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spk01: Good day and thank you for standing by and welcome to the SSMC Technologies first quarter 2021 earnings call. At this time, all participants are on a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please note that today's call has been recorded. If you require any further assistance, please press star 0. Now I'm going to turn the conference over to Mrs. Justine Stone. Thank you. Please go ahead.
spk02: Hi, everyone. Welcome and thank you for joining us for our Q1 2021 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 Patrick Pedanti, our Chief Financial Officer. Before we get started, we 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 our 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, April 26, 2021. 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.
spk06: Thanks, everyone, for joining. Our results for the first quarter are $1.235 billion in adjusted revenue, up 4.9%, and $1.18 in adjusted earnings per share, up 14.6%. Our adjusted consolidated EBITDA was $491.9 million for the quarter. and our adjusted consolidated EBITDA margin was 39.8%. Our first quarter adjusted organic revenue was up 2.9%. Strength in our alternatives business, interlinks, and our software businesses contributed to this growth, surpassing our own expectations. GST came in at 0.1% growth for both financial services and health care. Operating cash flow was $185.7 million for the three months ended March 31, 2021, up 25.7%. We bought back 2.7 million shares on the stock in Q1 2021 at an average price of $67.15 per share for $181.4 million. Our secured net leverage ratio now stands at 2.29 times and our total net leverage ratio is at 3.35 times. We continue our focus on organic revenue growth and we're beginning to see some positive trends. We are growing our sales force and building new revenue generating products and services. We continue to make product improvements and new technologies across our business. In SS&C Health, our digital capabilities continue to grow in partnership with our customers, an expert user experience design team. A pilot of the SS&C Digital Experience platform will launch in early Q2 2021, with the platform expanding to over 2 million members by early Q4 2021. This represents an exciting opportunity for our customers to unify their digital solutions and provide a single-member experience, aligning to member and market expectations. We continue to integrate Vedato across our various business lines and have new mandates using this technology. ESG investing is becoming increasingly more important to our investors and our clients. While we are working to expand and improve our own disclosures and policies, we are also building solutions to help our clients address their ESG needs. Our Learning Institute is developing an introductory ESG online course to be released in Q2 2021. This course will introduce users to environmental, social, and governance factors used by investors and lenders for making investment decisions. The course will equip learners with basic fluency and core ESG concepts, explore risk, and outline ongoing debates in the field. We completed the Capital Life and Pension Services Ireland acquisition in the first quarter, adding 308 employees. This acquisition makes S&C the largest technology and service providers in the international life and pensions market in Ireland and provides us with an excellent opportunity to expand in Ireland and across Europe. We also are continuing our efforts to acquire Mainstream Group, their board unanimously recommending our proposals. Mainstream is a provider investment administration, middle office, fund and accounting, superannuation administration, share registry and unit registry, services to leading fund managers and superannuation funds, family offices and dealer groups. Earlier this month, we announced a reduction in force of 2.2% of our global employee base. These decisions are always difficult, and we have delayed our plans since the first quarter of 2020. And we have and will continue to treat everyone fairly, provide severance and transition assistance. The markets we serve and our customers demand innovation and overall productivity increases. These pressures often dictate cost containment efforts. Our ability to continue to give pay raises, bonuses, and other career development opportunities require us to manage our costs carefully and fairly. I'll now turn the call over to Rahul to discuss the quarter in more detail. Rahul Kumar Thanks, Bill. We had a strong quarter with a broad base list in revenue both year over year and sequentially. Intralinks had robust growth as the M&A market is off to a brisk start and economic stimulus continues. Increased carve-outs and restructuring and overall economic activity driving acquisitions contributed to our deal and opportunity counts, and win rates remain high. In our alternatives business, the number of qualified prospects has returned to pre-COVID levels, and there's increased fundraising momentum across strategies. Our existing clients are growing organically through new fund launches and performance, and we continue to win new clients at healthy levels. We ended the quarter with over $2 trillion in assets under administration for the first time, a significant milestone. Our software business performed well. Outsourced technology trends across wealth, asset management, and alternatives remain strong. Customers increasingly demand the ability to select and configure their operating model, including both software applications and outsourced services. Our capabilities are proving to be a valuable differentiator. As one indicator, over 90% of SS&C Advent's Q1 new sales included hosting or other operational services. Many service offerings for our Geneva and ES applications continue to get traction in the marketplace. Now I will mention some key deals for Q1. A top alternatives fund administrator, an existing Geneva client, extended their Geneva license to 40 Act funds. A new hedge fund launch shows a suite of SS&C products, including SOMS, EMS, Global Fund Services, Advent Outsource Services, and FixLink. A large Canadian asset manager expanded Vision and Pacer licensing to support its business plan. This client shows SS&C's real assets fund services, investor services, and financial statement preparation for their real estate funds. A newly launched retail brokerage and wealth management business in Southeast Asia chose GWP for its end-to-end capabilities. One of Asia's leading investment firms chose SS&C Global Fund Services for bank loan servicing. A Swiss-based asset manager chose SS&C's fund services and regulatory solutions for valuation capabilities around complex derivatives. An existing mutual fund customer chose SS&C's digital investor experience. A large multinational asset manager and existing transfer agency client expanded their relationship with us to include their Luxembourg business. I will now turn it over to Patrick to run through the financials. Thanks. Results for the first quarter of 2021 were GAAP revenues of $1,233.4 million, GAAP net income of $174.9 million, and diluted EPS of $0.65. Adjusted revenues were $1,235.4 million, including the impact of the adoption of Revenue Standard 606 and for the acquired deferred revenue adjustment for acquisitions. Adjusted revenue was up 4.9 percent. Adjusted operating income increased 7.1 percent. And adjusted EPS was $1.18, a 14.6 percent increase over Q1 2020. Adjusted revenue increased $57.4 million. Our acquisitions contributed $18.6 million in a quarter. Foreign exchange had a favorable impact of $16.1 million, or 1.4 percent. Adjusted organic revenue increased on a constant currency basis by 2.9 percent, given by strength in the Alternatives Fund Administration, ADVENT, and Interlinks products. These were offset by weakness in the institutional asset management, healthcare, and the EZ products. Adjusted operating income for the first quarter was $475.8 million, an increase of $31.6 million, or 7.1% from the first quarter of 2020. Foreign exchange had a negative impact of $13.2 million on expenses in the quarter. Adjusted operating margins increased from 37.7 in the first quarter of 2020 to 38.5 in the first quarter of 2021, driven by cost controls. Expenses increased 3.5% on a constant currency basis. Acquisitions added 6.3 million, and foreign currency increased costs by 13.2 million. Adjusted consolidated EBITDA was $491.9 million or 39.8% of adjusted revenue, increase of $28.4 million from Q1 2020. Net interest expense for the first quarter was $51.4 million, includes $3.3 million of non-cash amortized financing costs, NOID. Average interest rate in the quarter for the amended credit agreement, including our senior notes, was 3.01% compared to 4.18% in the first quarter of 2020, and resulted in an interest expense decrease of $26 million, or 33% in the quarter. We recorded a GAAP tax provision in the quarter of $60.8 million, or 25.8% of pre-tax income. Adjusted net income as defined in Note 4 of the earnings release was $316.5 million, and adjusted diluted EPS was $1.18. And the effective tax rate used for adjusted net income was 26 percent. Diluted shares remain unchanged in Q4 at $268.1 million. The impact of an increase in the average share price and option exercises was offset by the share repurchases. On cash flow and our balance sheet, as of March 31st, we had approximately $253.7 million of cash and cash equivalents and approximately $6.6 billion of gross debt for a net debt position of approximately $6.3 billion. Operating cash flow for the three months ended March was $185.7 million, a $38 million or 25.7 percent increase compared to the same period in 2020. For the three-month end of March 31st, we purchased Treasury stock buybacks of $181.4 million for purchases of 2.7 million shares at an average price of $67.15 per share, compared to no Treasury buybacks in the first quarter of 2020. Program and date Treasury stock buybacks totaled $469.5 million for purchases of 7.8 million shares at an average price of $60.38. There's $280.5 million remaining on the current program, which was initially $750 million that the Board approved. Net debt borrowings in the quarter were $70.6 million compared to net borrowings of $150.1 million in 2020. We declared an issue and paid a dividend of $41.2 million. That's compared to $31.9 million last year, an increase of 29 percent. We paid interest in the quarter of $76.6 million compared to $102.5 million last year. In the quarter, we paid $42.5 million in income taxes compared to $17.7 in 2020. Our accounts receivable DSO was 48.9 days as of March 31st compared to 48.4 as of December 2020 and 52.4 days as of March 2020. Capital expenditures of capitalized software totaled $31.4 million or 2.5 percent of adjusted revenue. Spending was predominantly for capitalized software and IT infrastructure. Our LPM EBITDA that we used for covenant compliance was $1,886.4 million as of March 2021. It includes $4 million of acquired EBITDA and cost savings related to our acquisitions. And based on that debt of approximately $6.3 billion, our total leverage ratio was 3.35 times, and our secured ratio was 2.29 times. For outlook for the remainder of the year, the following assumptions are included in the outlook for 2021. We'll continue focusing on client service, and our retention rates will continue to be a range of most recent results. We've assumed foreign currency exchange will be at current levels for the remainder of the year. We expect the impact on DSC Health Unit pre-acquisition client terminations to impact revenue by approximately $17 million for the remainder of the year. Adjusted organic growth for the year will be in the range of 1.7% to 4.7%. Adjusted organic growth for Q2 will be in the range of 2.4% to 5.9%. Interest rate in our term loan facility will approximately be one month LIBOR plus the current spread, which is 175 BIPs. We will continue to manage expenses during this period and control variable expenses and staff hiring. And we'll continue to invest in our business long term with capital expenditures above 2.8% of revenue. And we expect the tax rate to be approximately 26% for the full year. For the second quarter of 2021, we expect revenue in the range of $1,190,000,000 to $1,230,000,000. Adjusted net income in the range of $294 million to $310 million and diluted shares to be in the range of $267.8 to $268.3 million. For the full year of 2021, we expect revenue in the range of $4,825,000,000 to $4,965,000,000, adjusting that income in the range of $1,213,000,000 to $1,279,000,000 and delivered shares in the range of $267.4 to $268.9 million. And for the full year, we expect cash from operating activities to be in the range of $1,280,000,000 to $1,340,000,000. And I'll turn it over to Bill for final comments. Thanks, Patrick. With almost $500 million in adjusted consolidated EBITDA for the quarter, exceeding $2 trillion in assets under administrations in our alternatives business, adjusted revenue growth of almost three percent, and reducing our security and total leverage ratios to 2.29 and 3.25 times, we have built a powerful franchise. The franchise continues to add talent and opportunities as we embark on a new post-COVID world. I will now open for questions.
spk01: We will now take questions. To ask a question, press star, follow the number one on your telephone keypad. And as a reminder, please ask one question and one follow-up question, and then you can get back into the queue. And our first question comes from Dan Perlin with RBC.
spk05: Hey, everyone, and a great start to the year. So, Bill, I just wanted to drill down a little bit. It sounds like maybe client budgets are starting to come back into growth mode. You called out alternatives, maybe being back to pre-COVID levels and new fundraising and interlinks. I'm just wondering, you know, as you're having those conversations today with clients, you You know, where do we stand, you know, in terms of the real demand environment? What's the current pipeline look like for you guys? I mean, obviously we see your guidance, which seems pretty reasonable, but I'm just also wondering kind of the tonal difference, you know, that you're having with clients today versus maybe a quarter or two ago.
spk06: Well, Dan, I think, you know, what you're seeing across the world is that, you know, the world's opening up and, you know, knock on wood that we can continue to do that, but you know, the different governments, whether it's the EU or the United States or all of North America and Asia, pumping money into the economies, and that's giving investment managers confidence as their fund flows start to, you know, fill their coffers, and that makes them, you know, either launch new funds, get into new investment types or new strategies, and that reflects in the increased demand we're seeing and and also we've increased the size of our sales force and and you know we continue to train and that has proven to be pretty effective and so we're you know cautiously optimistic you know no one can really predict uh what what the pandemic's going to do next hopefully it's going to fade off into the sunset but we don't have uh a perfect crystal ball on that, but I would say that's the primary drivers of our, of our demand. Yep.
spk05: No, that's good on the, um, the followup is on this new, um, kind of division that you guys launched is intelligent automation solutions, you know, where it sounds like you're trying to help clients with their digital transformations. You know, I guess I'm wondering, that sounds like not so much a deviation from your historical, like, you know, product-forward business, but it does sound like it might be broader in and around consulting and maybe some other IT kind of functions, you know, One, do you think that that's opening up the funnel for new opportunities that you guys are going to be able to bring in? And then secondly, is there a product roadmap that needs to go along with that in order to be successful there? Thanks.
spk06: Well, we're pretty excited about adding Gotham and his experience and expertise and then being able to make our bundles increasingly more user-friendly and and more powerful. So, you know, we're excited about our opportunities. We think we have lots of exciting technology, and we think that we're increasingly becoming more adept at binding our different products together, which gives our clients, you know, more comfort as they grow and expand and want to have, you know, fewer suppliers and rely heavily on them. Rahul, would you agree with that comment? Well, I would. And I would just add to the second part of the question that there already is a fair amount of IP within SSMC that relates to intelligent automation, whether it's our AWD product or various initiatives we have across the company on natural language processing and artificial intelligence. And Gautam and his team are charged with You know, pulling those together, as Bill said, to make sure that they are, you know, knitted together in the right way for a particular use case or a particular application in a given industry, as well as build new product. But we have a pretty good foundation.
spk05: Great. Thank you, guys.
spk01: And our next question comes from Surrender Thand with Jefferies.
spk05: Good afternoon. Congratulations on the quarter. My first question is regarding the guidance. Can you break down the outlook for organic growth amongst the various segments for the full year? Meaning as interlinks, DST, and then SS&C core.
spk06: Yeah, I think, you know, in general, we expect our our, uh, alternative business to, to grow, to grow, you know, in the, in the four to seven range, we expect interlinks to be a little bit better than that. And then our software businesses, the, you know, one to 2%. And, and, uh, you know, we're, we're striving hard to make, to keep DST in positive. So, you know, zero to one, uh, and, and we, you know, we think we have, uh, uh, the pipelines and, and capabilities to, to hit those numbers, and that's what we're striving for. You know, EZ does a lot better when there's more volatility in the market, and obviously recently volatility has picked up, which will help EZ's business. Rahul, do you have other points you'd like to make? No, Bill, I think you covered it. And, you know, I would just say, and we saw this in Q1, We are seeing pretty good lift across our business, right? So it is pretty broad-based. So we're pretty optimistic about what happens Q2 to Q4.
spk05: That's helpful. And then as a quick follow-up, can you maybe, is there any color that you can provide on the Schwab transaction and they're switching away from DST to BNY Mellon for the transfer agency business? And what kind of an impact that might have on you guys?
spk06: Yeah, we don't expect that to have much of an impact on our overall business. The revenue side of that was not particularly large. And, you know, sometimes some of these, you know, some of the big custodians are under tremendous pressure. And, you know, so we are, you know, we're holding our own and and bringing out new technology and moving a lot faster. And, you know, we're not going to always win. You know, Schwab did acquisitions, and, you know, they're going to bring in new technologies that were used by the acquisitions candidates that they acquired. So, I mean, this is going to happen occasionally. And, you know, Schwab is still a great customer of ours, and we have a lot of respect for them. And, you know, we're not going anywhere. We'll be there, and we're pretty optimistic about what we're building and how we're delivering it.
spk05: Thank you, Bill.
spk01: And our next question comes from Alex Cram with UBS.
spk00: Hey, good evening, everyone. can you maybe just talk about pricing in the quarter, maybe across the board, but then also on the hedge fund administration side, you've been talking about this for a couple of years now that you're trying to get a little bit more. So anything you can share on the quarter would be helpful.
spk06: Rahul, you want to take that? Sure. Alex, you know, I think as we've said previously, we've developed a pretty good process now where, you know, once a year, We go back to these customers and we talk to them about the contracts, particularly ones that are coming up on renewal, and to see generally a modest increase that's in line with what happens to our costs. So we're in that process and have been in that process for three or four months now, and there really hasn't been much to report other than, hey, nobody's happy to get approached about a price increase, but we've had good constructive dialogue. There really has not been any fallout out of that process, and we think that our mission, which was to be able to have that conversation and deliver a lot of value to go with that, we're doing that. So it's gone well. Like I said, it's pretty modest overall, but we expect to be able to keep doing it on an annual basis over the long term.
spk00: Okay, fair enough. And then maybe just turning back to the quarter, I think you mentioned DST, but can you break out maybe some of the other businesses, like the alternative business growth for the quarter, but then also, you know, I don't think you mentioned it. So anything you can share in terms of how the growth came together for the quarter? Sorry if I missed it.
spk06: The alternatives is Patrick, the alternative business grew 6.7% in the quarter. Interlinks was 10%. And as Bill mentioned, Diaz business had a lot lower volumes and was down 3% for the quarter. And the DSC business combined health and financial services was essentially flat on an adjusted basis.
spk00: All right. Thank you.
spk01: And our next question comes from Andrew Smith with Citi.
spk03: Hey, Bill. Hello, Patrick. Hope you're doing well. Thanks for taking my questions. So question on DST. I think you mentioned last quarter financial services for the year on an organic basis expect to be low single. Healthcare may be slapped down. Any update to the growth trajectory of DST this year? And then any commentary on how the pipeline is specifically shifting up for DST versus the other parts of the business would be helpful. Thank you.
spk06: Well, again, we've done lots of changes in DST, and we're pretty focused on it. We have some really good pipeline business in there, and I think that, you know, it's the execution part of it, right? You have to win, and then you have to convert. So we won a number of large mandates, and, you know, in the third and fourth quarter last year in our retirement services business, and, you know, that revenue is, you know, will build throughout 2020. and that will give us a reasonably significant lift on BST. And then we've got to win some more. That's the challenge to this. But we do think we're bringing out some really exciting new digital technologies and capabilities. And I think ultimately you have to have superior products and superior services. And when you have that, then the ability to to train your sales force and win the deals, I think, becomes increasingly positive. Is that your take, Rahul? It is, Bill. And, you know, the DST financial business, what we're thinking as planned for the year, you know, low single digits, probably 2.5% or so organic growth, and the health business, So, you know, the average of those two things is kind of a little over 2%. That's what's in our plan right now.
spk03: Got it. That's super helpful. And, yeah, I appreciate the technology commentary. That's, you know, that's great to hear. I guess just as a follow-up, just switching gears to institutional asset management market, obviously we saw the, you know, the announcement of the large asset manager switching to a front-to-back investment servicing platform. Are you seeing more demand or more conversation amongst the larger traditional asset managers just to overhaul their tech infrastructure? Obviously, we've been talking about this for a number of years, but it does seem like some things are starting to break loose at least. Just share a few of your comments here and there on that market.
spk06: Well, we are bringing out a number of new products and services and focused in that area. You know, the large-scale asset managers, it's a you know, it's a multi-year process for them. And, you know, the new technologies, right, the RPA, the AI, the ML, the natural language processing, those things are increasingly sophisticated and increasingly powerful.
spk04: And I think the managers are looking at what they have today and then how do they, you know, transition to newer technologies and be able to
spk06: you know, streamline their operations and infrastructure costs. So we think increasingly that will get adopted. And, you know, COVID kind of put a difficult thing to, you know, rip out your infrastructure and bring new. At the same time, it created an awful lot review and analysis. But now I think that's going to come to change. And, you know, we're planning on being at the forefront.
spk03: Makes sense. And so we're getting to that stage. Thanks a lot, Bill. Appreciate the comments.
spk01: And our next question comes from Raina Kumar with Evercore ISI.
spk02: Hi, good evening. Thanks for taking my question. Can you give us your thoughts on the current outlook for a large license deal? So now that vaccine is becoming more prevalent in the U.S., do you think you're going to start to do more face-to-face meetings to close up some of these larger deals that you spoke about on the fourth quarter earnings call?
spk06: Well, you know, as Rahul spoke earlier, uh, earlier arena that he, you know, the, the, the thing you're seeing now is increasingly, you know, infrastructure bundles with large licenses. So that, you know, the technology aspects of, of, of maintaining current code, right? So releases have to go in and it has to be handled and it has to be done in a very professional way. And, you know, that's our expertise. You know, often it's not these, uh, these large-scale managers that are, you know, very expert in using applications, but not necessarily as expert in, you know, maintaining them, upgrading them, planning for those things. And so, you know, we think that bundling capability is giving us, you know, a little more running room, and we think that You know, the large license sales, I think, are not going to be as robust as they were 10 years ago because there's more options for people, and I think they will adopt some of those options that make their entire infrastructure easier to manage. Do you have a whole? I do, and we've seen, you know, As Bill just mentioned, we've seen that strength in our Advent business, and we're starting to see more of those conversations in our institutional and investment management business.
spk02: That's extremely helpful. And just on the DST business, a clarification question, did you say DST for the full year could be up 0% to 1% organically or up 2% and higher? what gives you confidence that DST will, you know, continue to improve in 2021 versus what we saw in 2020? Thank you.
spk06: Yeah, I think I said zero to one, but Rahul correct me. And I think we're shooting at, you know, combined around 2%. And, you know, we have opportunities, you know, I mean, tremendous opportunities, you know, opportunities only translate into financial statements when contracts get signed. Right. So, you know, we are executing on large scale deals, you know, hopefully over the next couple of quarters, it will come to fruition and we'll be able to share with you. And we're, you know, we're cautiously optimistic that the big things are going to happen for us. And we've been working hard to make sure that happens and, You know, at the same time, continue to drive earnings, drive cash flow, and, you know, increase shareholder value. That's our job. Rahul, do you have any more on that? No, I don't. We are, you know, we're also, you know, we've got reasonably good visibility at least in the current quarter and a little bit out. So, you know, that's also part of where the confidence comes from.
spk01: Thank you. And our next question comes from James Fawcett with Morgan Stanley.
spk06: Thank you very much. I wanted to touch on quickly acquisitions. You know, during the course of the core role and kind of mentioned that you might be looking a little bit more tweaking your M&A strategy a little bit, and it seems like the mainstream may fit the criteria you outlined then. Should we expect acquisitions similar to this going forward in terms of price you're willing to pay, growth rates, et cetera? Well, I think the answer is yes. You know, I – You know, James, you can tell us about what's the high end of this. You know, it seems like there's not a lot of money chasing things. And, you know, we have a lot of confidence in our development teams and our sales organization. And, you know, we believe we can build most anything. You know, so the question becomes is where do you allocate your capital? And, you know, we want to allocate it. what will give our shareholders the best risk-adjusted return. So maybe these things that are selling at 20 times revenue, maybe they are going to be moonshots. But you've been at this long enough. 20 times revenue, man, that's a big number. So you've got to do your due diligence. You've got to know how you're going to make that payoff. And so You know, I would say, yeah, well, of course, we have to raise our prices to get good assets because good assets are selling for higher prices. But we're still disciplined. You know, like I said, you know, we did almost $500 million in adjusted consolidated EBITDA. And that gives us a lot of flexibility. And as Patrick said, you know, we're expected somewhere around $1.3 billion in free cash flow. We can use that to do lots of things, and we plan on doing lots of things. And so I think there's a good question, and there's no specific answer other than certainly if you're going to be in the M&A game, you're going to pay more now than you did five, ten years ago. Yeah, for sure. And I think the tweak certainly makes sense. I wish I could tell you, though, Bill, how high or how long it goes on. But I guess associated with that, it seems like there's been some recent focus on Australia, given... link group and mainstream is that a coincidence or is there something attractive about the australian market that you're looking to gain exposure to and just trying to get a little bit of of insight into if there's anything specific there that we should be paying attention to in that attention to in that region of the world well i think australia has a strong economy and and they have a you know their superannuation fund concepts and uh and distribution to their to their uh Populous is, you know, it's what they call the wall of money, I think.
spk04: And, you know, when you have that and you have, you know, upwards of 30 million people that are, you know, certainly in the top decile of the world's wealth, as far as full populations go, I think it's an attractive market, right?
spk06: And they have, you know, it's English-speaking. It's got common law practices. primarily contractual processes similar to, you know, the U.K. and U.S. and Canada. And so that makes it, you know, pretty attractive and makes what we do pretty transparent to them. And I think that's why we see the interesting industry. And plus there were things that were for sale. You know, so it's something that, you know, we try to take advantage of no matter where it is in the world. Yep, yep. Good. Thanks for that, Bill.
spk01: And our next question comes from Chris Donat with Piper Sandler.
spk03: Hi. Good afternoon, everyone. It's Chris Donat. In terms of your second quarter guidance, just wondering about the, it looks like about a 2% decrease from the first quarter in terms of adjusted revenue. How should we think about that?
spk06: Was that sort of coming off a strong quarter from Intralinks, or was other revenue pulled forward in other sources, or just help us understand what's the quarter-on-quarter change in revenue? Rahul, you want to take that? Sure. You know, I think the biggest thing there is we do have some seasonality in our business. You know, a couple of the areas, for example, In our alternatives business, we do a lot of year-end financial statements and tax work. In our transfer agency and in-invest businesses, we do some regulatory filings and reporting to investors that occur around the year-end process. And so there's pockets like that where there's just more work that gets concentrated in Q1 than Q2, and that's primarily the difference.
spk00: Okay. Got it. That makes sense.
spk06: And then... You already touched on this a little bit, but I just want to make sure I'm understanding what's going on with the new intelligent automation solutions group. Is that separate from singularity, or is there some overlap, or where are we with singularity? There's a lot of themes here with machine learning and robotic process automation that seem like they overlap between the two. Well, I think they do, right? I mean, Singularity is an investment analytics and accounting and reporting solution, and then our intelligent automation workflow product, AWD, would be integrated with that in order to be able to use all of Singularity's capabilities and be able to put in a very sophisticated workflow process. So it is all... all related, but it's the bundling of those things, I think, that gives us the powerful market.
spk04: Okay. Thanks, Bill.
spk01: And our next question comes from Jackson Adder with JP Morgan.
spk03: Great. Thanks for taking our questions.
spk06: First one is on win rates, and I was just curious if in either the as business or fund administration, whether you were seeing any kind of different win rates for maybe new fund launches versus your win rates with existing funds that are just putting out for an RFP. I think our historical win rates and our current win rates are pretty similar. We might have a little momentum now. But, you know, we're a pretty powerful force in this, right? We had $74 billion in our funds business. And, you know, we have consistently been a big force in new fund launches that we win. And I think that will continue.
spk04: Do you have any more color, Russell?
spk06: Bill, I agree. I think it is pretty consistent with the past. And we are, you know, as our business gets stronger and we continue to build products and services, it is strengthening. And that part of the market, the new phone launch market, has always been really attractive to us. And, you know, many of our long-term clients and big clients started out in that process. And that continues to be a place where we have a good number of wins. Okay. Um, and then my follow up is on, uh, just two quick ones on, on the mainstream acquisition. Um, first is, you know, is there anything structural about that business that would kind of, you know, keep it from being able to get to that S S and C, um, operating margin kind of target level.
spk03: And then also, um, If memory serves Advent, when you acquired them, had teams or maybe 20% of the business came from the international market. So I was curious if there's any kind of either retail or RIA potential cross-sell with Advent moving into a new market.
spk05: Thanks.
spk06: Well, we don't think there's anything structural. It's mainstream and we think it's good business. We think we can you know, had, you know, a lot of heft in sales, marketing, and then obviously we're going to save some money on overhead costs. So we should be able to drive the margins up. And as far as Advent's concerned, I think we're doing well internationally.
spk04: You know, Black Diamond, we acquired with Advent, and that's a big RIA. I think we're up to $1,700 or so RIA in Black Diamond, and that continues to be a nice growth area for us.
spk06: And we like that space. Of course, everybody likes that space. So finding, you know, tucking acquisitions is expensive. And, you know, you've got to be cognizant of that expense. And then also what's the time to market if we decide to build and we have to make sure that we, you know, are wise about which goes to which.
spk04: Okay. Thank you.
spk01: And there are no further questions at this time. I'll turn the conference back over to Bill Stone for final remarks.
spk06: Well, again, we appreciate all of you, and hopefully we're off to the races on here. The Kentucky Derby is coming up in a week or two, and I look forward to talking to you at the end of the second.
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