted net income per diluted share grew 27.8%, to $0.46.
- These results compare favorably to SS&C's guidance provided last quarter that called for fourth-quarter revenue of $394 million to $403 million, adjusted net income of $89.4 million to $92.4 million, and adjusted net income per share of $0.43 to $0.44.
- Adjusted recurring subscription revenue grew 24.9% year over year, to $368.5 million, including 38.4% growth in software-enabled services revenue, to just over $257.7 million, and 1.7% growth in maintenance and term license revenue, to just over $110.7 million.
- Adjusted non-recurring revenue increased 17.5%, to $36.2 million, including 22.9% growth in professional services revenue, to $26.9 million, and 4.2% growth in perpetual licenses revenue, to $9.3 million.
- Adjusted consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) grew 19.3% year over year, to $166.8 million.
- Organic revenue growth on a constant-currency basis was 4.8% during the quarter.
- Cash flow from operations grew 81.4% year over year in 2016, to $418.4 million.
- Paid down $383.4 million of debt in 2016, including $26 million paid down on SS&C's revolver during the quarter.
- Ended the year with $117.6 million in cash and equivalents, and just under $2.56 billion in gross debt.
- The ratio of net debt to adjusted consolidated EBITDA leverage was reduced to 3.9 as of Dec. 31, 2016, down from 4.08 at the end of last quarter.
What management had to say
SS&C CEO Bill Stone stated:
SS&C closed out 2016 with over $1.5 billion in adjusted revenues, and adjusted consolidated EBITDA margins above 40%. Our year is marked by our acquisitions of Citi Alternative Investor Services, Salentica, Wells Fargo Global Fund Services, and Conifer Financial Services -- expanding our reach and capability in fund administration and RIAs. The talent we acquired, both organically and through acquisitions, increase our market opportunity and our ability to win bigger, more complex mandates from top financial institutions.
For the current quarter, SS&C expects revenue of $402.5 million to $408.5 million and adjusted net income of $89 million to $92.5 million, with the latter range equating to adjusted net income per share in the range of roughly $0.43 to $0.45.
SS&C also introduced guidance for the full year of 2017, calling for adjusted revenue of $1.655 billion to $1.685 billion, cash from operations of $480 million to $500 million, and adjusted net income of $392 million to $409 million. Full-year adjusted net income per diluted share should be roughly $1.88 to $1.96. When you consider SS&C's history of under promising and over delivering, these ranges are roughly in line with analysts' consensus estimates.
Given SS&C Technologies' healthy combination of organic and acquisitive growth, continued outperformance (relative to both guidance and Wall Street's expectations) to end 2016, and its encouraging outlook for the coming year, it's no surprise to see investors bidding up the company's stock today.
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