Prepared remarks
Good day, and welcome to the SS&C Technologies Second Quarter 2026 Earnings Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Justine Stone, Head of Investor Relations. Please go ahead.
Hi, everyone. Welcome, and thank you for joining us for our Q2 2026 Earnings Call. I'm Justine Stone, Investor Relations for SS&C. With me today is Bill Stone, Chairman and Chief Executive Officer; Rahul Kanwar, President and Chief Operating Officer; and Brian Schell, our Chief Financial Officer. Before we get started, we'll need to review the safe harbor statement. Please note that various remarks we make today about future expectations, plans and prospects, including the financial outlook we provide, constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent annual report on Form 10-K, which is on file with the SEC and can also be accessed on our website. These forward-looking statements represent our expectations only as of today, July 23, 2026. While the company may elect to update these forward-looking statements, it specifically disclaims any obligation to do so. During today's call, we will be referring to certain non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to comparable GAAP financial measures is included in today's earnings release, which is located in the Investor Relations section of our website at www.ssctech.com. I will now turn the call over to Bill.
Thanks, Justine, and welcome, everyone. Q2 was record-setting for SS&C. Our strong quarter resulted in setting quarterly records for second quarter in revenue, adjusted EBITDA, earnings per share and shares repurchased. We continue to demonstrate success in an uncertain backdrop, underscoring the resilience of our diversified business model and the value clients place on our technology, expertise and innovation. Our second quarter results were adjusted revenue of $1,696.9 million, up 10.3% and adjusted diluted earnings per share of $1.76, an 18% increase. We delivered adjusted consolidated EBITDA of $670.7 million, up 12% or over $70 million and an adjusted consolidated EBITDA margin 39.5%. The dollar figures are all records. Adjusted organic revenue growth was 7.6% with performance driven by our largest businesses, new business wins, strength in multiyear renewals and market and transaction tailwinds. For the 6 months ended June 30, 2026, cash from operating activities was $716 million, up 11% year-over-year. This quarter, we returned $499 million to shareholders, which includes 6.4 million shares repurchased for $435.2 million, the highest quarterly buyback in our history. Primarily a result of our repurchase program, diluted shares outstanding are down 4% over the last year. Share repurchases remain our top capital allocation priority as we are projected to earn $7.29 in operating cash per share for the year. We have lots of flexibility. The acquisitions we completed at the end of 2025 are both tracking ahead of expectations. Curo has given us additional exposure in EMEA and revenues are growing nicely. Calastone continues to perform ahead of expectations as well. We expect 2026 growth to be in the mid-teens, and we have added 431 clients to the network. Although through Calastone, we are investing in solutions to support the future of our clients, including digital investment markets. As interest in tokenized investment products continues to grow, our clients and prospects are looking forward towards the infrastructure needed to support digital transactions. Combining our servicing capabilities with Calastone Technologies already supports the issuance and distribution of tokenized funds, our innovation roadmap now extends to the next stage of digital investment life cycle. The new capabilities will enable digital investment transactions to settle using regulated forms of digital cash, including stablecoins and tokenized commercial bank deposits. This will help reduce settlement risk, improve operational efficiency and simplify cross-border investment transactions. We look forward to capturing more market share. The highly anticipated Medicare GLP-1 Bridge Program launched on July 1. Since launch, nearly 3 million claims have been processed using SS&C's DomaniRx platform to support our client, Humana. We believe this demonstrates our technology scale, reliability and flexibility and underscores the critical role DomaniRx plays in enabling innovative health care programs. We're proud to expand access to these important therapies for millions of Americans. I'll now turn the call over to Rahul to discuss the quarter in more detail.
Thanks, Bill. Our second quarter results came in ahead of expectations with strong sales and renewal performance and continued margin expansion. We are on track to meet our margin objectives for the year. These results demonstrate the strength of SS&C's customer relationships and the criticality of our products and services. Outsourcing, co-sourcing and lift-outs combined with industry-leading technology continue to enhance our revenue growth. Rapid technological innovation is pushing customers towards SS&C as they look for a partner to help them take advantage of the latest technologies. Our front, middle and back-office technology business, including Geneva, delivered a strong quarter. We are seeing momentum in multiyear technology license renewals across our client base, reflecting the confidence clients have in our platforms and long-term roadmap. Several of our largest pipeline opportunities are anchored by tech. Our global footprint remains a competitive advantage with offerings spanning markets and asset classes worldwide, and we are seeing robust demand and healthy pipelines internationally as well as here in North America. We're deploying AI across our products and operations, and it is one of the drivers of the growth and margin expansion you see in these results. Our approach is governance first and proven internally before it reaches customers. In one example we announced this morning, a global leader in risk, reinsurance and capital chose our WorkHQ platform to scale Agentic automation across its business. This is one example of a trend we are seeing, established enterprises choosing SS&C to move their automation efforts to Agentic AI. With that, I'll turn it over to Brian to walk through the financials.
Thanks, Rahul, and good day, everyone. Unless noted otherwise, the quarterly comparisons are Q2 2025 — are to Q2 2025. As disclosed in our press release, our Q2 2026 GAAP results reflect revenues of $1.696 billion, net income of $235 million and diluted earnings per share of $0.97. As Bill noted at the beginning of our call, our adjusted non-GAAP results set several records for SS&C, including revenues of $1.697 billion, an increase of 10.3% and adjusted diluted EPS of $1.76, an 18.1% increase. The adjusted revenue increase of $159 million was primarily driven by incremental revenue contributions from organic growth of $118 million, acquisitions of $36 million and a favorable impact from foreign exchange of approximately $5 million. As a result, adjusted organic revenue growth on a constant currency basis was 7.6%, and our core expenses increased 6.1% or $58 million, which also excludes acquisitions and impact of FX. Adjusted consolidated EBITDA, also a record, was $671 million, reflecting an increase of $70 million or 11.7% and a margin of 39.5%, a 50 basis point expansion. Net interest expense for the second quarter was $107 million, an increase of $1 million year-over-year. Record adjusted net income was $426 million, up 13.3% and adjusted diluted EPS of $1.76 was up 18.1%. Our effective non-GAAP tax rate was 22.5% this quarter. Note for comparison purposes, we have recast the 2025 adjusted net income to reflect the full year effective tax rate of 22%. Also note the diluted share count is down to 242 million from 252.2 million year-over-year, primarily due to the size and continued impact of share repurchases and to a lesser extent, lower diluted shares. Cash flow from operating activities grew 11.1%, driven by growth in earnings. SS&C ended the second quarter with $435 million in cash and cash equivalents and $7.6 billion in gross debt. SS&C's net debt was $7.2 billion and our last 12 months consolidated EBITDA was $2.6 billion. Resulting net leverage ratio is 2.75x. In addition, we are actively exploring refinancing opportunities for our bonds maturing in 2027 to further optimize our capital structure. As we look forward to the third quarter and the full year 2026 with respect to guidance, we will continue to focus on client service and expect that retention rates will be in the range of our most recent results. We will continue to manage our business to support our long-term growth and manage our expenses by controlling and aligning variable expenses, increasing productivity and leveraging technology and AI tools to improve our operating margins and strategically investing in the business, especially with respect to R&D, sales and marketing. Specifically, we have assumed short-term interest rates remain at current levels, an effective tax rate of approximately 22.5% on an adjusted basis, capital expenditures to be 4.4% to 4.8% of revenues and a stronger weighting to share repurchases versus debt reduction. For the third quarter of '26, we expect revenue to be in the range of $1.657 billion to $1.697 billion and 5% organic revenue growth at the midpoint. Adjusted net income in the range of $413 million to $429 million, interest expense excluding amortization of deferred financing costs and original issue discount in the range of $103 million to $105 million and adjusted diluted EPS in the range of $1.73 to $1.79. For the full year 2026, we increased our expectations to revenue to be in the range of $6.672 billion to $6.832 billion and 5.5% organic revenue growth at the midpoint. Targeted EBITDA growth of 9.3%, EBITDA margin expansion of 50 basis points with the goal of a 40% margin in Q4. Cash from operating activities in the range of $1.717 billion to $1.817 billion, adjusted net income in the range of $1.67 billion to $1.77 billion, adjusted diluted EPS in the range of $6.93 to $7.25, reflecting approximately 15.5% growth at the midpoint. And now back to Bill.
Thanks, Brian. We believe our results speak to the strength of our business and consistency of our execution. Our clients continue to invest in SS&C and expand their relationships with us. We remain disciplined in how we operate, invest and allocate capital in ways that create long-term shareholder value. Team, we look forward to welcoming our clients at our Deliver Conference in Orlando, Florida. We have a lot of great sessions, demos and speakers lined up. And in partnership with NASDAQ, we will be hosting a remote opening bell ringing during our time there. With that, I will now open it up to questions.
Questions and answers
And our first question will come from the line of Dan Perlin with RBC Capital Markets.
Fantastic quarter. So the organic growth was a couple of hundred basis points above guidance. I would love to get a little bit more color in terms of the context around that. It sounds like there were some big license renewals in the quarter. I'm wondering, Bill, you often say you'll sell whatever you need. So if it's a license quarter or it's a big recurring sale, you just want to make the sale. I'm wondering how these deals are kind of flowing right now because it feels like there's a pretty big tilt towards maybe some of these license renewals.
Well, Dan, we get those license renewals when the contract runs out. So if we have a 7-year contract and it runs out, generally, when they renew, they want to renew for another 7 years. With the accounting pronouncements of ASC 606, that creates somewhat of a rush on revenue. So it depends when these things hit. I think one hit in June this year. I just think that that's a little bit of the lumpiness of the business. But as we get larger, we have more and more of these big clients with big renewals. In some ways, it kind of smooths out. We did have a couple of big renewals in Q2, and that's why organic revenue was up a couple of hundred extra basis points.
Got it. And then just a quick follow-up. Also, in the context of organic growth, you mentioned market and maybe some transactional activity. I'm really thinking more market directionality and how much that can play into any one given quarter. Obviously, you don't predict that into your guidance, but just trying to understand directionally how that might have impacted your organic growth as well.
Yes. We produce our capital movements index and our performance index for our hedge fund business every month. This past month, the redemption index was at 1.35%, which is about the lowest we've had in the history of having this thing, and we've done it since 2009. I think that's indicative of how strong that hedge fund business is and the strength of that type of asset manager. They have a lot of flexibility. They're very good risk managers and they have the full range of product capabilities. If you look at our assets under administration in our fund administration business, over the last two years, it's up $581 billion. I think that's pretty indicative of the strength that we have in that space.
That will come from the line of Jeff Schmitt with William Blair.
Another question on GlobeOp. Are you seeing demand for outsourcing just pick up in general as AI raises the need for companies to modernize, so they're turning to third-party vendors to do that more easily?
I do think that's a big part of what's happening. At a baseline, we've got strong demand because we're tech-forward and we're the biggest player in this business, and we have a lot of referenceability. Customers are looking to take advantage of AI and some of the Agentic capabilities we have. Rather than try to build everything internally from scratch, the fact that we can deploy it in a very scalable way has been positive for us.
Okay. Great. And then a question on GIDS. What's the underlying growth there when you exclude the recent lift-outs like Insignia? And how does your pipeline for additional lift-outs look? Those seem to be pretty accretive transactions.
Certainly, ultimately, they are very accretive. At the same time, it's competitive. We have to win and we have to deliver a great service, which we have been doing. These are large, sophisticated organizations that require a lot of attention, and we give them that attention. I think we have a great pipeline in our Global Investor and Distribution Services business, and I think that will continue. One of our prospects is you guys have 65% market share; I'm pretty sure you can probably handle us. That goes to the strength and size of our business: we win mandates from Australia, Europe and North America. I think we have a very powerful business model. If you back out Insignia, the underlying growth is still in excess of 5%.
One moment for our next question. And that will come from the line of Kevin McVeigh with UBS.
Congratulations again. Just really strong results and it feels like a little bit of a choppy environment. Bill, you mentioned the claims launch. Any way to think about what that contributed in the quarter and how that scales over the course of 2026?
Yes. We get in excess of double the $0.20. This is a trial program of the government, but it so far has been very popular. We'll see; it's a six-month program. Will they stick with a very successful program? That's probably 50-50. We do believe there is a lot of great collaboration between us, Humana and CMS that manages Medicare and Medicaid. We're optimistic. When it comes, it will come in large waves. If we can deliver a great service and the government likes what we do, they spend a lot of money and we won our fair share.
No doubt. And then you talked a little bit about AI governance and how you're starting to see it in the organization. Is that still through Blue Prism? Or are you starting to see other avenues? And any way to think about from a margin perspective, philosophically, how much will go to reinvestment versus margin expansion?
We made the upfront investments. We bought Blue Prism which had AI, ML, RPA and natural language processing. We spent $1.6 billion on that. Similarly, we spent about $1 billion and bought Calastone so we could be a leader in technologies customers want. We don't want to dabble or have multiple small licenses; we buy capabilities and scale them. When we acquired Blue Prism, we got about 1,400 people, and we've added more through other acquisitions. We're optimistic about where we're putting our investments, how we're using them, and we focus on governance and protection because our customers are in highly regulated businesses and regulatory issues are serious.
And our next question will come from the line of Alexei Gogolev with JPMorgan.
This is Bella Camaj on for Alexei. Congrats on the quarter. Given the organic growth performing so positively this quarter, especially the callout from those large license renewals, how should we think about third quarter organic growth implying a step down? Is that mainly renewal timing rolling off? And are there any other similarly sized renewals in the second half that could potentially offer upside?
Our pipeline is full of opportunities. There are some renewals coming up as well, so we have opportunities to outperform. We're staying consistent with great revenue growth and great earnings and not getting ahead of ourselves. That's how we will approach Q3 and Q4, but we'll let the results speak for themselves.
Got it. That makes sense. And just a quick follow-up. Looking at your capitalized software spend, where would you say that investment is mostly concentrated today? Is that mainly a function of the recent WorkHQ launch, implementation tooling or perhaps other platforms? Should we expect that level to persist into the second half of this year and into 2027?
We brought out a number of new systems. We brought out Genesis in asset management. We have a new release of Eclipse. We'll bring out a new release of DBC. We've launched DomaniRx and a new release of our medical claims. We brought out WorkHQ and our AI guardrails product. We're building out our private cloud and strengthening cybersecurity. I think we'll have similar capitalized software and R&D investment, but we also expect material margin improvement opportunities through adoption of AI agents and other technologies available today.
And our next question will come from the line of Pete Heckmann with D.A. Davidson.
Most of my questions have been answered. I was curious on the Intralinks side: virtual data room saw a nice sequential increase in organic growth but was on a relatively easy comparison. How much do you attribute that to an uptick in larger M&A or success in getting new clients versus just benefiting from an easy comparison?
We're having success across the metrics we track: opportunities in pipeline, conversion to bookings and bookings converting to revenue. All of those things are positive. Comps only matter if you can improve on them, and that's what we're doing. We are seeing the business strengthen and expect that to continue through the remainder of the year.
Would you attribute wins to particular areas? I think you mentioned private assets and private equity. Any other areas seeing adoption in the virtual data room area?
There are two components to the Intralinks business: virtual data rooms, which are more linked to the M&A markets, and the alternatives LP communications part of the business, which has been growing steadily. We're seeing success in both.
Our next question will come from the line of James Faucette with Morgan Stanley.
It's Michael Infante on for James. Just one from us. On the larger renewals and the second-half slate of renewals, how is AI factoring into these conversations? Do you view Agentic monetization and the WorkHQ opportunity as a call option for future monetization? Or are you seeing customers use AI as a mechanism to push back on your own price realization?
At large organizations, upgrading infrastructure is constant and AI is top of mind for executives and boards. Our approach has been effective in showing that our technology and the way we roll it out is better, and that customers are protected. RPA bots handle simpler processes today, reducing time and cost. Agentic agents can do more complex tasks with proper guardrails. If you build an orchestration layer as we have, you can create sophisticated workflows that are not people intensive. That's our approach, and it's been effective.
I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. Stone for any closing remarks.
Again, we appreciate everybody on this call, and we appreciate you owning our shares or following our shares. We work hard for our shareholders, and we will continue to do so. We look forward to speaking with you next quarter. Thanks.
This concludes today's program. Thank you all for participating. You may now disconnect.