SS&C Technologies Holdings, Inc. (SSNC), a leading hedge fund and private equity administrator and mutual fund transfer agency, owns and manages a comprehensive technology suite across various sectors, including securities accounting, front-to-back-office operations, risk and performance analytics, regulatory reporting, and healthcare information processes. This premier provider of investment management technology is consistently enhancing its solution ecosystem.
SSNC saw robust margins in the last reported quarter, with a notable surge in adjusted consolidated EBITDA margins by 230 basis points sequentially and 110 basis points year-over-year. A large chunk of this margin expansion is attributed to the company's digital worker initiative. SSNC announces that it has reached its 2023 goal for digital workers, and it sees potential for more growth ahead in this area.
On top of that, the financial services business attained an impressive revenue retention rate of 97.3%, hitting a new record high. Furthermore, SS&C Intralinks forecasts a stable M&A deal flow in the first quarter of 2024.
Considering these factors, SSNC comes forth as a potentially promising investment opportunity for this year. An examination of its fundamental performance indicators could provide insightful data for potential investors.
SS&C Technologies Holdings Inc.: An Analysis of Financial Performance Trends (2021-2023)
The trailing-12-month revenue of SSNC shows a consistent upward trend from March 2021 to September 2023. Here are key points about the trend and fluctuations:
- Revenue started significantly at $4.73 billion in March 2021.
- There was a noticeable increase over the next few quarters, reaching $5.05 billion by the end of December 2021.
- In 2022, there was a similar incremental growth leading the Revenue to $5.28 billion by December 2022.
- As we move into 2023, the growth continued but at a slightly slower pace, finally recording Revenue of $5.43 billion in June 2023.
- The most recent data reflects a Revenue of $5.43 billion as reported in September 2023.
This pattern is indicative of a stable and constant growth, with fluctuations being minor, generally sticking to an incremental pattern. In terms of growth rate, measuring from the first value in March 2021 to the last one in September 2023, there's an approximate increase of 18% in Revenue. Note these percentages and figures are rounded for ease of reference and actual values might have minute differences.
The Gross Margin performance of SSNC shows a fluctuating trend from March 2021 to September 2023. Here's a brief summary:
- The value grew from 45.4% in the first quarter of 2021 to 47.6% by the end of 2021, indicating a growth rate of about 4.85% within that year.
- In 2022, the Gross Margin peaked at 48.3% in the first quarter, slightly dipped to 48.2% in second quarter, and then sharply fell to 47.6% by the end of the year.
- The trend continued into 2023 with Gross Margin declining further to 47.3% by the first half of the year. However, it noted a slight increase to 47.5% in the third quarter of 2023.
The most recent data reflects a slight recovery in Gross Margin, but overall showing a slight decrease over the past two years from its peak in the first quarter of 2022. For a company like SSNC, maintaining a steady or growing margin can be an indicator of pricing power and operational efficiency. However, this downward trend in recent years should be closely monitored. Calculating the growth rate from the first value (45.4% in March 2021) to the last value (47.5% in September 2023), we see a positive growth rate of approximately 4.63%.
The DPS (Dividends Per Share) of SSNC has exhibited a generally increasing trend over the analysed period. Noteworthy points include:
- The DPS started at $0.57 in March 2021 and increased consistently, with minor fluctuations, over time.
- There was an appreciable growth in the DPS throughout 2021, with values increasing from $0.57 in March to $0.68 by December.
- This positive trajectory continued into 2022, the DPS climbed up to $0.8 by September and then steadied for the rest of the year.
- In the first half of 2023, the DPS remained constant at $0.8. However, a slight increase occurred in September 2023, bringing the DPS to $0.84.
By calculating the growth rate from the first value to the last, there is an observed total growth of $0.27 over the span of roughly two and a half years, representing a significant increase of approximately 47.37% from the initial value.
This indicates an enduring upward momentum in the company's DPS, signifying favorable returns for the shareholders during this period. The most recent data underscores that the DPS has been maintaining a steady pace, suggesting a stable dividend payment policy by SSNC.
The given dataset records the SSNC from March 2021 to September 2023. Here's a summarized description of the trend and fluctuations in the data set:
- Starting from 0.297 in March 2021, the Asset Turnover rate for SSNC remained relatively stable till December 2021, observed around 0.29-0.30.
- A small dip was observed in the first quarter of 2022, with the Asset Turnover rate decreasing to 0.29 but rebounded back to 0.298 by the end of third quarter the same year.
- In December 2022, the Asset Turnover again experienced an upward movement, marking the value at 0.304.
- The greatest growth was observed from December 2022 to September 2023 as Asset Turnover grew from 0.304 to 0.336, which indicates a notable increase in efficiency indicating that the company is generating more revenue per dollar of assets.
As a whole, the growth rate from March 2021 to September 2023 was calculated approximately to be 13.1%, which signifies a gradual but consistent improvement in the company's ability to generate revenue from its assets. The positive trend in SSNC's Asset Turnover in the dataset suggests an improving financial performance and efficient utilization of assets by the company.
Analyzing SS&C Technologies' Fluctuating Stock Performance from July 2023 to January 2024
The share price of SSNC tends to fluctuate over time as shown by the following data:
- On July 14, 2023, the share price was $60.67.
- It reached a value of $61.55 on July 21, 2023, but slightly dropped to $61.38 on July 28, 2023.
- The share price saw a notable decrease through August 2023, hitting its lowest at $55.54 on August 25.
- September 2023 noticed an overall drop with the price reaching down to $52.94 by the end of the month.
- October 2023 observed further fluctuations, ending with a modest increase reaching $52.12 by the 13 and then decreasing to $49.58 by the 27.
- However, starting from November 2023, the share prices started increasing again and continued to grow consistently in December 2023 to reach a value of $61.19 by the year's end.
- In the initial days of 2024, there was a short fall in the shares to $59.79 on January 5, but the shares picked up reaching $60.52 on January 9, 2024.
Throughout this given period, the growth rate of SSNC share price can be seen as volatile. There is a clear trend of a steady decline in share price from late July 2023 to late October 2023. However, this trend reverses starting from early November 2023, when the share price sees a consistent and accelerating growth until the end of 2023. There was a slight deceleration in the beginning of January 2024, but the price showed signs of picking up from January 9, 2024. Here is a chart of SSNC's price over the past 180 days.
POWR Ratings Spotlight: Success in Stability, Value, and Momentum for SS&C Technologies
SSNC has an overall A rating, translating to a Strong Buy in our POWR Ratings system. It is ranked #10 out of the 133 stocks in the Software - Application category.
The POWR Ratings for SSNC across six dimensions provide a comprehensive picture of the company's performance. However, three dimensions stand out for their consistently high values and clear trends over time. They are stability, value, and momentum.
Stability: Throughout the period, the stability ranking has remained consistently high. After hitting an initial peak of 84 in July 2023, the stability rating slightly decreased to 82 in August 2023, remaining at this level with slight dips and climbs through January 2024. Even at its lowest point, the stability score was still higher than the majority of other dimensions, highlighting it as one of the strongest performing metrics for SS&C Technologies Holdings Inc.
Value: Another standout dimension for SSNC is value. In July 2023, it scored 80 and steadily increased to reach a score of 84 by January 2024. The value score has remained stable throughout, displaying consistent strength.
Momentum: While starting with a lower score in July 2023, momentum displayed a clear upward trend over time. It increased from 33 in July 2023, to peak at 98 in December 2023 before falling slightly to 96 in January 2024. The strong upward trend in momentum signals continuously improving performance in this dimension.
Overall, based on the three most noteworthy dimensions from the POWR Ratings, SS&C Technologies Holdings Inc. showed formidable stability, increasingly appreciated value, and strongly improving momentum during this period.
How does SS&C Technologies Holdings Inc. (SSNC) Stack Up Against its Peers?
Other stocks in the Software - Business sector that may be worth considering are Yext Inc. (YEXT), Sapiens International Corporation N.V. (SPNS), and Commvault Systems Inc. (CVLT) -- they have better POWR Ratings.
What To Do Next?
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SSNC shares were trading at $60.46 per share on Wednesday afternoon, up $0.26 (+0.43%). Year-to-date, SSNC has declined -1.06%, versus a 0.09% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
The Compelling Case for Adding SS&C Technologies (SSNC) to Your 2024 Portfolio StockNews.com
