SS&C Technologies Holdings, Inc. reports 104% revenue growth in 2018 and 10.2 pp EBITDA Margin decline from 37.9% to 27.7%
02/14/2019 • About SS&C Technologies Holdings, Inc. (
$SSNC) • By InTwits
SS&C Technologies Holdings, Inc. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- SS&C Technologies Holdings, Inc. is a fast growth stock: 2018 revenue growth was 104%, 5 year revenue CAGR was 36.9% at 2018 ROIC 4.5%
- SS&C Technologies Holdings, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.4%. At the same time it's a lot of higher than industry average of 3.1%.
- CAPEX is quite volatile: $89m in 2018, $46m in 2017, $38m in 2016, $18m in 2015, $19m in 2014
- In the last 5 years the company invested considerably less than D&A: $209m vs. $1,235m. In 2018 this situation was still the same: CAPEX was 89 while D&A was 519
- The company has potentially unprofitable business model: ROIC is 4.5%
- It operates with high leverage: Net Debt/EBITDA is 8.5x while industry average is -2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
SS&C Technologies Holdings, Inc.'s Revenue surged on 104%. Revenue growth showed acceleration in 18Q4 - it increased 153.4% YoY. Revenue growth was financed by EBITDA margin decline. EBITDA Margin dropped on 10.2 pp from 37.9% to 27.7% in 2018.
Gross Margin decreased on 7.0 pp from 47.1% to 40.0% in 2018. SG&A as a % of Revenue increased slightly on 1.1 pp from 14.2% to 15.3% in 2018. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in 2018. SBC as a % of Revenue stuck to a growing trend at 0.81 pp per annum in 2014-2018.
Net Income margin dropped on 16.6 pp from 19.6% to 3.0% in 2018. The efficient tax rate was 17.5% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 SS&C Technologies Holdings, Inc. had CAPEX/Revenue of 2.6%. SS&C Technologies Holdings, Inc.'s CAPEX/Revenue increased slightly on 0.82 pp from 1.8% in 2015 to 2.6% in 2018. It's average level of CAPEX/Revenue for the last three years was 2.6%.
Accounts receivable as a % of Revenue increased on 5.4 pp from 14.6% to 19.9% in 2018. Accounts payable as a % of Revenue decreased slightly on 1.0 pp from 3.1% to 2.0% in 2018.
SS&C Technologies Holdings, Inc. has spent
$7,067m on M&A in 2018 which accounts for 207% of revenue.
Return on investment
The company operates at low ROIC (4.5%) and ROE (2.8%). ROIC decreased on 3.2 pp from 7.7% to 4.5% in 2018. ROE dropped on 10.5 pp from 13.3% to 2.8% in 2018.
Leverage (Debt)
Debt level is 8.5x Net Debt / EBITDA and 8.7x Debt / EBITDA. Net Debt / EBITDA surged on 5.4x from 3.1x to 8.5x in 2018. Debt jumped on 304% while cash jumped on 160%.
SS&C Technologies Holdings, Inc. has no short term refinancing risk: cash is higher than short term debt (190.5%).
Valuation and dividends
The company's trades at EV/EBITDA 24.1x and P/E 143.3x.
The company paid 68.8% of Net Income as dividends in 2018. Dividends grew on average at 48.0% per annum in the last 5 years).
Management team
The company's CEO is William C Stone "Bill". William C Stone "Bill" is a founder and has 14 years tenure with the company. CEO total compensation was
$15,862,121 in 2018 which included
$875,000 salary. SS&C Technologies Holdings, Inc.'s CFO is Patrick J Pedonti. Patrick J Pedonti has 17 years tenure at the company.
At the end of financial year the company had 13.6% shares owned by insiders. Insider ownership didn't change in 2018.
The company has 22,600 employees. The number of employees jumped on 173%. Average revenue per employee in 2018 was
$151,376 and it dropped on 25.1%.
Financial and operational results
FY ended 12/31/2018
SS&C Technologies Holdings, Inc. ($SSNC) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 768 | 1,000 | 1,481 | 1,675 | 3,421 | 104.2% |
| Gross Profit | 357 | 468 | 681 | 789 | 1,370 | 73.7% |
| SG&A | 99 | 193 | 240 | 239 | 525 | 120.0% |
| EBITDA | 300 | 316 | 517 | 634 | 948 | 49.4% |
| EBIT | 200 | 165 | 289 | 397 | 429 | 8.1% |
| Tax | 47 | 18 | 33 | -46 | 22 | |
| Net Income | 131 | 43 | 131 | 329 | 103 | -68.6% |
| Stock Based Compensation | -4 | 11 | 4 | 41 | 97 | 133.6% |
Balance Sheet
|
|---|
| Cash | 110 | 434 | 118 | 64 | 167 | 160.2% |
| Accounts Receivable | 94 | 170 | 241 | 244 | 682 | 179.5% |
| Accounts Payable | 12 | 12 | 16 | 27 | 41 | 52.8% |
| Short Term Debt | 20 | 32 | 126 | 38 | 88 | 131.1% |
| Long Term Debt | 599 | 2,719 | 2,375 | 2,007 | 8,169 | 306.9% |
Cash flow
|
|---|
| Capex | 19 | 18 | 38 | 46 | 89 | 93.8% |
| Dividends | 10 | 45 | 50 | 54 | 71 | 31.5% |
| Acquisitions | 87 | 2,731 | 458 | 17 | 7,067 | 40,482.9% |
Ratios
|
|---|
| Revenue growth | 7.7% | 30.3% | 48.1% | 13.1% | 104.2% | |
| EBITDA growth | 6.2% | 5.1% | 63.9% | 22.6% | 49.4% | |
|
|---|
| Gross Margin | 46.5% | 46.8% | 46.0% | 47.1% | 40.0% | -7.0% |
| EBITDA Margin | 39.1% | 31.5% | 34.9% | 37.9% | 27.7% | -10.2% |
| EBIT Margin | 26.1% | 16.5% | 19.5% | 23.7% | 12.5% | -11.1% |
| SG&A, % of revenue | 13.0% | 19.3% | 16.2% | 14.2% | 15.3% | 1.1% |
| SBC, % of revenue | -0.5% | 1.1% | 0.3% | 2.5% | 2.8% | 0.4% |
| Net Income Margin | 17.1% | 4.3% | 8.8% | 19.6% | 3.0% | -16.6% |
| CAPEX, % of revenue | 2.4% | 1.8% | 2.5% | 2.7% | 2.6% | -0.1% |
|
|---|
| ROIC | 9.6% | 4.4% | 5.5% | 7.7% | 4.5% | -3.2% |
| ROE | 10.2% | 2.5% | 6.0% | 13.3% | 2.8% | -10.5% |
| Net Debt/EBITDA | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x | 5.4x |
People
|
|---|
| Insider ownership | 13.6% | 13.6% | 13.6% | 13.6% | 13.6% | 0.0% |
| Employees | 4,674 | 6,089 | 8,001 | 8,287 | 22,600 | 172.7% |
| Revenue/Employee, th. $ | 164 | 164 | 185 | 202 | 151 | -25.1% |
SS&C Technologies Holdings, Inc. ($SSNC) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 422 | 896 | 992 | 1,111 | | 3.5% | 118.0% | 137.3% | 153.4% |
| EBITDA | 148 | 85 | 327 | 388 | | 0.0% | -43.0% | 99.8% | 123.5% |
| Net Income | 51 | -64 | 57 | 59 | | 6.5% | -224.7% | -11.2% | -64.5% |
Balance Sheet
|
|---|
| Cash | 74 | 785 | 732 | 167 | | -31.9% | 768.8% | 609.0% | 160.2% |
| Short Term Debt | 37 | 73 | 71 | 88 | | -63.0% | 97.1% | 79.9% | 131.1% |
| Long Term Debt | 1,949 | 6,837 | 6,615 | 8,169 | | -16.8% | 202.3% | 203.8% | 306.9% |
Ratios
|
|---|
| Gross Margin | 45.6% | 32.6% | 41.5% | 42.6% | | -1.1% | -12.9% | -5.9% | -6.0% |
| EBITDA Margin | 35.2% | 9.4% | 32.9% | 34.9% | | -1.2% | -26.7% | -6.2% | -4.7% |
| Net Income Margin | 12.2% | -7.1% | 5.7% | 5.3% | | 0.3% | -19.5% | -9.6% | -32.4% |
Peers in Application Software
Below you can find SS&C Technologies Holdings, Inc. benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 13.5% | 13.6% | 15.7% | 15.2% |
|---|
| SS&C Technologies Holdings, Inc. ($SSNC) | | 30.3% | 48.1% | 13.1% | 104.2% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 63.4% | 61.9% | 64.2% | 64.6% | 66.1% |
|---|
| SS&C Technologies Holdings, Inc. ($SSNC) | 46.5% | 46.8% | 46.0% | 47.1% | 40.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.3% | -10.7% | -5.3% | -4.2% | -3.3% |
|---|
| SS&C Technologies Holdings, Inc. ($SSNC) | 39.1% | 31.5% | 34.9% | 37.9% | 27.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 3.0% | 2.3% | 2.4% |
|---|
| SS&C Technologies Holdings, Inc. ($SSNC) | 2.4% | 1.8% | 2.5% | 2.7% | 2.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.4% | -13.1% | -9.8% | -11.8% | -10.4% |
|---|
| SS&C Technologies Holdings, Inc. ($SSNC) | 9.6% | 4.4% | 5.5% | 7.7% | 4.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| Five9, Inc. ($FIVN) | | | -6.7x | -8.6x | 7.3x |
| |
|---|
| Median (69 companies) | -1.4x | -1.0x | -0.9x | -0.9x | -0.7x |
|---|
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
