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spk11: Good day, everyone, and welcome to the SS&C Technologies First Quarter 2022 Earnings Call. Today's call is being recorded, and all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session, and if you would like to ask a question during this time, simply press the star key, followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. Thank you, and I would now like to turn the call over to Justine Stone, Head of Investor Relations. Please go ahead.
spk10: Hi, everyone. Welcome and thank you for joining us for our first quarter 2022 earnings call. I'm Justine Stone, Investor Relations for SS&C Technologies. 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 Private Security Litigation and 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, April 28, 2022. 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 refer you 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. Also, in the third quarter 2021, we entered into a joint venture named Domani RX LLC, which we are the majority interest holder and primary beneficiary. All earnings figures discussed today, including operating income, EBITDA, net income, and EPS, are attributable to SS&C based on the ownership interest retained by SS&C. I will now turn the call over to Bill.
spk13: Thanks, everyone, for joining. Our results for the first quarter were $1,296,000,000 in adjusted revenue, up 4.9% and $1.25 in adjusted diluted earnings per share. up 5.9%. Adjusted consolidated EBITDA was $514.9 million for the quarter, the highest first quarter in our 35-year history. Our EBITDA margin was 39.8%. Our first quarter adjusted organic revenue was up 4.3%. Our alternatives, interlinks, and advent businesses were the growth leaders for the quarter. X the impact of our healthcare business, our Q1 2022 organic growth and financial service which is over 90% of our revenue was 5.9%. SSNC generated net cash from operating activities of $183.5 million for the three months ended March 31, 2022. In the quarter, we bought back 2.3 million shares and average price of $75.22 per share for a total of $170.9 million. We also used cash on hand to help fund the acquisition of Blue Prism and HubWise. which both closed in March. Our consolidated net leverage ratio now stands at 3.48, and our net secured leverage ratio is 2.51. We expect to reduce our gross leverage to 3.0 by the end of the year, while remaining active with our share repurchase program. These are exceptional numbers given the global uncertainty and resultant hesitancy of our customers. We're excited to add Blue Prison Team and their automation capabilities into S&C's arsenal. Blue Prism will continue growing revenues at 15% to 20% with the potential to accelerate with its successful cross-sale initiatives. We estimate the enterprise-grade intelligent automation market to be in excess of $150 billion. Based off McKinsey's estimate, 30% of all roles can be automated. Companies across the world continue to struggle with the labor market, and we are in a great position to capitalize on this disruption. Currently, Blue Prism, like most fast-growing new technology companies, is operating at a loss. Through revenue growth and cost controls, we expect 15% to 20% EBITDA margins exiting 2023 and 30% to 40% EBITDA margins exiting 2024. I'll now turn the call over to Rahul to discuss the quarter in more detail.
spk02: Thanks, Bill. We had a good quarter across the board, led by strong performance from Advent, Interlinks, and Alternatives Fund Administration. The Alternatives business continues to strengthen from market-driven gains and internal development efforts. Investor allocations to hedge funds are at all-time highs, and assets under administration continue to grow despite market volatility. We remain focused on extending the depth and breadth of our technological capabilities. Go Central and Treasury Management Solutions both launched this quarter, have generated significant interest already. Go Central utilizing AI and RPA technology throughout will contribute to our win rates going forward, as well as advancing the automation journey across all client operations. Our private markets and advent teams have been closely partnering to enhance a holistic operating and technology model in support of hybrid and credit funds. This new offering marries Geneva's core technology capabilities and private markets administration services in a manner that offers clients flexible delivery models. In Q2, we expect to close our first combined deal and have several large prospects in the pipeline targeted for later this year. Intralinks remain strong in both M&A and alternatives coming off of 2021's record-breaking M&A environment. We continue to take market share and anticipate steady continuation of deal volume for the remainder of the year. As expected, healthcare revenue declined 15.5% in the quarter. We're investing heavily in Domani Rx, and we continue to move towards the development of a cloud-native, API-driven claims adjudication platform based off the vast experience of ourselves and the other two founding partners. With the upcoming launch of Domani Rx and the interest this new technology has generated, we expect a strong recovery in 2023. Now I will mention some key deals for Q1. A $5 billion broker-dealer chose Black Diamond due to our superior service and support model over competitors, as well as our trading and rebalancing functionality. An existing GIDS client, a top U.S. mutual fund, expanded their relationship with our event center solution. One of our largest mutual fund clients expanded their transfer agency BPO services. A $14 billion hedge fund, an existing Geneva client, chose our SOMS and fixed-link solutions. They viewed, as in Geneva, both as Tier 1 platforms and found the two together to be an extremely powerful solution. A $1 billion AUA real assets fund chose a suite of SSNC private market services, including investor tax and fund services, because of our expertise in various asset types and fund structures. I will now turn it over to Patrick to run through the financials.
spk04: Thank you. Results for the first quarter were gap revenues of $1.295 billion, GAAP net income of $172.1 million and diluted GAAP EPS of 64 cents. On an adjusted basis, revenue was $1.296 billion, including the impact of the adoption of the Revenue Standard 606 and for deferred revenue adjustments for prior acquisitions. Adjusted revenue was up 4.9 percent, adjusted operating income Contributable to SS&C increased 4.8%, and adjusted EPS was $1.25, a 5.9% increase over Q1 2021. Overall, adjusted revenues increased 60.8 million, or 4.9% in Q1. Our acquisitions contributed 17.4 million. Foreign exchange had an unfavorable impact of 8.7 million, or 0.7% in the quarter. Adjusted organic revenue increase on a constant currency basis was 4.3%. We had strength across several product lines, including alternatives, interlinks, and the advent businesses. Adjusted operating income for the first quarter was 498.7 million, an increase of 22.9 million, or 4.8% on the first quarter of 21. Adjusted operating margins were flat at 38.5 percent in the first quarter as compared to the first quarter of 2021. Expenses increased 1.7 percent on a constant currency basis, and acquisitions added 17.6 million in expenses, and foreign currency decreased costs by 7.8 million. Consolidated EBITDA which is defined at Note 3 in our earnings release was $514.9 million or 39.7% of revenue, an increase of $23 million or 4.7% from Q1 2021. Net interest expense for the quarter was $49.3 million and includes $2.6 million of non-cash amortized financing costs, NOID. The average rate in the quarter for our credit facility and senior notes was 3.11% compared to 3.01% in the first quarter of 21. We recorded a gap tax provision of 63.5 million or 27% of pre-tax income. Adjusted net income just defined in note four for earnings release was 334.4 million and adjusted EPS was $1.25. The effective tax rate used for adjusted net income was 26 percent. Diluted shares increased to $267.6 million from 267 in Q4 of 2021. The impact of option exercises and an increase in the average share price are partially offset by share repurchases. On the balance sheet and cash flow, we ended the first quarter with $558 million of cash and cash equivalents and $7.6 billion of gross debt. SS&C's net debt, defined in our credit agreement, excludes cash and cash equivalents of $145 million held at the Damani RXJV. So the net debt was $7.2 billion as of March 31st. Operating cash flow for the three months ended March was 183.5 million, a 2.2 million decrease compared to the same period in 2021. And a couple highlights in the first quarter of our net borrowings were 1,583,000,000 compared to net borrowings of 70 million in 2021 period. In the quarter, we paid $1,553,000,000 for the Blue Prism and HubWise acquisition, net of cash acquired. To fund the HubWise acquisition, we borrowed two incremental loans for a total of $1,530,000,000 that mature in March, 2029 and bear interest at SOFR plus 2.25% with a 50 BIP SOFR floor. Treasury stock buybacks were 170.9 million for purchases of 2.3 million shares at an average price of 75.22. And in July 2021, the board authorized up to 1 billion of stock buybacks and the program to date, Treasury stock buybacks totaled 333.7 million for purchase of 4.4 million shares. In the quarter, we declared and paid a 51.1 million common stock dividend, an increase of 24% from last year. We paid income taxes of 42 million compared to 42.5 in the first quarter of 21. Our accounts receivable DSO upticked a little bit in the quarter, up to 52.7 days compared to 49.5 days as of December 2021. Capital expenditures of capitalized software were 35.6 million or approximately 2.7% of adjusted revenue. And the spending was predominantly for internal use of capitalized software and our IT infrastructure. On the end, LTM consolidated, or LTM consolidated EBITDA that we used for covenant compliance was $2 billion. to $3.5 million as of March 2022. Based on a net debt of $7.2 billion, our total leverage ratio was 3.48, and our secured leverage ratio was 2.51. On outlook for the remainder of the year, a first cover of a few assumptions we've made. We'll continue focusing on our client service and our retention rates our client retention rates will continue to be in the range of most recent results. We have assumed foreign currency exchange will be at current levels for the remainder of the year, and that will impact revenue negatively by approximately $43 million in Q3 through Q4. Our recent acquisitions of Blue Prism and HubWise will contribute approximately $203 million of revenue for the remainder of the year. And on that basis, adjusted organic growth for the year will be in the range of 2.4% to 5.6%. And adjusted organic growth in Q2 in the range of 1.7% to 4.8%. On interest rates, we have assumed that near-term LIBOR will be about 70 BIPs. And the spread on our credit agreement is 175 BIPs. and 225 bits on a new facility that we put in place for Blue Prism acquisition. And we expect LIBOR rates to increase approximately 100 bits through the rest of the year. This will impact our expected interest costs by about $0.06 compared to previous guidance. Blue Prism will impact EPS, a dilution of about $0.09 for the year, including the impact of the new debt facility. We expect staff costs to increase to the continued wage inflation and impact Q2 operating results. We will manage our expenses in the second half of the year by controlling variable expenses and maintaining our operating margins. We'll continue to use our free cash flow to pay both pay down debt and stock buybacks. And we've assumed a tax rate of 26% on an adjusted basis for the year. So in summary, for the second quarter of 2022, we expect revenue in the range of $1,328,000,000 to $1,368,000,000. Diluted shares in the range of $267.2 million to $266.7 million. and adjusted EPS in the range of $1.13 to $1.19. For the full year of 22, we expect revenue in the range of $5,350,000,000 to $5,510,000,000, diluted shares in the range of $268,000,000 to $266.4 million, and adjusted EPS in the range of $4.99 to $5.21. And we expect cash from operating activities to be in the range of $1,315,000,000 to $1,375,000,000. And I'll turn it over back to Bill for final comments.
spk05: Thanks, Patrick.
spk13: And as Patrick just mentioned, we're guiding organic revenue growth at 4% of the year and reducing our EPS guidance due to the dilution from Blue Prison and the interest rate increases. The start of 2022 has been a challenging environment for our clients. Uncertainty and instability in the world and the labor force have made our clients and prospects more hesitant to sign deals. This uncertainty can also be a catalyst for change, a need for operational stability from a reliable, trusted provider. We are aggressively investing in our sales force and R&D efforts to capture this opportunity. Go Central, Singularity, Genesis, Aloha, Treasury Management, and others are rolling out now. Costs will be controlled through reduced incremental hiring, utilizing AI and automation, including Blue Prism's digital workers, to accomplish this and a reduction in our global real estate footprint.
spk05: And I'll now open it up for questions.
spk11: Thank you. As a reminder, everyone, if you would like to ask a question, please press star 1 on your telephone keypad. Please limit yourself to one question and one follow-up question. And if you would like to ask additional questions, please feel free to re-queue. Once again, everyone, that is star 1. All right. We'll take our first question from Alex Cram with UBS.
spk06: Yeah. Hey. Good evening, everyone. Maybe just starting on the DST side here. um growth of 0.9 the quarter decels quarter of a quarter i heard you on the selling environment and obviously it's a lot of uncertainty in the world but i would also say that you know coming into this year we still had traditional asset managers i think do very well in the back of multi-year highs in equity markets etc so i think i think your customer base actually doing fairly well so just wondering what in particular you're seeing at dst and uh in this environment, if we can see that growth rate kind of take up again in that business. Thanks.
spk13: Well, I'll give it a shot, Alex, and I'll have Rahul comment. But, you know, we continue to roll out additional capabilities in our DST businesses, and we have lots of large opportunities. And, you know, it comes down to you know, not only closing those opportunities, but also then getting those clients live. So there's a bunch of pent-up revenue that hopefully will start to roll into those financial statements in the second half of 2022. But, you know, they're large-scale organizations, and while we have teams working on it, we also rely on the clients to help us in that process. And And these uncertainties are not helping them move more quickly. Rahul, do you have any other color?
spk02: The one thing I'd add also is, you know, these customers are some of our biggest customers across the company. So the DSD relationships are strategic for us, and they frequently buy from us in other areas, including alternatives, Advent, and others. And obviously that's not reflected in the DST financial services line, but it does speak to the value of the relationship.
spk06: Fair point. Thank you for that. And then maybe just on the margin real quick, clearly margins flat year over year. I think last quarter you already talked about some inflationary pressure. I think you brought this up again today. So just wondering, are things a little bit tougher than you expected given the big resignation that everybody talks about or And how do you think it's going to continue to impact or how are you going to navigate that environment?
spk13: Well, I think that's a great question, Alex. And we are instituting all kinds of things to improve our retention and be able to create an environment where we are an employer of choice. there's wage inflation and that, you know, the overall, you know, power has really moved from capital to labor. And while I don't think that's necessarily a bad thing, I think, you know, for the short term, you know, adjusting your sights on, you know, going for price increases and being able to move inflationary costs you know, through to the revenue side, I think is what we're working on and being sensitive to our employees and making sure that we remain an employer of choice.
spk05: All right, great. I'll jump back in the queue. Thank you. All right, and we'll take our next question from Andrew Schmidt with Citi.
spk08: Hey, guys, thanks for taking my questions. Good to see the resiliency here. First, a set of questions on Blue Prism. To back the envelope, it looks like they should be approaching 100% or 1% point accretive on a pro forma basis when we think about just total growth. Just want to make sure I have that correct. And then if you could talk a little bit about just the opportunity to plug blue prism into the SSC direct sales force. It seems like that's one of the big river opportunities, just timeframe and process there. That would be helpful. Thanks a lot.
spk05: Rahul, you want to take that? Yes. So maybe Patrick can comment on the first one on the accretive bill.
spk04: I think your question was around revenue, right? How much does it add to revenue growth?
spk05: That's right, on a pro forma basis.
spk04: Yeah, so I think what we have in our financials for this year in our forecast is the first quarter had about $10.8 million, and that just represents a half a month. And then for the remainder of the year, I think we're estimating somewhere around $196 million of revenue for the second, third, and fourth quarter.
spk05: Then I think to the second – yeah, sorry.
spk08: Yeah, I was going to say, I guess the question is more around just combined company growth rates. It seems like it should – obviously, this is accretive, the growth, but it seems like it should be approaching that kind of 100 basis point accretion when – obviously, when we have this in the base in 2023. I just want to make sure that's the right ballpark.
spk02: You know, I think if you think about it, right, it's roughly we're getting 200 million in 10 months. Right. So let's call it 230 or something like that. And, you know, at a 20 percent growth rate, that's 46 million, which would be pretty close to 1 percent. So that's that's how we think about it as well.
spk08: Great. Perfect. Thank you for that.
spk02: And then the second part of the question. Yeah, to the second part of the question, we're actually pretty excited about the opportunity. We obviously have 18,000 clients, most of whom, I'd say virtually all of them, are candidates to have greater automation and to have digital workers. So that cross-sell component is pretty important to us. We also have a wealth of direct applications ourselves, whether in our outsourcing business where we're performing many of the tasks that folks would look to have digital workers do. So we're working hard and our teams are working hard on coming up with applications for if you're a hedge fund or an insurance company, here's something we might be able to do for you using this technology. And rolling that out, we think will be pretty powerful.
spk05: So that's all underway. Perfect. Appreciate that.
spk08: And then when we think about just the core business, Interlinks, from a growth perspective, was a real surprise from my perspective, given the M&A volumes out there. And it seems like a lot of that is due to share gain. Maybe you could talk a little bit about just the drivers there and how you see that playing out for the full year from a growth perspective.
spk05: Thanks.
spk13: Well, we have great business and influence, and they continue to find pockets of growth throughout their client base and new clients. And they've done a lot of things with... with helping the alternatives industry with portals and other things along those lines, information delivery. And then, you know, obviously they continue to be very strong in the VDR market and M&A in general. So we, you know, we expect, you know, similar growth for the rest of the year.
spk05: Perfect. Thanks, Bill, Roel, Patrick. Appreciate the comments. And we'll take our next question from Peter Heckman with Davidson.
spk07: Thanks for taking the question. Can you just remind us of some of the dynamics in the healthcare business, the decline in revenue, the timing of any customer losses, and whether that would be fully reflected in the run rate number for the first quarter? And then just remind us how the GAB works, if I remember correctly. You own a majority, so you're consolidating that with revenue and then have a minority interest coming out. But from your comments, it sounds like we're going to start to see that joint venture start to ramp. Would that be from new customers or increased volumes or both?
spk13: Yeah, so the money is 80% owned by us and 10% owned by each of our partners. And that's right on how we... how we do the accounting on that. You know, we have a lot of interest in Domani and the platform that we're building is pretty much on track. We hope to roll that out to one of our partners on the 1st of January of 23 and then the second one on the 1st of January of 24. But we also have tremendous interest in others coming in as customers into money or as partners. So we expect revenue to ramp nicely in 2023 through, you know, the next five or 10 years. And so we're excited about it. We think it's the first really, you know, cloud-based claims adjudication process in the PBM world. And we're excited about where we are.
spk07: And then just as regards to the decline in revenue this quarter, can you remind me, was that a loss of one large customer or was it an aggregate of several? And if you could just remind me when that actual deconversion happened. Did that happen January 1st?
spk04: It happened January 1st.
spk13: And several, right? And it's a total of about 70 to 80 million. And one of them represents about half.
spk05: Okay.
spk07: And then do you think on the O'Shares acquisition, do you feel like that should close by the end of the summer?
spk04: I think it's scheduled right now. It's a little unpredictable because there's some approval requirements, but I think it's scheduled for the end of June.
spk05: Okay. I appreciate it. And we'll take our next question from James Fawcett with Morgan Stanley.
spk01: Hey, this is Jonathan on for James. Thanks for taking my question. So you had alluded to driving price increases to offset wage inflation. And if I think back to the analyst day from last year, I think you had talked about, call it 100 basis points of pricing uplift to drive growth. How are the sort of price increase conversations going with customers, and is that enough to sort of offset the magnitude of wage inflation that you're seeing?
spk13: Well, I mean, I think it's a process, and I think the process is well underway. And, you know, obviously... Inflation has ticked up almost month after month for the last five or six months. And so we're planning on raising our prices to be able to cover our increased costs. And I think our customers understand that that's what's happening across the board for almost all their vendors. And we're no different. And we have a very talented company. labor force, and we're going to make sure that we take care of them and continue to be a very strong and trusted partner.
spk01: Got it. And a follow-up on the RPA opportunity, how are you thinking about the headcount or the magnitude of investment required to service the broader RPA platform that you have, inclusive of Blue Prism?
spk13: Well, you know, again, we have a large development organization. We have many, many talented RPA developers as well as AI and, you know, NLP and machine learning. So, you know, we have a big staff and Blue Prism complements it great. So, you know, we think that, you know, in general, we're going to be able to deploy hundreds of digital workers and, you know, hopefully over the next two or three years, thousands of them. which will allow us to grow and not add the headcount like we would have if we didn't have such technologies. And I think that's the whole holy grail of doing this acquisition is to bring that high-powered technology that allows you to substitute digital workers for human workers. It doesn't replace human workers per se in total, but it's certainly Augsburg's augments them in a very, very strong way.
spk05: Appreciate the call, Bill. Thank you. We'll take our next question from Kevin McPhee with Credit Suisse.
spk09: Great. Thanks so much. Is there any way to think about what the potential revenue opportunity is across your existing client base for Blue Prism? I think you obviously have 18,000 clients. you know, over time, is there any way to think about what the revenue contribution can be, you know, again, across the existing client base?
spk02: Yeah, sure, Bill. Thanks. So, you know, it's a huge market, right? And as a multiple of the you know, 200 and change that Superism does, we anticipate that just in our current client base, you know, we probably have three, four, five times that amount of opportunity. And some of the consultants out there are representing this as 150 billion or more market, right? And potentially as much as 30% of, as Bill noted, of all the line jobs that are done lend themselves to this kind of technology. So we're just trying, you know, we're obviously, we're mindful of, size of the market and at the same time we have to focus on specific things that we can do better than anybody else and and bloopers already has a number of those in the customers that they have deployed and we're working with them when building out additional use cases and applications it's helpful and then it seems like the revenue retention was up 90 basis consequentially
spk09: historically there's been a little seasonality. Should it stay at that 96.4, or how should we think about the revenue retention? I think you said stay around that level. Is that right? I just wanted to confirm that.
spk05: Yeah, I think it should stay around that. Great. Thank you. In the historical ranges, yeah, over the last couple of years. Thank you, Patrick.
spk11: All right, we'll take our next question from Alex Graham with UBS.
spk06: Oh, that was quick. Hello again. Just had a couple of follow-ups here. One, on the interest expense, thanks, Patrick, for the color in terms of the rising interest rate environment, et cetera. Maybe to make it even easier for some of us, can you actually give us the kind of dollar amounts of interest expense that you expect for the next three quarters as you bake in that rate increase?
spk05: Sure.
spk04: I think, including the new debt on Blue Prism, I think, which is about 36 or 37 million for the year, you know, we expect about 250 million this year in total.
spk06: Okay.
spk04: And yeah, in terms of the ramp, I guess it's, I guess, I don't know if you have any assumptions you want to share, given that- Well, I would think, I mean, yeah, I think right now, you know, the average interest rate on our original facility is probably around 2.45%. And and the new facility is 50 basis points higher than that because of the spread. And then I would say, you know, it goes up another 50 basis points in Q3 and another 50 basis points in Q4.
spk06: Super helpful. Thanks for that. And then just, just as we think about capital deployment here, are you assuming basically mostly, you know, payoff debts given the rising interest rate environment or, Do you still think there's appetite for buybacks as we step through the year? And then, yeah, and that's it. And then, sorry, just one last quick one. Stock-based comp increased quarter over quarter. Is that a good, any reason why the big step up? I think there was a second highest in company history. Is that a good run rate to think about for now?
spk13: Well, Alex, I think we'll be... I'll take part of this, Patrick, then turn it to you. Yeah, I think we're going to aggressively buy back our stock. We still see it as financially quite a bit more effective than paying down debt, although if interest rates continue to rise, then we'll revisit that. But right now, you know, we're going to generate $5 a share in cash and our stock's trading at 70 bucks or so, $69. And plus we pay a 1.2% dividend, I think. And so I think economically it makes a lot more sense to buy back stock. But, you know, rising interest rates could change that for sure. You know, we have tried to move a lot of the cash bonus programs into more equity programs. bonus programs and, and have them as a compliment to the cash and, and have cash be less of a, less of a driver of the bonus program. So I would think that the, uh, equity, uh, stock-based compensation is probably, um, probably pretty close to what it will be going forward. And, um, uh, I think that, you know, again, it's a tough labor market out there and, and we're going to do everything we can in order to, uh, to reduce attrition as much as we can. And I think we've done a pretty good job to date.
spk06: All right, helpful. Thanks again.
spk05: We'll take our next question from Chris Bennett with Piper Sandler.
spk03: Hey, good afternoon. Thanks for taking my questions. I had one for role on the alternatives business, and it shows the 10.7% growth. in alternatives in the first quarter in your slide deck, and then with the private markets growing over 18%, I'm just curious if you can comment on what's driving that strength in private markets, what you see for competition, and is this a lot of in-house opportunities shifting to SSNC?
spk02: Sure. I think it's a little bit of, you know, all of that but but mostly it's a continuation of a trend uh where folks that had in-house operations as they start new funds uh they they use us or somebody like us and we would say that you know the investment that we have made in in technology and process over the last decade or so is is market differentiating right so we have a really strong business we're the biggest uh provider of private market and that's both private equity and real assets funds in the world, and the capability keeps getting better. So we're a natural place for many of these funds to come to, and it's a combination of these are hot asset classes, particularly in the private lending, private credit, and private equity, as well as real assets. So because they're hot asset classes, there's a lot of new launches, and then there's transfers of internal. So all of that leads to, I think, a growth trend that is both positive and we think sustainable.
spk03: Okay. Got it. And then, uh, Bill, just on the healthcare business, uh, your optimism for the future, uh, for this year for that, um, what's the best way for those that's on the outside to track progress there? Is that something we'll see a flurry of press releases or will we need to wait till second quarter results or third quarter results? Just how should we try to keep an eye on that one and, and progress you're making?
spk13: Yeah, I think, you know, as we, um, as we sign new customers and new partners, so, you know, we would have press releases, but, you know, people, you know, are kicking the tires on the technology and want to make sure that, that, you know, we're going to deliver on our milestones and, you know, knock on wood, we've done a pretty good job so far. So I think, you know, more to come, you know, and, and I think that, you know, these are large scale healthcare organizations and so they're, you know, large chunks of revenue. And I think, you know, I think we'll prove to have been wise to have gone down this path.
spk05: Okay. Thank you. We'll take our next question from Andrew Schmidt with Citi.
spk08: Hey, guys. Thanks for taking my follow-ups here. I wanted to ask about the opportunity to implement the Blue Prism digital workforce across the client operations. Is there any way to size or think about that opportunity from a productivity perspective? And then is that included in the Blue Prism margin ramp or is this a separate opportunity?
spk05: Thanks. Yeah, we would view it as a separate opportunity.
spk13: I think Blue Prism has a lot of running room in being able to market its products out to our client base. And then, you know, the productivity increases that we get inside SS&C, I think, will really enter to the business units where they deploy Blue Prism. So, you know, that was one of the strategic reasons for doing it. And I think it's going to be something that really, really strengthens our business.
spk08: That's helpful. Thank you, Bill. And then just on the margin for the year, just taking out Blue Prism, has that outlook changed at all relative to the prior outlook, perhaps contemplating some incremental wage and cost pressure? And then how do you feel about just costs being stable from this point forward? Because obviously we've seen some volatility, some big pickups. I'm curious if there's more to come or your comfort level there.
spk05: Thanks a lot.
spk13: Yeah. I mean, you know, we obviously don't have a crystal ball either. So, so depending on what happens, you know, in the marketplace, you know, we're going to have to react and react in a way that is competitive. You know, right now we think we have done the right things and, and, you know, we have, you know, rearrange some of our, some of our compensation policies, and we're trying to make sure that we're sensitive to our talented workforce. And right now, we think we're in reasonable shape, but rather than have one bonus paid the first quarter after the year, we're going to spread out some of that bonus so that we pay parts of it in Q2, parts of it in Q3, and then the majority of it in the first quarter of 23. So there's a number of changes that we're making, and hopefully they're being well-received by our workforce and that they know that they're foremost in our mind and they're our biggest asset. So given that there aren't any more changes and interest rates or inflation don't keep going off the charts, I think we're in reasonable shape.
spk05: about it. Thank you very much, Bill. Appreciate it.
spk11: Our next question comes from Patrick O'Shaughnessy with Raymond Jane. Please go ahead.
spk12: Hey, good afternoon. Question about Blue Prism. How do you guys mechanically cross sell Blue Prism to your client base? Is it the legacy SS&C salespeople who have this kind of added to their arsenal? Is it a team-based approach with the legacy Blue Prism people or how's that going to work?
spk13: Well, it's both. Obviously, we're training our current sales force and getting some use cases. So you have to have a digital worker that's called Reconciliation or a digital worker that's called Verify or some other where we take an expert and they work with an engineer and they create a digital worker. And that has a rules-based repetitive capability that that, uh, that we then deploy. And so, you know, we have to have the use cases. We have to train our sales forces, what that use case is. And we have to, you know, kind of, uh, uh, use both blue prism personnel as well as our own, but, but we're pretty optimistic about it. And, and it's something that, uh, everybody's interested in. So, you know, salespeople like to sell stuff that everybody wants to buy. So I think we, we, we feel pretty strongly that, that, um, that the adoption will be, you know, swifter than usual, I think.
spk12: Got it. That's helpful. Thank you. And then a question for Patrick. Your full year adjusted net income outlook decreased by, I believe it's 48 million at the midpoint relative to your previous outlook. But the operating cash flow outlook decreased by 130 million at the midpoint. What's driving that differential?
spk04: There's a couple of things that are driving the differential. One is I think Bill mentioned that we are now going to institute for some employees a quarterly bonus. So instead of having an annual bonus for this year in the first quarter of 23, we're going to make some payments this year. So that's affecting cash flow, 60 to $80 million. And then there were about 20 or $25 million of yield costs related to
spk05: Blue Prism acquisition and financing that are hitting the cash flow. Got it. Thank you very much.
spk11: And that concludes the question and answer session. I would like to turn the call back over to Bill Stone for any additional or closing remarks.
spk13: Well, again, we appreciate... you all being on the call today, and we look forward to executing over the next several months and talking to you at the end of the second quarter. Thanks a lot. Bye.
spk11: And that does conclude today's presentation. Thank you for your participation, and you may now disconnect.
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