SS&C (SSNC)

Financial software provider SS&C Technologies (NASDAQ:SSNC) reported revenue ahead of Wall Street’s expectations in Q3 CY2025, with sales up 7% year on year to $1.57 billion. The company expects next quarter’s revenue to be around $1.61 billion, close to analysts’ estimates. Its non-GAAP profit of $1.57 per share was 6.5% above analysts’ consensus estimates.

Company Overview

Founded in 1986 as a bridge between technology and financial services, SS&C Technologies (NASDAQ:SSNC) provides software and software-enabled services that help financial firms and healthcare organizations automate complex business processes.

A combination of increasing reliance on data and analytics across various industries and the desire for cost efficiency through outsourcing could mean that companies in this space gain. As functions such as payroll, HR, and credit risk assessment rely on more digitization, key players in the data & business process services industry could be increased demand. On the other hand, the sector faces headwinds from growing regulatory scrutiny on data privacy and security, with laws like GDPR and evolving U.S. regulations potentially limiting data collection and monetization strategies. Additionally, rising cyber threats pose risks to firms handling sensitive personal and financial information, creating outsized headline risk when things go wrong in this area.

In the financial services sector, SS&C competes with FIS, Broadridge Financial Solutions, and BlackRock's eFront in fund administration; Envestnet, Orion, and Addepar in wealth management; and SEI Investments in multiple segments. In healthcare, SS&C faces competition from Evernorth Express Scripts/Cigna, CVS Caremark, and UnitedHealth/OptumRx.

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years.

With $6.15 billion in revenue over the past 12 months, SS&C is one of the larger companies in the business services industry and benefits from a well-known brand that influences purchasing decisions.

As you can see below, SS&C’s sales grew at a decent 5.7% compounded annual growth rate over the last five years. This shows its offerings generated slightly more demand than the average business services company, a useful starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. SS&C’s annualized revenue growth of 6.4% over the last two years aligns with its five-year trend, suggesting its demand was stable.

This quarter, SS&C reported year-on-year revenue growth of 7%, and its $1.57 billion of revenue exceeded Wall Street’s estimates by 1.3%. Company management is currently guiding for a 5.2% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 4.9% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and suggests its products and services will see some demand headwinds.

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

SS&C’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 22.8% over the last five years. This profitability was elite for a business services business thanks to its efficient cost structure and economies of scale.

Analyzing the trend in its profitability, SS&C’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q3, SS&C generated an operating margin profit margin of 23.3%, up 1.1 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

SS&C’s unimpressive 7.3% annual EPS growth over the last five years aligns with its revenue performance. On the bright side, this tells us its incremental sales were profitable.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For SS&C, its two-year annual EPS growth of 15.6% was higher than its five-year trend. This acceleration made it one of the faster-growing business services companies in recent history.

In Q3, SS&C reported adjusted EPS of $1.57, up from $1.29 in the same quarter last year. This print beat analysts’ estimates by 6.5%. Over the next 12 months, Wall Street expects SS&C’s full-year EPS of $6.04 to grow 7.9%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

SS&C has shown terrific cash profitability, enabling it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the business services sector, averaging 20.5% over the last five years.

Taking a step back, we can see that SS&C’s margin dropped by 3.2 percentage points during that time. It may have ticked higher more recently, but shareholders are likely hoping for its margin to at least revert to its historical level. If the longer-term trend returns, it could signal increasing investment needs and capital intensity.

SS&C’s free cash flow clocked in at $421.5 million in Q3, equivalent to a 26.9% margin. This result was good as its margin was 9.1 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, leading to temporary swings. Long-term trends are more important.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

SS&C historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 6.6%, somewhat low compared to the best business services companies that consistently pump out 25%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, SS&C’s ROIC averaged 1.5 percentage point increases over the last few years. This is a good sign, and if its returns keep rising, there’s a chance it could evolve into an investable business.

SS&C reported $388.3 million of cash and $6.81 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $2.41 billion of EBITDA over the last 12 months, we view SS&C’s 2.7× net-debt-to-EBITDA ratio as safe. We also see its $421 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see SS&C beat analysts’ EPS expectations this quarter. We were also happy its full-year EPS guidance narrowly outperformed Wall Street’s estimates. On the other hand, its full-year revenue guidance was in line and its EPS guidance for next quarter fell slightly short of Wall Street’s estimates. Overall, this print was mixed but still had some key positives. The stock traded up 2.6% to $83 immediately after reporting.

Updated: December 4, 2025 at 11:28 PM EST

Before making an investment decision, investors should account for SS&C’s business fundamentals and valuation in addition to what happened in the latest quarter.

SS&C isn’t a terrible business, but it isn’t one of our picks. Although its revenue growth was decent over the last five years and Wall Street believes it will continue to grow, its cash profitability fell over the last five years. And while the company’s powerful free cash flow generation enables it to stay ahead of the competition through consistent reinvestment of profits, the downside is its relatively low ROIC suggests management has struggled to find compelling investment opportunities.

SS&C’s P/E ratio based on the next 12 months is 13.3x. While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $101.22 on the company (compared to the current share price of $87.66).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.