SS&C Technologies Holdings, Inc. (Nasdaq:SSNC), a global provider of financial services software and software-enabled services, today announced results for the quarter ended June 30, 2010.
Revenue on a GAAP basis for the second quarter of 2010 was $81.6 million. This is an increase of $14.4 million, or 21.4%, from revenues over the same period in 2009. Net income, on a GAAP basis, for the second quarter of 2010 was $4.4 million, an increase of $0.9 million, or 24.9%, over the same period in 2009. Diluted earnings per share (EPS) for Q2 2010 were $0.06 and remained flat compared to the same period in Q2 2009, reflecting the issuance of an aggregate of 9.8 million shares of common stock in the Company's IPO.
Adjusted revenue, which is adjusted for one-time purchase accounting adjustments (a non-GAAP measure defined in note 1 to the attached Consolidated Condensed Financial Information), was $81.7 million, an increase of $14.4 million or 21.5% from $67.3 million in the same period of 2009.
Annual Run Rate Basis (ARRB) recurring revenue, defined as the addition of maintenance and software-enabled services revenue, was $70.4 million, an annual run rate of $281.6 million. This represents an increase of 21.7% from $57.9 million and $231.5 million run-rate in the same period in 2009 and an increase of 4.8% from Q1 2010's $67.2 million and $268.8 million run-rate. We believe a good indicator of visibility is the ARRB of our recurring revenue.
Adjusted operating income (a non-GAAP financial measure defined in note 2 to the attached Consolidated Condensed Financial Information) was $32.4 million for the three months ended June 30, 2010, compared to $26.0 million in Q2 2009, an increase of 24.7%. GAAP operating income in the second quarter of 2010 was $19.8 million and included amortization of $8.7 million and stock-based compensation of $3.9 million, compared to $15.8 million of operating income in Q2 2009, an increase of 25.0%. Adjusted Consolidated EBITDA (a non-GAAP financial measure defined in note 3 to the Consolidated Condensed Financial Information) in Q2 2010 was $33.8 million, compared to $27.2 million in Q2 2009, an increase of 24.2%.
Adjusted net income and adjusted diluted earnings per share (non-GAAP measures defined in note 4 to the attached Consolidated Condensed Financial Information) were $16.2 million and $0.22 compared to $11.2 million and $0.18 in Q2 2009.
"We are pleased with our second quarter results and our 21.5% increase in adjusted revenue," said Bill Stone, Chairman and CEO, SS&C Technologies Holdings, Inc. "We continue to execute on our strategy to remain focused on the financial services industry, worldwide, and grow our software-enabled services revenue, both organically and from our acquisitions, and in Q2 SS&C achieved a 25.9% increase in software-enabled services revenues over Q2 2009."
"We continue to improve our operating margins and our strong 24.7% increase in adjusted operating income confirms our focus," continued Stone.
SS&C generated net cash from operating activities of $23.4 million for the six months ended June 30, 2010, compared to $20.9 million for the same period in 2009, representing a 12.1% increase. We ended the quarter with $88.9 million of cash on the balance sheet.
"Our balance sheet and cash flow continue to improve. We generated $23.4 million in net cash from operations during the first six months of 2010," said Stone. "As we previously announced, we completed a redemption of $71.75 million in aggregate principal amount outstanding of our 11 3/4% Senior Subordinated Notes due 2013 during the second quarter. Additionally we paid down $9.8 million of our term loan facility during the six months ended June 30, 2010."
We are focusing our development organization to deliver new products and services in 2010. Most recently we launched Risk Analytics' daily and monthly risk reporting integrated with our fund administration business. SS&C Fund Services provides middle- and back-office services for more than 3,000 funds under administration, and supports multiple structures, including hedge funds, fund of funds, private equity funds and managed account platforms.
In Q2, we launched SS&C Private Equity Industry (PEI) Solutions, which combines our TNR Solution private equity platform with our private equity fund administration services. SS&C's private equity business services more than 1,000 funds worldwide.
"We have spent considerable time in 2010 developing a high quality end-user experience for clients through secure web portals," said Stone. "In Q2, we launched new web front-end portals for our fund administration businesses, TradeThru and LMS."
We continue to integrate our Tradeware acquisition with the SS&C family of products and services and focus on its development. In Q2, Tradeware FIXLink started reporting short positions in securities to the Australian Securities and Investments Commission (ASIC) and announced the signing of two institutional clients.
The increase in our software-enabled services can be attributed primarily to the growth of our alternative investment services.
"We continue to see momentum in this business," said Stone. "One deal of note was a Geneva-based fund of funds manager launching a managed account platform, did a worldwide search for a fund administrator and turned to SS&C for their expertise."
SS&C Lightning, our capital markets solution, continues to gain market acceptance, particularly its collateral management capability. In Q2, Bank of the West completed their implementation of Lightning to support their fixed income trading, sales and collateral management services.
SS&C continues to see momentum with our GEARS (Global Enterprise Accounting and Reporting Solution) platform in the institutional and asset management market. In Q2, SS&C added blue chip clients Bombardier and Guardian Capital LP.
SS&C's Municipal Finance software business remains strong and we added the investment banking arm of Edward Jones. Commenting on the strength of this business, Stone says, "The State and Local Governments are facing record tax shortfalls, which are being met by the issuance of Municipal Bonds. SS&C has been a leader in this business since acquiring Dubois Brown & Co. (DBC) in November 2002. Cities, states, colleges and universities, as well as the advisors who counsel them, turn to DBC Finance to structure their offerings in the most optimized way."
Based on the information available as of August 3, 2010, we currently expect third quarter revenues to be in the range of $82.0 to $83.0 million, and adjusted net income to be in the range of $16.3 to $16.8 million, assuming an effective tax rate of 35% and approximately 75.5 to 76.0 million diluted shares outstanding for the quarter ending September 30, 2010. For full year 2010, our expectation is for revenues to be in the range of $325.0 to $329.0 million and adjusted net income in the range of $63.0 to $64.0 million. We currently expect the number of diluted shares outstanding to increase by approximately an additional 0.5 million in the fourth quarter of 2010.
Results of SS&C Technologies, Inc.
Our operating subsidiary, SS&C Technologies, Inc., posted the same revenues and net income for the second quarter of 2010 as the Company.
Non-GAAP Financial Measures
Adjusted revenue, adjusted operating income, adjusted consolidated EBITDA, adjusted net income and adjusted diluted earnings per
share are non-GAAP measures. See the accompanying notes to the attached Consolidated Condensed Financial Information for the reconciliations and definitions for each of these non-GAAP measures and the reasons our management believes that these measures provide useful information to investors regarding our financial condition and results of operations.