Visitors to the Windsor headquarters of global financial software provider SS&C Technologies Inc. are greeted by a touch screen receptionist. Across the lobby, a wall-mounted TV is tuned to CNBC. Down the corridor, a set of flat-panel displays stream company-related business intelligence.
Less than 10 minutes into meeting William C. Stone, the firm’s chairman and CEO, it’s obvious that providing 24/7 access to technology-driven information is the bedrock of this business. To Stone, 57, who founded the company in 1986, a top-rated financial portfolio manager or a hedge fund honcho is no different from, say, a movie star, an international soccer player or a famous musician.
“When you’re the best, the world can’t get enough of you,” he said. “When you’re going to work that hard and be responsible for $5 million or $5 billion dollars — your portfolio, the information about your clients, the information about what trades you might want to do, the compliance aspects, the reporting aspects, the capital ratio aspects, all kinds of different things are with you whether you’re in the car, on the train, or on a plane. You have access to all of your data in a secure environment that gives people comfort that when you’re on a flight to Sydney or London, you’re still the master of your universe.”
SS&C’s clients manage more than $16 trillion in assets and Stone wants all business intelligence associated with those assets to be downloadable within minutes, if not seconds, onto a secure mobile device. Client firms license the technology for anywhere from $5,000 to $3 million a month, depending on the complexity. The mobile software is designed for both Apple’s iOS and Google’s Android platforms. Applications and services span a range of vehicles and asset classes.
“We don’t know which ones are going to be the darlings of the various industries. So we want to make sure that wherever the money goes, we have something,” said Stone.
That explains why SS&C’s 81 software products span a range of verticals from accounting, trade order management and enterprise reporting to global risk, municipal finance, and property management.
Competitors include State Street, Eagle Investment Systems (a subsidiary of Bank of New York Mellon), Automated Data Processing, Advent Software and Yardi. Stone said SS&C has 90 percent marketshare in money market securities software in the U.S. and Europe, and 90 percent marketshare in municipal bond structuring software in the U.S.
SS&C Technologies Inc. is a holding company of SS&C Technologies Holdings, Inc. [Nasdaq: SSNC].
In a highly fragmented industry, ease of use is a key differentiator.
“We admire what Apple has done and what Steve Jobs has done with the clean look that he has in his devices,” he said. “We want the minimalist kind of approach so you’re not cluttering up the experience for the partner, the portfolio manager, the trader or the analysts. You’re giving what they need, when they need it, regardless of time and space.”
That’s the underlying message wrapped around the product portfolio: “Don’t wonder. Know. Anything. Anytime. Anywhere.” The tagline was launched this August, months after SS&C made two key acquisitions — Thomson Reuters’ Portia, its largest acquisition to date, and GlobeOp Financial Services S.A.
“The new tagline is to recognize that industries change, customers change and organizations change and for us to be able to stay abreast, we need to change as well,” said Stone.
That means offering products that address four key trends:
1. 24/7 access to business intelligence.
2. Regulatory compliance software that converges reporting requirements across multiple accounting standards.
3. Products that can handle the growing complexity in global taxation laws.
4. Virtualization — the ability to use software to emulate hardware.
From insurance to fund management, Stone wants to be in just about every vertical.
“We recognize that you as a portfolio manager are going to move money between different asset classes,” he said. “We don’t want you moving away from where we’re providing services and go to places where we don’t provide services.”
That explains the 34 acquisitions since 1995 and the ongoing negotiations for more cash acquisitions in the U.S., Europe, Asia and Australia, where SS&C is growing its marketshare.
“We have some fund administrators that we’re interested in acquiring, some technology companies, some software as a service company we’re talking to — we’re in a bit of digestion period right now having just acquired GlobeOp and Portia, but that’s gone very, very well for us and we’re going to continue to march,” said Stone.
SS&C’s debt position stands at $1 billion and the debt to EBITDA (earnings before interest, tax, depreciation and amortization) ratio is 4.2.
“Our goal is to get below 3 and our acquisitions will generate a lot of cash quickly,” he said.
The company, 27 percent of whose common shares are owned by the Carlyle Group, was resilient during the economic downturn, posting 150 percent growth in revenue between 2007 and 2011. Plans are underway to potentially hire several hundred employees next year, adding to the current 4,200.
Last quarter however saw a net loss of $5.76 million on the heels of acquisition-related and other expenses, down from a net income of $13 million for the same period last year. Meanwhile revenue surged 31.6 percent to $120.9 million, up from $91.8 million during the corresponding quarter in 2011.
“We’ll do $160 million to $170 million this quarter,” said Stone. Roughly a half of the revenue would be acquisition-driven and the rest from organic growth.
“In 2004, we did $95 million in revenue. In 1994 we did $9.2 million. So in 2014 we’d have to go to $950 million,” Stone pointed out. “I’m not saying we’ll get there, but we’re constantly striving.”
Stone’s business strategy is if you’re going to run a small company, you might as well run a big company. His reasoning? You’ve got to do the same things but the resources and rewards are far better.
How big is big enough?
“We’re just getting started,” he said.
