Note 2—Property, Plant and Equipment, net
Property, plant and equipment and the related accumulated depreciation are as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
|
2026 |
|
|
2025 |
|
|
Land |
|
$ |
24.8 |
|
|
$ |
25.1 |
|
|
Building and improvements |
|
|
224.6 |
|
|
|
223.5 |
|
|
Equipment, furniture, and fixtures |
|
|
508.9 |
|
|
|
506.2 |
|
|
|
|
|
758.3 |
|
|
|
754.8 |
|
|
Less: accumulated depreciation |
|
|
(479.2 |
) |
|
|
(465.3 |
) |
|
Total property, plant and equipment, net |
|
$ |
279.1 |
|
|
$ |
289.5 |
|
|
Depreciation expense for the three months ended March 31, 2026 and 2025 was $18.1 million and $17.8 million, respectively.
Amortization expense related to capitalized software development costs for the three months ended March 31, 2026 and 2025 was $40.6 million and $34.3 million, respectively. Capitalized software is included in intangible and other assets, net, in our unaudited Condensed Consolidated Balance Sheets.
As of March 31, 2026 and December 31, 2025, unpaid property, plant and equipment additions totaling $26.3 million and $23.7 million, respectively, are included in accounts payable and other accrued expenses, in our unaudited Condensed Consolidated Balance Sheets.
Note 3—Investments
Investments are as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2026 |
|
|
2025 |
|
Non-marketable equity securities |
|
$ |
124.1 |
|
|
$ |
124.1 |
|
Seed capital investments |
|
|
31.8 |
|
|
|
26.4 |
|
Marketable equity securities |
|
|
12.8 |
|
|
|
19.6 |
|
Partnership interests in private equity funds |
|
|
4.1 |
|
|
|
4.3 |
|
Total investments |
|
$ |
172.8 |
|
|
$ |
174.4 |
|
Realized and unrealized gains and losses for our equity securities are as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
2026 |
|
|
2025 |
|
|
Unrealized losses on equity securities held as of the end of the period |
|
$ |
(0.8 |
) |
|
$ |
(1.8 |
) |
|
Realized gains for equity securities sold during the period |
|
|
0.2 |
|
|
|
— |
|
|
Total losses recognized in other income, net |
|
$ |
(0.6 |
) |
|
$ |
(1.8 |
) |
|
Fair Value Measurement
Authoritative accounting guidance on fair value measurements establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.
As of March 31, 2026 and December 31, 2025, we held certain investment assets and certain liabilities that are required to be measured at fair value on a recurring basis. These investments include money market funds and marketable equity securities where fair value is determined using quoted prices in active markets. Accordingly, the fair value measurements of these investments have been classified as Level 1 in the tables below. Investments for which we elected net asset value as a practical expedient for fair value and investments measured using the fair value measurement alternative are excluded from the tables below. Fair value for deferred compensation liabilities that are credited with deemed gains or losses of the underlying hypothetical investments, primarily equity securities, have been classified as Level 1 in the tables below. The fair values of cash, accounts receivable, net, short-term borrowings, and accounts payable approximate the carrying amounts due to the short-term maturities of these instruments.
Note 7—Stockholders’ Equity
Stock repurchase program
In July 2024, our Board of Directors authorized a stock repurchase program, which enabled us to repurchase up to $1 billion in the aggregate of our outstanding common stock on the open market or in privately negotiated transactions until the one-year anniversary of the Board’s authorization, unless earlier terminated by the Board. In May 2025, our Board of Directors authorized a stock repurchase program, which enables us to repurchase up to $1.5 billion in the aggregate of our outstanding common stock on the open market or in privately negotiated transactions until the one-year anniversary of the Board’s authorization, unless earlier terminated by the Board. During the three months ended March 31, 2026 and 2025, we repurchased 2.3 million and 2.4 million shares, respectively, of common stock for approximately $168.5 million and $206.9 million, respectively, which includes a 1% excise tax on share repurchases. We use the cost method to account for treasury stock purchases. Under the cost method, the price paid for the stock is charged to the treasury stock account.
Dividends
We paid quarterly cash dividends of $0.27 per share of common stock in March 2026 totaling $65.3 million. We paid quarterly cash dividends of $0.25 per share of common stock in March 2025 totaling $61.6 million.
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss balances, net of tax, consist of the following (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency Translation |
|
|
Defined Benefit Obligation |
|
|
Accumulated Other Comprehensive Loss |
|
Balance, December 31, 2025 |
|
$ |
(284.0 |
) |
|
$ |
(10.2 |
) |
|
$ |
(294.2 |
) |
Net current period other comprehensive (loss) income (1) |
|
|
(72.1 |
) |
|
|
0.4 |
|
|
|
(71.7 |
) |
Balance, March 31, 2026 |
|
$ |
(356.1 |
) |
|
$ |
(9.8 |
) |
|
$ |
(365.9 |
) |
(1) Amounts are reported net of tax. Tax effects were immaterial.
Note 8—Variable Interest Entity
In July 2021, we entered into an agreement whereby we obtained an 80.2% interest in DomaniRx, LLC (“DomaniRx”), a variable interest entity under GAAP. We have the power to direct the majority of the activities of DomaniRx that most significantly impact its economic performance, the obligation to absorb losses and the right to receive benefits from DomaniRx. Accordingly, we determined that we are the primary beneficiary of DomaniRx and consolidate its results.
The carrying value of the assets and liabilities associated with DomaniRx included in our unaudited condensed consolidated balance sheet at March 31, 2026 and December 31, 2025, which are limited for use in its operations and do not have recourse against our general credit or our senior secured credit facilities, are as follows:
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
|
2026 |
|
2025 |
|
Assets: |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
20.8 |
|
$ |
28.4 |
|
Prepaid expenses and other current assets |
|
|
0.3 |
|
|
0.5 |
|
Intangible assets |
|
|
237.5 |
|
|
232.7 |
|
Other assets |
|
|
16.5 |
|
|
12.0 |
|
Liabilities: |
|
|
|
|
|
Other liabilities |
|
|
1.8 |
|
|
1.1 |
|
Note 9—Revenues
We generate revenues primarily through our technology-enabled services. Our technology-enabled services are generally provided under contracts with initial terms of one to five years that require monthly or quarterly payments and are subject to automatic annual renewal at the end of the initial term unless terminated by either party. We also generate revenues by licensing our software to clients through either term or perpetual licenses and by selling maintenance services. We classify license revenues related to sales-based royalty arrangements as term license revenue. Maintenance services are generally provided under annually renewable contracts. Our pricing typically scales as a function of our clients’ assets under management, the complexity of asset classes managed, the volume of transactions and the scope of service the client requires. Revenues from professional services consist mostly of services provided on a time and materials basis.
The following table summarizes stock options, performance stock units (“PSUs”) and restricted stock units (“RSUs”) activity, for the three months ended March 31, 2026 (shares in millions):
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options |
|
|
PSUs and RSUs |
|
|
Outstanding at December 31, 2025 |
|
|
24.3 |
|
|
|
5.0 |
|
|
Granted |
|
|
2.1 |
|
|
|
3.1 |
|
|
Cancelled/forfeited |
|
|
— |
|
|
|
— |
|
|
Exercised |
|
|
(0.4 |
) |
|
n/a |
|
|
Vested |
|
n/a |
|
|
|
(2.0 |
) |
|
Outstanding at March 31, 2026 |
|
|
26.0 |
|
|
|
6.1 |
|
|
Note 11—Income Taxes
The effective tax rate was 25.3% and 18.4% for the three months ended March 31, 2026 and 2025, respectively. The change in the effective tax rate for the three months ended March 31, 2026 compared to the prior year was primarily due to a decrease in 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.
On July 4, 2025, the One Big Beautiful Bill Act was enacted in the United States. Certain provisions of the legislation became effective in 2025 while others became effective in 2026. The legislation did not have a material impact on our provision for income taxes in the year ended December 31, 2025 or the three months ended March 31, 2026.
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 continues to be released each year. 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 enactments effective in 2025 and 2026 were not material to our provision for income taxes.
Note 12—Earnings per Share
The following table sets forth the computation of basic and diluted EPS (in millions, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2026 |
|
|
2025 |
|
Net income attributable to SS&C common stockholders |
|
$ |
226.1 |
|
|
$ |
213.0 |
|
|
|
|
|
|
|
|
Shares attributable to SS&C: |
|
|
|
|
|
|
Weighted-average common shares outstanding – used in calculation of basic EPS |
|
|
241.5 |
|
|
|
245.8 |
|
Weighted-average common stock equivalents – stock options and restricted shares |
|
|
6.1 |
|
|
|
9.1 |
|
Weighted-average common and common equivalent shares outstanding – used in calculation of diluted EPS |
|
|
247.6 |
|
|
|
254.9 |
|
|
|
|
|
|
|
|
Earnings per share attributable to SS&C common stockholders – Basic |
|
$ |
0.94 |
|
|
$ |
0.87 |
|
Earnings per share attributable to SS&C common stockholders – Diluted |
|
$ |
0.91 |
|
|
$ |
0.84 |
|
Weighted-average stock options, RSUs and PSUs representing 7.9 million and 5.4 million shares were outstanding for the three months ended March 31, 2026 and 2025, respectively, but were not included in the computation of diluted EPS because the effect of including them would be anti-dilutive.
Note 13—Commitments and Contingencies
From time to time, we are subject to legal proceedings and claims. In our opinion, we are not involved in any litigation or proceedings that would have a material adverse effect on us or our business.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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 for the year ended December 31, 2025, filed with the Securities and Exchange Commission (the “SEC”) on February 26, 2026 (the “2025 Form 10-K”) and the Condensed Consolidated Financial Statements included in this Form 10-Q. Within the condensed consolidated financial statements, the line items named technology-enabled services were previously named software-enabled services.
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 includes the change in an acquired business, but excludes the impact of any business which we acquired for the time period which would impact the comparable prior year period.
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.
Critical Accounting Estimates
A number of our accounting policies require the application of significant judgment by our management, and such judgments are reflected in the amounts reported in our Condensed Consolidated Financial Statements. In applying these policies, our management uses its judgment to determine the appropriate assumptions to be used in the determination of estimates. Those estimates are based on our historical experience, terms of existing contracts, management’s observation of trends in the industry, information provided by our clients and information available from other outside sources, as appropriate. Actual results may differ significantly from the estimates contained in our Condensed Consolidated Financial Statements. There have been no material changes to our critical accounting estimates and assumptions or the judgments affecting the application of those estimates and assumptions since the filing of our 2025 Form 10-K. Our critical accounting policies are described in the 2025 Form 10-K and include:
•Acquisition Accounting, Intangible Assets and Goodwill
•Stock-based Compensation
Results of Operations
Our results of operations below include the results of our recent acquisitions from the date of acquisition. FPS Trust Company was acquired in February 2025, Calastone Limited in October 2025 and Curo Fund Services in November 2025.
Revenues
We derive our revenues from two sources: technology-enabled services revenues and license, maintenance and related revenues. As a general matter, fluctuations in our technology-enabled services revenues are attributable to our customer retention, the number of new technology-enabled services clients as well as total assets under management in our clients’ portfolios and the number of outsourced transactions managed for our existing clients. Technology-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.
The following table provides the percentage of total revenue derived by the two sources of revenue:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2026 |
|
|
2025 |
|
Technology-enabled services |
|
|
85.4 |
% |
|
|
83.9 |
% |
License, maintenance and related |
|
|
14.6 |
% |
|
|
16.1 |
% |
Total revenues |
|
|
100.0 |
% |
|
|
100.0 |
% |
The following table sets forth revenues (dollars in millions) and percent change in revenues for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
Percent
Change from
Prior
Period |
|
|
|
2026 |
|
|
2025 |
|
|
|
|
Technology-enabled services |
|
$ |
1,407.3 |
|
|
$ |
1,269.9 |
|
|
|
10.8 |
% |
License, maintenance and related |
|
|
239.8 |
|
|
|
244.0 |
|
|
|
(1.7 |
)% |
Total revenues |
|
$ |
1,647.1 |
|
|
$ |
1,513.9 |
|
|
|
8.8 |
% |
Three Months Ended March 31, 2026 and 2025. Our revenues increased $133.2 million, or 8.8%, primarily due to an increase of $75.9 million in organic revenue growth driven by strength in the SS&C GlobeOp fund administration and Global Investor and Distribution Solutions businesses. Our revenues also increased due to acquisitions, which contributed $34.9 million, and the favorable impact from foreign currency translation of $22.4 million.
Technology-enabled services revenues increased $137.4 million, or 10.8%, primarily due to an increase in organic revenues of $86.2 million as well as acquisitions, which added $34.9 million in revenues, and the favorable impact from foreign currency translation of $16.3 million. License, maintenance and related revenues decreased $4.2 million, or 1.7%, due to a decrease in organic revenues of $10.3 million, partially offset by the favorable impact from foreign currency translation of $6.1 million.
Cost of Revenues
Cost of technology-enabled services revenues consists primarily of costs related to personnel who deliver our technology-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.
The following tables set forth each of the following cost of revenues as a percentage of their respective revenue source for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2026 |
|
|
2025 |
|
Cost of technology-enabled services |
|
|
52.6 |
% |
|
|
52.5 |
% |
Cost of license, maintenance and related |
|
|
43.7 |
% |
|
|
40.8 |
% |
Total cost of revenues |
|
|
51.3 |
% |
|
|
50.7 |
% |
Gross margin percentage |
|
|
48.7 |
% |
|
|
49.3 |
% |
The following table sets forth cost of revenues (dollars in millions) and percent change in cost of revenues for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
Percent
Change from
Prior
Period |
|
|
|
2026 |
|
|
2025 |
|
|
|
|
Cost of technology-enabled services |
|
$ |
740.5 |
|
|
$ |
667.3 |
|
|
|
11.0 |
% |
Cost of license, maintenance and related |
|
|
104.8 |
|
|
|
99.5 |
|
|
|
5.3 |
% |
Total cost of revenues |
|
$ |
845.3 |
|
|
$ |
766.8 |
|
|
|
10.2 |
% |
Three Months Ended March 31, 2026 and 2025. Our total cost of revenues increased by $78.5 million, or 10.2%, primarily due to an increase of $42.8 million in organic costs as well as acquisitions, which added $19.8 million in costs, and the unfavorable impact from foreign currency translation, which increased costs by $15.9 million. Our organic cost increase reflects continued investment in delivering client service.
Cost of technology-enabled services revenues increased $73.2 million, or 11.0%, due to an increase of $40.1 million in organic costs, acquisitions, which added $19.8 million in costs, and the unfavorable impact from foreign currency translation of $13.3 million. Cost of license, maintenance and related revenues increased $5.3 million, or 5.3%, due to an increase of $2.7 million in organic costs and the unfavorable impact from foreign currency translation of $2.6 million.
Operating Expenses
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.
The following table sets forth the percentage of our total revenues represented by each of the following operating expenses for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2026 |
|
|
2025 |
|
Selling and marketing |
|
|
9.2 |
% |
|
|
10.1 |
% |
Research and development |
|
|
8.2 |
% |
|
|
8.5 |
% |
General and administrative |
|
|
7.1 |
% |
|
|
7.1 |
% |
Total operating expenses |
|
|
24.5 |
% |
|
|
25.7 |
% |
The following table sets forth operating expenses (dollars in millions) and percent change in operating expenses for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
Percent
Change from
Prior
Period |
|
|
|
2026 |
|
|
2025 |
|
|
|
|
Selling and marketing |
|
$ |
151.7 |
|
|
$ |
152.3 |
|
|
|
(0.4 |
)% |
Research and development |
|
|
134.6 |
|
|
|
129.1 |
|
|
|
4.3 |
% |
General and administrative |
|
|
117.3 |
|
|
|
107.8 |
|
|
|
8.8 |
% |
Total operating expenses |
|
$ |
403.6 |
|
|
$ |
389.2 |
|
|
|
3.7 |
% |
Three Months Ended March 31, 2026 and 2025. Operating expenses increased $14.4 million, or 3.7%, due to acquisitions, which added $15.6 million in expenses and the unfavorable impact from foreign currency translation of $9.1 million. These increases were partially offset by a decrease of $10.3 million in organic operating expenses. Total operating expenses, excluding the impact of acquisitions and foreign currency translation, primarily decreased due to lower personnel costs.
Comparison of the Three Months Ended March 31, 2026 and 2025 for Interest, Taxes and Other
Interest expense, net. Net interest expense totaled $105.4 million and $105.2 million for the three months ended March 31, 2026 and 2025, respectively. We had an average interest rate of 5.69% and 6.09% for the three months ended March 31, 2026 and 2025, respectively.
Other income, net. Other income, net was $6.8 million and $7.2 million for the three months ended March 31, 2026 and 2025, respectively. For the three months ended March 31, 2026, other income, net consisted primarily of dividend income of $9.4 million, partially offset by foreign currency translation losses of $1.4 million. For the three months ended March 31, 2025, other income, net consisted primarily of dividend income of $11.2 million, partially offset by foreign currency translation losses of $2.2 million and investment losses due to mark-to-market adjustments of $1.8 million.
Equity in earnings of unconsolidated affiliates, net. Equity in earnings of unconsolidated affiliates, net totaled $3.9 million and $2.3 million for the three months ended March 31, 2026 and 2025, respectively.
Provision for income taxes. The following table sets forth the provision for income taxes (dollars in millions) and effective tax rates for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2026 |
|
|
2025 |
|
Provision for income taxes |
|
$ |
76.8 |
|
|
$ |
48.1 |
|
Effective tax rate |
|
|
25.3 |
% |
|
|
18.4 |
% |
Our effective tax rate for the three months ended March 31, 2026 differs 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, 2026 compared to the prior year was primarily related to a decrease in 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 2026 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.
On July 4, 2025, the One Big Beautiful Bill Act was enacted in the United States. Certain provisions of the legislation became effective in 2025 while others became effective in 2026. The legislation did not have a material impact on our provision for income taxes in the year ended December 31, 2025 or the three months ended March 31, 2026.
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 continues to be released each year. 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 enactments effective in 2025 and 2026 were not material to our provision for income taxes.
Liquidity and Capital Resources
Our principal cash requirements are for delivering value to our clients, investing in research and development, pursuing new sales opportunities, making payments with respect to our indebtedness, acquiring complementary businesses or assets, repurchasing shares of our common stock and paying 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.
We paid quarterly cash dividends of $0.27 per share of common stock in March 2026 totaling $65.3 million. We paid quarterly cash dividends of $0.25 per share of common stock in March 2025 totaling $61.6 million.
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 Sheets 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 $3,617.5 million of client funds obligations at March 31, 2026.
Cash flows from operating, investing and financing activities, as reflected in our Condensed Consolidated Statements of Cash Flows, are summarized in the following table (in millions):
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|
Three Months Ended March 31, |
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|
|
Net cash, cash equivalents and restricted cash and cash equivalents provided by (used in): |
|
2026 |
|
|
2025 |
|
|
Change From Prior Year |
|
Operating activities |
|
$ |
299.7 |
|
|
$ |
272.2 |
|
|
$ |
27.5 |
|
Investing activities |
|
|
(65.5 |
) |
|
|
(63.3 |
) |
|
|
(2.2 |
) |
Financing activities |
|
|
(741.1 |
) |
|
|
935.3 |
|
|
|
(1,676.4 |
) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
|
(6.4 |
) |
|
|
3.9 |
|
|
|
(10.3 |
) |
Net (decrease) increase in cash, cash equivalents and restricted cash and cash equivalents |
|
$ |
(513.3 |
) |
|
$ |
1,148.1 |
|
|
$ |
(1,661.4 |
) |
Net cash provided by operating activities was $299.7 million for the three months ended March 31, 2026. Cash provided by operating activities primarily resulted from net income of $226.3 million adjusted for non-cash items of $257.7 million, partially offset by changes in our working capital accounts totaling $184.3 million. The changes in our working capital accounts were mainly driven by a decrease in accrued expenses and increases in accounts receivable and prepaid expenses as well as changes in income taxes prepaid and payable due to the timing of tax payments.
Investing activities used net cash of $65.5 million for the three months ended March 31, 2026, primarily related to $62.0 million in capitalized software development costs, $7.6 million investment in securities, and $6.0 million in capital expenditures, partially offset by proceeds from the sales / maturities of investments of $7.6 million and the collection of other non-current receivables of $2.7 million.
Financing activities used net cash of $741.1 million for the three months ended March 31, 2026, primarily related to a net decrease in client funds obligations of $470.2 million, $168.0 million of purchases of common stock for treasury, $65.3 million in quarterly dividends paid, and $54.9 million in withholding taxes paid related to equity award net share settlements, partially offset by proceeds of $22.3 million from stock option exercises.
We have made a permanent reinvestment determination in certain non-U.S. operations that have historically generated positive operating cash flows. At March 31, 2026, we held approximately $231.0 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.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Senior Secured Credit Facilities and Senior Notes
The table below provides a summary of the key terms of our Senior Secured Credit Facilities and Senior Notes:
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Amount Outstanding
at March 31, 2026 |
|
|
Maturity |
|
Scheduled Quarterly |
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|
(in millions) |
|
|
Date |
|
Payments Required |
Senior Secured Credit Facilities |
|
|
|
|
|
|
|
Term B-8 Loans |
|
$ |
3,861.9 |
|
|
May 9, 2031 |
|
(1) |
Term A-9 Loans |
|
|
770.0 |
|
|
September 27, 2029 (2) |
|
0.625% (3) |
Revolving Credit Facility (4) |
|
|
80.0 |
|
|
December 28, 2027 |
|
None |
5.5% Senior Notes |
|
|
2,000.0 |
|
|
September 30, 2027 |
|
None |
6.5% Senior Notes |
|
|
750.0 |
|
|
June 1, 2032 |
|
None |
(1)Per the September 2024 Incremental Joinder, scheduled quarterly payments of 0.25% are required. We have made all required scheduled payments on our Term B-8 Loans and do not have any principal payments due until maturity.
(2)The Term A-9 Loans will mature on the earlier to occur of (1) September 27, 2029 or (2) 91 days prior to the maturity of (x) the 5.5% Senior Notes if more than $150.0 million aggregate principal amount remains outstanding on the 91st day
prior to such maturity or (y) the Revolving Credit Facility if more than $150.0 million aggregate principal amount of commitments remain outstanding on the 91st day prior to such maturity, whichever of (x) or (y) comes first.
(3)Scheduled quarterly payment required for the first eight fiscal quarters commencing with the fiscal quarter ending December 31, 2024. The scheduled quarterly payment will increase to 1.250% as of December 31, 2026 for each quarter thereafter until the maturity date of the Term A-9 Loans.
(4)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 $513.3 million was available as of March 31, 2026. The Revolving Credit Facility also contains a $75.0 million letter of credit sub-facility, of which $6.7 million was utilized as of March 31, 2026.
Debt Terms
Our obligations under the Term B-8 Loans and Term A-9 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).
The amended senior secured credit facility includes negative covenants that, among other things and subject to certain thresholds and exceptions, limit our ability and the ability of our restricted subsidiaries to incur debt or liens, make investments (including in the form of loans and acquisitions), merge, liquidate or dissolve, sell property and assets, including capital stock of our subsidiaries, pay dividends on our capital stock or redeem, repurchase or retire our capital stock, alter the business we conduct, amend, prepay, redeem or purchase subordinated debt, or engage in transactions with our affiliates. The amended senior secured credit facility also contains customary representations and warranties, affirmative covenants and events of default, subject to customary thresholds and exceptions. In addition, the amended senior secured credit facility contains a financial covenant for the benefit of the Revolving Credit Facility requiring us to maintain a maximum consolidated net secured leverage ratio. The amended senior secured credit facility also contains a financial maintenance covenant for the benefit of the Term A-9 Loans that will require us to maintain a separate maximum consolidated net secured leverage ratio. In addition, under the amended senior secured credit facility, certain defaults under agreements governing other material indebtedness could result in an event of default under the amended senior secured credit facility, in which case the lenders could elect to accelerate payments under the amended senior secured credit facility and terminate any commitments they have to provide future borrowings. As of March 31, 2026, we were in compliance with all financial and non-financial covenants.
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.
At any time after March 30, 2025, we may, at our option, redeem some or all of the 5.5% Senior Notes, in whole or in part, at 100% of the principal amount, plus accrued and unpaid interest to the redemption date.
At any time prior to June 1, 2027, we may, at our option, redeem some or all of the 6.5% Senior Notes, in whole or in part, at a price equal to 100% of the principal amount of the 6.5% Senior Notes, plus a “make-whole” premium, plus accrued and unpaid interest, if any, to, the date of redemption. On and after June 1, 2027, we may, at our option, redeem some or all of the 6.5% 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:
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|
|
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|
Year |
|
Price |
|
On or after June 1, 2027 |
|
|
103.250 |
% |
On or after June 1, 2028 |
|
|
101.625 |
% |
June 1, 2029 and thereafter |
|
|
100.000 |
% |
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.
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.
Covenant Compliance
Under the Revolving Credit Facility portion of the amended senior secured credit facility, we are required to satisfy and maintain a specified financial ratio at the end of each fiscal quarter if the sum of (i) outstanding amount of all loans under the Revolving Credit Facility and (ii) all non-cash collateralized letters of credit issued under the Revolving Credit Facility in excess of $20 million is equal to or greater than 30% of the total commitments under the Revolving Credit Facility. In addition, the Term A-9 Loans will be subject to a 5.25x consolidated net secured leverage ratio commencing at the fiscal quarter ending December 31, 2024, which will, at our option, increase to 5.75x for four consecutive fiscal quarters following a material permitted acquisition. Our ability to meet either financial ratio can be affected by events beyond our control, and we cannot assure you that we will meet either ratio. Any breach of either financial covenant could result in an event of default under the amended senior secured credit facility. Upon the occurrence of any event of default under the amended senior secured credit facility, the lenders could elect to declare all amounts outstanding under the amended senior secured credit facility to be immediately due and payable and terminate all commitments to extend further credit. Any default and subsequent acceleration of payments under the amended senior secured credit facility would have a material adverse effect on our results of operations, financial position and cash flows. Additionally, under the amended senior secured credit facility, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is also tied to baskets and ratios based on Consolidated EBITDA.
Consolidated EBITDA is a non-GAAP financial measure used in key financial covenants contained in the amended senior secured credit facility, which is the material facility supporting our capital structure and providing liquidity to our business. Consolidated EBITDA is defined as earnings before interest, taxes, depreciation and amortization (“EBITDA”), further adjusted to exclude unusual items and other adjustments permitted in calculating covenant compliance under the amended senior secured credit facility. We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Consolidated EBITDA is appropriate to provide additional information to investors to demonstrate compliance with the specified financial ratio and other financial condition tests contained in the amended senior secured credit facility.
Management uses Consolidated EBITDA, among other financial metrics, to help gauge the costs of our capital structure. Management further believes that providing this information allows our investors greater transparency and a better understanding of our ability to meet our debt service obligations and make capital expenditures.
Consolidated EBITDA does not represent net income or cash flow from operations as those terms are defined by generally accepted accounting principles, or GAAP, and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. Further, the amended senior secured credit facility requires that Consolidated EBITDA be calculated for the most recent four fiscal quarters. As a result, the measure can be disproportionately affected by a particularly strong or weak quarter. Further, it may not be comparable to the measure for any subsequent four-quarter period or any complete fiscal year.
Consolidated EBITDA is not a recognized measurement under GAAP and investors should not consider Consolidated EBITDA as a substitute for measures of our financial performance and liquidity as determined in accordance with GAAP, such as net income, operating income or net cash provided by operating activities. Because other companies may calculate Consolidated EBITDA differently than we do, Consolidated EBITDA may not be comparable to similarly titled measures reported by other companies. Consolidated EBITDA has other limitations as an analytical tool, when compared to the use of net income, which is the most directly comparable GAAP financial measure, including:
•Consolidated EBITDA does not reflect the significant interest expense we incur as a result of our debt leverage;
•Consolidated EBITDA does not reflect the provision of income tax expense in the jurisdictions in which we operate;
•Consolidated EBITDA does not reflect any attribution of costs to our operations related to our investments and capital expenditures through depreciation and amortization charges;
•Consolidated EBITDA does not reflect the cost of compensation we provide to our employees in the form of stock-based awards;
•Consolidated EBITDA does not reflect the equity in earnings of unconsolidated affiliates; and
•Consolidated EBITDA excludes expenses and income that are permitted to be excluded per the terms of our amended senior secured credit facility, but which others may believe are normal expenses for the operation of a business.
The following is a reconciliation of net income to Consolidated EBITDA attributable to SS&C common stockholders as defined in our amended senior secured credit facility.
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Three Months Ended March 31, |
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|
Twelve Months Ended March 31, |
|
(in millions) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
Net income |
|
$ |
226.3 |
|
|
$ |
213.2 |
|
|
$ |
811.8 |
|
Interest expense, net |
|
|
105.4 |
|
|
|
105.2 |
|
|
|
426.4 |
|
Provision for income taxes |
|
|
76.8 |
|
|
|
48.1 |
|
|
|
204.9 |
|
Depreciation and amortization |
|
|
181.0 |
|
|
|
170.8 |
|
|
|
714.0 |
|
EBITDA |
|
|
589.5 |
|
|
|
537.3 |
|
|
|
2,157.1 |
|
Stock-based compensation |
|
|
61.7 |
|
|
|
52.7 |
|
|
|
266.6 |
|
Acquired EBITDA and cost savings (1) |
|
|
— |
|
|
|
— |
|
|
|
31.4 |
|
Loss on extinguishment of debt |
|
|
0.4 |
|
|
|
0.9 |
|
|
|
2.8 |
|
Equity in earnings of unconsolidated affiliates, net |
|
|
(3.9 |
) |
|
|
(2.3 |
) |
|
|
7.7 |
|
Purchase accounting adjustments (2) |
|
|
1.1 |
|
|
|
1.0 |
|
|
|
4.5 |
|
ASC 606 adoption impact |
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.4 |
|
Foreign currency translation losses |
|
|
1.4 |
|
|
|
2.2 |
|
|
|
1.0 |
|
Investment gains (3) |
|
|
(8.7 |
) |
|
|
(9.3 |
) |
|
|
(13.4 |
) |
Facilities and workforce restructuring |
|
|
9.2 |
|
|
|
7.1 |
|
|
|
47.2 |
|
Acquisition related (4) |
|
|
0.9 |
|
|
|
1.3 |
|
|
|
11.2 |
|
Other (5) |
|
|
0.5 |
|
|
|
1.9 |
|
|
|
39.8 |
|
Consolidated EBITDA |
|
$ |
652.2 |
|
|
$ |
592.9 |
|
|
$ |
2,556.3 |
|
Consolidated EBITDA attributable to noncontrolling interest (6) |
|
|
(1.2 |
) |
|
|
(1.0 |
) |
|
|
(3.5 |
) |
Consolidated EBITDA attributable to SS&C common stockholders |
|
$ |
651.0 |
|
|
$ |
591.9 |
|
|
$ |
2,552.8 |
|
________________________
(1)Acquired EBITDA reflects the EBITDA impact of significant businesses that were acquired during the last twelve months as if the acquisition occurred at the beginning of the trailing twelve-month period, as well as cost savings enacted in connection with acquisitions.
(2)Purchase accounting adjustments include (a) an adjustment to increase revenues by the amount that would have been recognized if deferred revenue were not adjusted to fair value at the date of acquisitions, (b) an adjustment to increase personnel and commissions expense by the amount that would have been recognized if prepaid commissions and deferred personnel costs were not adjusted to fair value at the date of the acquisitions and (c) an adjustment to increase or decrease rent expense by the amount that would have been recognized if lease obligations were not adjusted to fair value at the date of acquisitions.
(3)Investment gains includes unrealized fair value adjustments of investments and dividend income received on investments.
(4)Acquisition related includes costs related to both current acquisitions and the resolution of pre-acquisition matters.
(5)Other includes additional expenses and income that are permitted to be excluded per the terms of our amended senior secured credit facility from Consolidated EBITDA, a financial measure used in calculating our covenant compliance, and includes a loss on the sale of fixed assets of $33.3 million during the twelve months ended March 31, 2026.
(6)Consolidated EBITDA attributable to noncontrolling interest represents Consolidated EBITDA based on the ownership interest retained by the noncontrolling parties of DomaniRx, our consolidated variable interest entity.
Our covenant requirement for consolidated net secured leverage ratio for the benefit of the Revolving Credit Facility and the actual ratio as of March 31, 2026 are as follows:
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|
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|
|
|
Covenant
Requirement |
|
Actual
Ratio |
|
Maximum consolidated net secured leverage to
Consolidated EBITDA ratio(1) |
|
6.25x |
|
|
1.69 |
|
_____________________________________________________
(1)Calculated as the ratio of consolidated net secured funded indebtedness, net of cash and cash equivalents, 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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We do not use derivative financial instruments for trading or speculative purposes. We have generally invested our available cash in short-term, highly liquid financial instruments, having initial maturities of three months or less. When necessary, we have borrowed to fund acquisitions.
Interest Rate Risk
We derive revenues from investment earnings related to cash balances maintained in bank accounts on which we are the agent for clients. The balances maintained in the bank accounts will fluctuate. The effect of changes in interest rates attributable to earnings derived from cash balances we hold for clients is offset by changes in interest rates on our variable debt. For the three months ended March 31, 2026, our average daily cash balances of approximately $2.6 billion were maintained in such accounts. We estimate that a 100 basis point increase in the interest rate would equal approximately $12.8 million of net income, net of income taxes, on an annual basis.
At March 31, 2026, total variable interest rate debt was approximately $4,711.9 million. As of March 31, 2026, a 100 basis point increase in interest rates would result in an increase in interest expense of approximately $47.1 million per year.
Foreign Currency Exchange Rate Risk
During the three months ended March 31, 2026, approximately 35% of our revenues were from clients located outside the United States and approximately 24% of our revenues were from currencies other than the United States dollar. The British pound represents the majority of revenues denominated in a currency other than the United States dollar. While revenues and expenses of our foreign operations are primarily denominated in their respective local currencies, some subsidiaries do enter into certain transactions in currencies that are different from the local currency. These transactions consist primarily of cross-currency intercompany balances and certain trade receivables and payables. As a result of these transactions, we have exposure to changes in foreign currency exchange rates that result in foreign currency transaction gains and losses, which we report in other income, net. The amount of these balances can fluctuate in the future as we bill customers and buy products or services in currencies other than our functional currency (i.e., the United States dollar), which could increase our exposure to foreign currency exchange rates. Our exposures to foreign currency exchange rates can also fluctuate as a result of acquisitions. Accordingly, we continuously assess and monitor our exposure to foreign currency exchange rates. We do not enter into any market risk sensitive instruments for trading or hedging purposes.
The foregoing risk management discussion and the effect thereof are forward-looking statements. Actual results in the future may differ materially from these projected results due to actual developments in global financial markets. The analytical methods used by us to assess and minimize risk discussed above should not be considered projections of future events or losses.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and chief financial officer (our principal executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2026. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2026, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There have not been any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
