As Macroenvironment Deteriorates, SS&C Sees Modest Slowdown in Growth

SS&C Technologies reported third-quarter results a bit below expectations. Revenue of $1.32 billion fell shy of the FactSet consensus estimate of $1.35 billion and management’s midpoint guidance provided in July of $1.34 billion. Adjusted EPS of $1.15 and adjusted EBTIDA of $502 million missed the consensus estimates of $1.20 and $510 million, respectively. We attribute the miss to macroeconomic conditions, particularly lower asset values for fund administration, but we believe the firm’s solutions are sticky. We view SS&C as having a narrow moat due to switching costs and note that the firm’s retention rate of 96.5% in the quarter came in slightly above 2020 and 2021 levels. We maintain our $75 fair value estimate and view the shares as attractive.