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Item 7. Management’s Discussion and Analysis

2025-03-03 compared with 2024-02-28 · 142 added, 132 removed, 345 unchanged (44% of the section changed)

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We are a leading provider of mission-critical, sophisticated software-enabled services that allow financial services providers to automate complex business processes.

Our portfolio of software products and rapidly deployable software-enabled services allows our clients to automate and integrate front-office functions such as trading and modeling, middle-office functions such as portfolio management and reporting, and back-office functions such as accounting, transfer agency, compliance, regulatory services, performance measurement, reconciliation, reporting, processing and clearing.

Our portfolio of software products and rapidly deployable software-enabled

services allows our clients to automate and integrate front-office functions such as trading and modeling, middle-office functions such as portfolio management and reporting, and back-office functions such as accounting, transfer agency, compliance, regulatory services, performance measurement, reconciliation, reporting, processing and clearing.

We provide our solutions globally to thousands of clients, principally within the institutional asset and wealth management, alternative investment management, brokerage, retirement, financial advisory and financial institutions vertical markets.

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Acquired Capabilities, Products and Services

Battea-Class Action Services, LLC

September 2024

Added expertise in in all stages of filing and processing settlement claims in connection with antitrust, securities litigation and settlement recovery services

Iress Managed Funds Administration Business

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Our software-enabled services revenues increased from $4,273.9 million in 2022 to $4,840.3 million in 2024.

We believe that our high level of these contractually recurring revenues provides us with the ability to better manage our costs and capital investments.

We believe that our high degree of these contractually recurring revenues provides us with the ability to better manage our costs and capital investments.

To support the growth in our software-enabled services revenues and maintain our level of customer service, we have added personnel, expanded our facilities and invested in IT.

In March 2022, in connection with our acquisition of Blue Prism, we entered into an Incremental Joinder to our credit agreement, which is described in Contractual Obligations, resulting in new term loans totaling $1,530.0 million.

In December 2022, we entered into an amendment to our revolving credit facility, which is also described in Contractual Obligations, which increased the capacity of our revolving credit facility from $250.0 million to $600.0 million.

We have a total of $3,525.2 million of variable rate debt that matures in April 2025.

In May 2024, we entered into the Incremental Joinder & First Amendment to the Credit Agreement, resulting in term B-8 loans totaling $3,935.0 million.

We also issued $750.0 million of 6.5% Senior Notes in May 2024.

The net proceeds of the Term B-8 Loans and from the sale of the 6.5% Senior Notes were used to repay all amounts owed under the previously existing term loans.

In September 2024, in connection with our acquisition of Battea, we entered into an Incremental Joinder to our credit agreement , resulting in new term loans totaling $800.0 million.

All of these transactions are described in Contractual Obligations.

We generated $1,388.6 million in cash from operating activities in 2024, compared to $1,215.1 million and $1,134.3 million in 2023 and 2022, respectively.

In 2023, we used our operating cash flow, $115.4 million in proceeds from the exercise of stock options and existing cash to purchase $471.6 million of common stock for treasury, pay down $374.7 million of debt, pay $220.9 million in dividends and invest in capital expenditures in our business.

Ongoing macroeconomic conditions, such as increases in interest rates and inflation rates and changes in foreign currency exchange rates, could have impacts on our results that are uncertain and, in many respects, outside our control.

In 2024, we used our operating cash flow, cash received from debt borrowings, $355.1 million in proceeds from the exercise of stock options and existing cash to fund the Battea acquisition, purchase $737.5 million of common stock for treasury, pay $244.9 million in dividends and invest in capital expenditures in our business.

Ongoing macroeconomic conditions, such as changes in interest rates and inflation rates and changes in foreign currency exchange rates, could have impacts on our results that are uncertain and, in many respects, outside our control.

Economic conditions are subject to rapid and possibly material change, which ultimately could result in material negative effects on our business and results of operations.

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License and professional services revenues tend to fluctuate based on the number of new licensing clients, the timing and terms of contract renewals and demand for consulting services.

Our results of operations below include the results of our recent acquisitions from the date which they were acquired, including Capita in March 2021, Blue Prism and Hubwise in March 2022, MineralWare in May 2022, O'Shares in June 2022, Tier1 in August 2022, CFO in December 2022 and the Iress Managed Funds Administration Business in October 2023.

Our results of operations below include the results of our recent acquisitions from the date which they were acquired, including Blue Prism and Hubwise in March 2022, MineralWare in May 2022, O’Shares in June 2022, Tier1 in August 2022, CFO in December 2022, the Iress Managed Funds Administration Business in October 2023 and Battea in September 2024.

The following table sets forth the percentage of our total revenues represented by each of the following sources of revenues for the periods indicated:

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Fiscal 2024 versus Fiscal 2023 .

Our revenues increased $219.8 million, or 4.2%, primarily due to an increase of $143.2 million in organic revenues driven by strength in the SS&C GlobeOp fund administration, virtual data room services, Global Investor and Distribution Solutions and Blue Prism products.

Our revenues increased $379.2 million, or 6.9%, primarily due to an increase of $336.8 million in organic revenues driven by strength in the SS&C GlobeOp fund administration, virtual data room services, Global Investor and Distribution Solutions and Wealth and Investment Technologies businesses.

Our revenues also increased due to acquisitions, which contributed $31.7 million in revenues as well as the favorable impact from foreign currency translation of $10.7 million.

Software-enabled services revenues increased $352.0 million, or 7.8%, primarily due to an increase in organic revenues of $311.7 million, and acquisitions, which added $29.9 million in revenues, as well as the favorable impact from foreign currency translation of $10.4 million.

License, maintenance and related revenues increased $27.2 million, or 2.7%, primarily due to an increase in organic revenues of $25.1 million, acquisitions added $1.8 million in revenues and the favorable impact from foreign currency translation was $0.3 million.

Fiscal 2023 versus Fiscal 2022 .

Our revenues also increased due to acquisitions, which contributed $75.8 million in

revenues as well as the favorable impact from foreign currency translation of $0.8 million.

Software-enabled services revenues increased $214.4 million, or 5.0%, primarily due to an increase in organic revenues of $187.9 million, and acquisitions, which added $23.9 million in revenues, as well as the favorable impact from foreign currency translation of $2.6 million.

License, maintenance and related revenues increased $5.4 million, or 0.5%, primarily due to acquisitions, which added $51.9 million in revenues.

The increase was partially offset by a decrease in organic revenues of $44.7 million and the unfavorable impact from foreign currency translation of

$1.8 million.

The increase was partially offset by a decrease in organic revenues of $44.7 million and the unfavorable impact from foreign currency translation of $1.8 million.

The decrease in organic revenues was due to decreased license revenues for institutional and investment management products.

Fiscal 2022 versus Fiscal 2021 .

Our revenues increased $232.0 million, or 4.6%, primarily due to acquisitions, which contributed $223.6 million in revenues, and an increase of $101.7 million in organic revenues driven by strength in the SS&C GlobeOp fund administration, Eze, Black Diamond, Geneva, and virtual data room services and products.

These increases were partially offset by the unfavorable impact from foreign currency translation of $93.3 million.

Software-enabled services revenues increased $17.8 million, or 0.4%, primarily due to an increase in organic revenues of $54.8 million, and acquisitions, which added $37.2 million.

These increases were partially offset by the unfavorable impact from foreign currency translation of $74.2 million.

License, maintenance and related revenues increased $214.2 million, or 26.9%, primarily due to acquisitions, which added $186.4 million in revenues, and an increase in organic revenues of $46.9 million.

These increases were partially offset by the unfavorable impact from foreign currency translation of $19.1 million.

Cost of Revenues

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Fiscal 2024 versus Fiscal 2023 .

Our total cost of revenues increased by $167.4 million, or 5.9%, primarily due to an increase in organic costs of $135.1 million and acquisitions, which added $25.5 million in costs.

Our cost of revenues also increased due to the unfavorable impact from foreign currency translation of $6.8 million.

Organic cost increases reflect the continued investment in delivering client service.

Cost of software-enabled services revenues increased $146.8 million, or 5.9%, primarily due to an increase of $116.0 million in organic costs, acquisitions, which added $25.4 million in costs, and the unfavorable impact from foreign currency translation of $5.4 million.

Cost of license, maintenance and related revenues increased $20.6 million, or 5.4%, primarily due to an increase of $19.1 million in organic costs, the unfavorable impact from foreign currency translation of $1.4 million and acquisitions, which added $0.1 million in costs.

Fiscal 2023 versus Fiscal 2022 .

Our total cost of revenues increased by $83.3 million, or 3.0%, primarily due to an increase in organic costs of $55.1 million and acquisitions, which added $32.8 million in costs, partially offset by the favorable impact from foreign currency translation of $4.6 million.

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Cost of license, maintenance and related revenues increased $26.1 million, or 7.4%, primarily due to acquisitions, which added $17.5 million in costs, an increase in organic costs of $7.7 million and the unfavorable impact from foreign currency translation of $0.9 million.

Fiscal 2022 versus Fiscal 2021 .

Our total cost of revenues increased by $126.0 million, or 4.8%, primarily due to an increase in organic costs of $123.6 million and acquisitions, which added $63.8 million in costs, partially offset by the favorable impact from foreign currency translation of $61.4 million.

Organic cost increases are primarily due to personnel costs, including the impact of wage inflation, costs to support organic growth and independent contractors, partially offset by decreases in costs such as amortization and rent expense.

Cost of software-enabled services revenues increased $88.8 million, or 3.8%, primarily due to an increase of $119.0 million in organic costs and acquisitions, which added $22.7 million in costs, partially offset by the favorable impact from foreign currency translation of $52.9 million.

Cost of license, maintenance and related revenues increased $37.2 million, or 11.8%, primarily

due to acquisitions, which added $41.1 million in costs and an increase in organic costs of $4.6 million, offset by the favorable impact from foreign currency translation of $8.5 million.

Operating Expenses

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Fiscal 2024 versus 2023 .

Operating expenses increased $70.5 million, or 5.1%, primarily due to acquisitions, which added $42.7 million in expenses, and an increase in organic operating expenses of $32.0 million.

These increases were partially offset by the favorable impact from foreign currency translation of $4.2 million.

Total operating expenses, excluding the impact of acquisitions and foreign currency translation, primarily increased due to shifting resources to support organic growth and an increase in stock-based compensation expense.

Operating expenses increased $77.2 million, or 5.4%, primarily due to an increase of $66.9 million in organic operating expenses, acquisitions, which added $6.9 million in expenses, and the unfavorable impact from foreign currency translation of $3.4 million.

Total operating expenses, excluding the impact of acquisitions and foreign currency translation, primarily increased due to resource needs to support organic growth.

Fiscal 2023 versus 2022 .

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These increases were partially offset by the favorable impact from foreign currency translation of $4.2 million.

Total operating expenses, excluding the impact of acquisitions and foreign currency translation, primarily increased due to an increase in personnel costs, travel and entertainment, marketing costs and information technology related expenses.

Comparison of Fiscal 2024, 2023 and 2022 for Interest, Taxes and Other

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We had interest expense of $463.0 million in 2024 compared to $476.3 million in 2023 and $312.2 million in 2022.

The decrease in interest expense for 2024 as compared to 2023 is due to lower average debt balances.

The increase in interest expense for 2023 as compared to 2022 is due to higher average interest rates on debt.

The increase in interest expense for 2022 as compared to 2021 is due to higher average interest rates on debt and higher average debt balances.

We had an average interest rate of 6.71%, 6.65% and 4.22%, for the twelve months ended December 31, 2024, 2023 and 2022, respectively.

Our total debt balance as of December 31, 2022 was higher compared to the prior year due to the Incremental Joinder we entered into in connection with our acquisition of Blue Prism.

These facilities are discussed further in “Liquidity and Capital Resources”.

Other income (expense), net .

We had other income, net of $20.7 million in 2023 compared to other income, net of $20.8 million in 2022 and other expense, net of $18.2 million in 2021.

Our debt balances are discussed further in “Liquidity and Capital Resources”.

Other income, net .

We had other income, net of $8.9 million in 2024 compared to $20.7 million in 2023 and $20.8 million in 2022.

Other income, net for 2024 included net investment gains of $19.6 million, which includes fair value adjustments to increase the carrying value of our investments and dividend income.

Other income, net for

2023 also included income of $13.4 million from the settlement of a dispute related to pre-acquisition matters.

The remaining portion of other income, net consisted primarily of losses on the sale or adjustment to carrying value of fixed assets of $11.7 million.

Those investment gains were partially offset by foreign currency translation losses of $8.2 million.

Other income, net for 2023 included net investment gains of $19.0 million, which includes fair value adjustments to increase the carrying value of our investments and dividend income.

Other income, net for 2022 also included an expense of $8.1 million relating to a legal accrual recorded in connection with the DST ERISA litigation discussed in Note 18 – Commitments and Contingencies of the Notes to the Consolidated Financial Statements.

Other income, net for 2023 also included income of $13.4 million from the settlement of a dispute related to pre-acquisition matters.

The remaining portion of other income, net consisted primarily of losses on the sale or adjustment to carrying value of fixed assets of $11.7 million.

Other income, net for 2022 included net investment gains of $38.7 million, which includes fair value adjustments to increase the carrying value of our

investments and dividend income.

Other income, net for 2022 also included an expense of $8.1 million relating to a legal accrual recorded in connection with the DST ERISA litigation.

The remaining portion of other income, net consisted primarily of foreign currency translation gains and losses.

Other expense, net for 2021 included an expense of $43.4 million relating to the DST ERISA litigation, and investment gains and dividends totaling $30.1 million.

The remaining portion of other expense, net consisted primarily of foreign currency translation gains and losses.

Equity in earnings of unconsolidated affiliates, net .

We had equity in earnings of unconsolidated affiliates, net of $24.4 million for 2024, $100.0 million for 2023 and $25.8 million for 2022.

Our equity in earnings of unconsolidated affiliates in 2023 and 2022 is primarily related to a $96.3 million and $29.3 million adjustment, respectively, to increase the carrying value of one of our investments as a result of favorable operating performance in the underlying company held by the investment.

During 2021, one of our affiliates sold its primary asset, a hotel, for a gain that resulted in the significant increase in earnings of unconsolidated affiliates, net.

Our equity in earnings of unconsolidated affiliates in 2024, 2023 and 2022 is primarily related to a $19.1 million, $96.3 million and $29.3 million adjustment, respectively, to increase the carrying value of one of our investments.

Loss on extinguishment of debt, net .

We recorded a $2.1 million, $5.5 million and $10.9 loss on extinguishment of debt in 2023, 2022 and 2021, respectively, relating to the write-off of a portion of the unamortized capitalized financing fees and the unamortized original issue discount associated with additional prepayments on our term loans prior to their scheduled maturity.

We recorded a $31.2 million, $2.1 million and $5.5 loss on extinguishment of debt in 2024, 2023 and 2022, respectively.

The loss on extinguishment of debt, net in 2024 primarily related to the amendment of our credit agreement discussed further in “Liquidity and Capital Resources.” The loss on extinguishment of debt, net in 2023 and 2022 relates to the write-off of a portion of the unamortized capitalized financing fees and the unamortized original issue discount associated with additional prepayments on our term loans prior to their scheduled maturity.

Provision for income taxes.

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Our 2024, 2023 and 2022 effective tax rates differ from the statutory rate primarily due to the effect of our foreign operations and permanent book to tax differences.

The increase in the effective tax rate from 2022 to 2023 was primarily related to an increase in uncertain tax positions in the current year, decreases in relative favorable impacts of stock-based compensation in the current year, and a change in the composition of income before income taxes from foreign and domestic tax jurisdictions.

Our effective tax rate for 2023 includes increases in uncertain tax positions and benefits related to stock-based awards.

The decrease in the effective tax rate from 2023 to 2024 was primarily related to releases of uncertain tax positions in the current year, recognition of a state tax benefit associated with income apportionment rules, increases in relative favorable impacts of stock-based compensation in the current year, and a change in the composition of income before income taxes from foreign and domestic tax jurisdictions.

Our effective tax rate for 2024 includes benefits related to releases of uncertain tax positions and tax refunds, both due to closed audits, recognition of a state tax benefit associated with income apportionment rules, recognition of a tax benefit associated with a change in domestic tax credit methodology, releases of valuation allowances on deferred tax assets, and benefits related to stock-based awards.

Our effective tax rate for 2023 included increases in uncertain tax positions and benefits related to stock-based awards.

Our effective tax rate for 2022 included increases in valuation allowances on deferred tax assets, benefits related to stock-based awards and releases of uncertain tax positions due to statute of limitation expirations.

Our effective tax rate for 2021 included benefits related to stock-based awards and recognition of tax expense related to a law change in the U.K.

Our effective tax rate includes the effect of operations outside the U.S., which historically have been taxed at rates lower than the U.S.

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tax jurisdictions in which we operate have either recently enacted legislation or are in the process of enacting legislation to adopt certain components of the Pillar Two Model Rules beginning in 2024 or in future years.

We are currently assessing the impact of Pillar Two on our financial condition and results of operations.

The provisions effective in 2024 were not material to our financial position and cash flows.

Liquidity and Capital Resources

Our principal cash requirements are to finance the costs of our operations pending the billing and collection of client receivables, to fund payments with respect to our indebtedness, to invest in research and development, to acquire complementary businesses or assets, repurchase shares of our common stock and to pay dividends on our common stock.

We expect our cash on hand, cash flows from operations, and cash available under our Credit Agreement to provide sufficient liquidity to fund our current obligations, projected working capital requirements and capital spending for at least the next twelve months.

Our principal cash requirements are to finance the costs of our operations, to fund payments with respect to our indebtedness, to invest in research and development, to acquire complementary businesses or assets, repurchase shares of our common stock and to pay

dividends on our common stock.

We expect our cash on hand, cash flows from operations, and cash available under our Credit Agreement to provide sufficient liquidity to fund our cash requirements for at least the next twelve months.

Our cash, cash equivalents and restricted cash and cash equivalents, including amounts held on behalf of clients, at December 31, 2024 were $3,370.5 million, an increase of $371.9 million from $2,998.6 million at December 31, 2023.

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Cash provided by operating activities during the year ended December 31, 2024 resulted from net income of $761.7 million adjusted for non-cash items of $811.6 million, partially offset by changes in our working capital accounts totaling $184.7 million.

The changes in our working capital accounts were primarily driven by decreases in accrued expenses and other liabilities, changes in income taxes prepaid and payable and an increase in accounts receivable, partially offset by an increase in accounts payable.

The decrease in accrued expenses was primarily due to the payments made relating to the DST ERISA litigation discussed in Note 18 - Commitments and Contingencies of the Notes to the Consolidated Financial Statements.

The changes in our working capital accounts were primarily driven by increases in accounts receivable, contract assets and prepaid expenses, partially offset by increases in deferred revenue.

Investing activities :

Cash used in investing activities during the year ended December 31, 2023 totaled $268.4 million, which included capitalized software development costs of $194.9 million, capital expenditures of $56.6 million and cash paid for acquisitions (net of cash acquired) of $34.1 million, partially offset by receipts from the collection of other non-current receivables of $10.0 million and proceeds from sales and maturities of investments of $8.0 million.

Cash used in investing activities during the year ended December 31, 2024 totaled $855.7 million, which included $647.1 million paid for business acquisitions, net of cash acquired and asset acquisitions, capitalized software development costs of $194.3 million and capital expenditures of $61.4 million, partially offset by distributions received from unconsolidated affiliates of $25.3 million, receipts from the collection of other non-current receivables of $10.2 million, proceeds from sales and maturities of investments of $6.9 million and proceeds from the sale of property and equipment of $4.8 million.

Financing activities:

Cash provided by financing activities during the year ended December 31, 2023 was $712.8 million and resulted from the increase in client funds obligations of $1,669.7 million and $115.4 million received from the exercise of stock options.

These proceeds were partially offset by treasury stock repurchases of $471.6 million, net repayments of debt totaling $374.7 million, quarterly dividends paid of $220.9 million and withholding taxes paid related to equity award net share settlements of $5.1 million.

Cash used in financing activities during the year ended December 31, 2024 was $152.3 million and primarily resulted from $737.5 million of purchases of common stock for treasury, $244.9 million in quarterly dividends paid, $39.4 million in payments of deferred financing fees and $26.2 million in withholding taxes paid related to equity award net share settlements.

These expenditures were partially offset by net borrowings of $289.9 million, proceeds of $355.1 million from stock option exercises, the increase in client funds obligations of $235.8 million and proceeds from noncontrolling interests of $14.9 million.

Fiscal 2023 versus 2022

Our cash, cash equivalents and restricted cash and cash equivalents, including amounts held on behalf of clients, at December 31, 2022 were $1,337.6 million, a decrease of $1,833.8 million from $3,171.4 million at December 31, 2021.

The decrease in cash was primarily due to the decrease in cash and cash equivalents associated with funds held on behalf of clients.

Our cash, cash equivalents and restricted cash and cash equivalents, including amounts held on behalf of clients, at December 31, 2023 were $2,998.6 million, an increase of $1,661.0 million from $1,337.6 million at December 31, 2022.

The increase in cash was primarily due to the increase in cash and cash equivalents associated with funds held on behalf of clients.

See Notes 8, 10 and 11 to our Consolidated Financial Statements for further discussion of acquisitions, debt and equity, respectively.

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Operating activities:

Cash provided by operating activities during the year ended December 31, 2022 resulted from net income of $649.0 million adjusted for non-cash items of $700.4 million, partially offset by changes in our working capital accounts (excluding the effect of acquisitions) totaling $215.1 million.

The changes in our working capital accounts were primarily driven by decreases in accrued expenses and other liabilities and deferred revenue and an increase in contract assets and accounts receivable.

Cash provided by operating activities was negatively affected by approximately $68.0 million of transaction costs related to the Blue Prism acquisition.

The decrease in accrued expenses was primarily due to the payment of annual employee bonuses in the first quarter of 2022 and the payment of transaction costs related to the Blue Prism acquisition that were recorded as liabilities by Blue Prism at the time of the acquisition.

Cash provided by operating activities during the year ended December 31, 2023 resulted from net income of $608.6 million adjusted for non-cash items of $704.7 million, partially offset by changes in our working capital accounts totaling $98.2 million.

The decrease in accrued expenses was primarily due to the payments made relating to the DST ERISA litigation.

Investing activities :

Cash used in investing activities during the year ended December 31, 2022 totaled $1,757.6 million, which included cash paid for acquisitions (net of cash acquired) of $1,636.2 million, capitalized software development costs of $144.9 million, capital expenditures of $63.4 million and investments in securities of $10.0 million, partially offset by distributions received from unconsolidated affiliates of $66.2 million, proceeds from the sale of property and equipment of $11.4 million, receipts from the collection of other non-current receivables of $9.8 million and proceeds from sales and maturities of investments of $9.5 million.

Financing activities:

Cash used in financing activities during the year ended December 31, 2022 was $1,184.5 million and resulted from the decrease in client funds obligations of $1,709.0 million, treasury stock repurchases of $476.1 million, quarterly dividends paid of $203.1 million, deferred financing fees paid of $14.7 million and withholding taxes paid related to equity award net share settlements of $0.7 million.

These expenditures were partially offset by net borrowings of debt totaling $1,127.3 million and $91.8 million received from the exercise of stock options.

We have made a permanent reinvestment determination in certain non-U.S.

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subsidiaries where we have made such a determination and in turn no provision for income taxes had been made.

At December 31, 2023, we held approximately $109.8 million in cash that was available to our foreign borrowers under our senior secured credit facility and will be used to facilitate debt servicing of those entities.

Contractual Obligations

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Total contractual obligations

(1) Reflects interest payments on our Credit Agreement at an assumed interest rate of one-month Adjusted Term SOFR of 5.47% plus 1.75% on our Term B-3, B-4 and B-5 facilities, one-month Adjusted Term SOFR of 5.46% plus 2.25% on our Term B-6 and B-7 facilities and 5.5% on our Senior Notes.

(1) Reflects interest payments on our Credit Agreement at an assumed interest rate of one-month Adjusted Term SOFR of 4.36% plus 2.00% on our Term B-8 facility, one-month Adjusted Term SOFR of 4.36% plus 1.50% on our Term A-9 facility, 5.5% on our 5.5% Senior Notes and 6.5% on our 6.5% Senior Notes.

(2) We are obligated under noncancelable operating leases for office space and office equipment.

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As a result, these amounts are not included in the above contractual obligations table.

Senior Secured Credit Facilities

Senior Secured Credit Facilities and Senior Notes

On April 16, 2018, in connection with our acquisition of DST, we entered into an amended and restated credit agreement with SS&C Technologies, Inc.

(“SS&C”), SS&C European Holdings SARL, an indirect wholly-owned subsidiary of SS&C (“SS&C SARL”) and SS&C Technologies Holdings Europe SARL, an indirect wholly-owned subsidiary of SS&C (“SS&C Tech SARL”) as the borrowers (“Credit Agreement”).

Also in 2018, we entered into amendments to the Credit Agreement in connection with our acquisitions of Eze and Intralinks.

On March 22, 2022, in connection with our acquisition of Blue Prism, we entered into an Incremental Joinder to the Credit Agreement with certain of our subsidiaries.

Also in 2018, we entered into amendments to the Credit Agreement in connection with our acquisitions of Eze and Intralinks, the Term B-5 Loan.

On March 22, 2022, in connection with our acquisition of Blue Prism, we entered into an Incremental Joinder to the Credit Agreement with certain of our

subsidiaries.

Pursuant to the Incremental Joinder, a new $650.0 million senior secured incremental term loan B facility (“Term B-6 Loan”) and a new $880.0 million senior secured incremental term loan B facility (“Term B-7 Loan” and together with the Term B-6 Loan, the “Incremental Term Loans”) was made available to us, the proceeds of which were used to finance substantially all of the consideration for the acquisition of Blue Prism.

On March 28, 2019, we issued $2.0 billion aggregate principal amount of 5.5% Senior Notes due 2027 (“5.5% Senior Notes”), the proceeds of which were used to repay a portion of the outstanding Term B-3 Loan under our Credit Agreement.

The Credit Agreement had a revolving credit facility with a five-year term available for borrowings by SS&C with $250.0 million in available commitments (“Revolving Credit Facility”).

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As of December 31, 2024, there was $3.7 million utilized of the letter of credit sub-facility and $596.3 million available of the Revolving Facility Amendment.

On May 9, 2024, we entered into the Incremental Joinder & First Amendment to Credit Agreement (the “Amendment”) which amended our Credit Agreement.

Pursuant to the Amendment, we borrowed $3,935.0 million in aggregate principal amount of incremental term B-8 loans (the “Term B-8 Loans”).

The Term B-8 Loans bear interest at, at our option, the Base Rate (as defined in the Amendment), plus 1.00% per annum, or the Term SOFR Rate (as defined in the Amendment), plus 2.00% per annum.

Also on May 9, 2024, we issued $750.0 million aggregate principal amount of 6.5% Senior Notes due 2032 (the “6.5% Senior Notes”).

The 6.5% Senior Notes are senior unsecured obligations and rank equal in right of payment with all of our existing and future senior indebtedness.

The 6.5% Senior Notes are fully and unconditionally guaranteed, jointly and severally, by SS&C Holdings and all of its existing domestic restricted subsidiaries (other than SS&C Technologies) that guarantee our existing senior secured credit facilities and future domestic restricted subsidiaries that guarantee our existing senior secured credit facilities and certain other indebtedness.

Interest on the 6.5% Senior Notes is payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2024.

The net proceeds of the Term B-8 Loans and from the sale of the 6.5% Senior Notes were used to repay all amounts owed under the term B-3 loans, the term B-4 loans, the term B-5 loans, the term B-6 loans and the term B-7 loans (together, the “Existing Term Loans”) under the Credit Agreement, as well as to pay related fees and expenses.

On September 27, 2024, in connection with our acquisition of Battea, we entered into an Incremental Joinder to our Credit Agreement (the “September 2024 Incremental Joinder”).

Pursuant to the September 2024 Incremental Joinder, we borrowed $800.0 million in aggregate principal amount of incremental term A-9 loans (“Term A-9 Loans”), the net proceeds of which were used to finance in part the acquisition of Battea, the payment of fees and expenses related thereto and for working capital and general corporate purposes.

The Term A-9 Loans bear interest at, at our option, the Base Rate (as defined in the Incremental Joinder), plus 0.50% per annum, or the Term SOFR Rate (as defined in the Incremental Joinder), plus 1.50% per annum, in each case with two leverage-based adjustments that increase the interest rate margin by 0.25% per annum if our consolidated net secured leverage ratio is greater than 3.50x and 4.25x, respectively, and one leverage-based adjustment that reduces the interest rate margin by 0.125% per annum if our consolidated net secured leverage ratio is less than or equal to 2.50x.

The table below provides a summary of the key terms of our Senior Secured Credit Facilities and Senior Notes:

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Senior Secured Credit Facilities

Term Loan B-3

April 16, 2025

Variable rate (1)

Term Loan B-4

April 16, 2025

Variable rate (1)

Term Loan B-5

April 16, 2025

Variable rate (1)

Term Loan B-6

March 22, 2029

Variable rate (2)

Term Loan B-7

March 22, 2029

Variable rate (2)

Term B-8 Loans

Term A-9 Loans

September 27, 2029 (2)

Revolving Credit Facility

December 28, 2027

Variable rate (3)

5.5% Senior Notes

September 30, 2027

Fixed at 5.5%

(1) In January 2020, we entered into a pricing amendment, whereby the interest rate margin applicable to the term loans was reduced from LIBOR plus 2.25% to LIBOR plus 1.75%.

In June 2023, we entered into an amendment, whereby the interest rate provisions were amended to, at our option, either (a) the Base Rate, plus 0.75% per annum or the (b) SOFR plus the credit spread adjustment set forth in the Credit Agreement (“Adjusted Term SOFR”), plus 1.75% per annum.

(2) Bears interest at, at our option, either (a) the Base Rate, plus 1.25% per annum or the (b) Adjusted Term SOFR, plus 2.25% per annum.

(3) Bears interest at, at our option, the Base Rate per annum or the Term SOFR.

Loans based on the Base Rate bear interest at a rate between the Base Rate plus 0.25% or 0.50%, depending on our consolidated secured net leverage ratio.

Loans based on Term SOFR bear interest at a rate between Term SOFR plus 1.25% and Term SOFR plus 1.50%, depending on our consolidated secured net leverage ratio.

SS&C’s and SS&C SARL’s obligations under the Term Loans are guaranteed by (i) our existing and future U.S.

wholly-owned restricted subsidiaries, in the case of the Term B-3 Loan, Term B-5 Loan, Term B-6 Loan and the Revolving Credit Facility and (ii) our existing and future wholly-owned restricted subsidiaries, in the case of the Term B-4 Loan and Term B-7 Loan.

The obligations of the U.S.

loan parties under the Credit Agreement are secured by substantially all of the assets of such persons (subject to customary exceptions and limitations), including a pledge of all of the capital stock of substantially all of the U.S.

6.5% Senior Notes

(1) Per the September 2024 Incremental Joinder, scheduled quarterly payments of 0.25% are required.

We have made prepayments on our Term B-8 Loans and do not have any principal quarterly payments due until March 2030.

(2) The Term A-9 Loans will mature on the earlier to occur of (1) September 27, 2029 or (2) 91 days prior to the maturity of (x) the 5.5% Senior Notes if more than $150.0 million aggregate principal amount remains outstanding on the 91 st day prior to such maturity or (y) the Revolving Credit Facility if more than $150.0 million aggregate principal amount of commitments remain outstanding on the 91 st day prior to such maturity, whichever of (x) or (y) comes first.

(3) Scheduled quarterly payment required for the first eight fiscal quarters commencing with the fiscal quarter ending December 31, 2024.

The scheduled quarterly payment will increase to 1.250% for each quarter thereafter until the maturity date of the Term A-9 Loans.

Our obligations under the Term B-8 Loans and Term A-9 Loans are guaranteed by our existing and future wholly-owned domestic restricted subsidiaries (subject to customary exceptions and limitations).

The obligations of the loan parties under the amended senior secured credit facility are secured by substantially all of the assets of such persons (subject to customary exceptions and limitations), including a pledge of all of the capital stock of substantially all of the U.S.

wholly-owned restricted subsidiaries of such persons (with customary exceptions and limitations) and 65% of the capital stock of certain foreign restricted subsidiaries of such persons (with customary exceptions and limitations).

All obligations of the non-U.S.

loan parties under the Credit Agreement are secured by substantially all of our and the other guarantors’ assets (subject to customary exceptions and limitations), including a pledge of all of the capital stock of substantially all of our wholly-owned restricted subsidiaries (with customary exceptions and limitations).

The Credit Agreement includes negative covenants that, among other things and subject to certain thresholds and exceptions, limit our ability and the ability of its restricted subsidiaries to incur debt or liens, make investments (including in the form of loans and acquisitions), merge, liquidate or dissolve, sell property and assets, including capital stock of its subsidiaries, pay dividends on its capital stock or redeem, repurchase or retire its capital stock, alter the business we conduct, amend, prepay, redeem or purchase subordinated debt, or engage in transactions with its affiliates.

The Credit Agreement also contains customary representations and warranties, affirmative covenants and events of default, subject to customary thresholds and exceptions.

In addition, the Credit Agreement contains a financial covenant for the benefit of the Revolving Credit Facility requiring us to maintain a minimum consolidated net secured leverage ratio.

In addition, under the Credit Agreement, certain defaults under agreements governing other material indebtedness could result in an event of default under the Credit Agreement, in which case the lenders could elect to accelerate payments under the Credit Agreement and terminate any commitments they have to provide future borrowings.

On March 28, 2019, we issued $2.0 billion aggregate principal amount of 5.5% Senior Notes due 2027 (“Senior Notes”), the proceeds of which were used to repay a portion of the outstanding Term B-3 Loan under our existing senior secured credit facilities.

The amended senior secured credit facility includes negative covenants that, among other things and subject to certain thresholds and exceptions, limit our ability and the ability of our restricted subsidiaries to incur debt or liens, make investments (including in the form of loans and acquisitions), merge, liquidate or dissolve, sell property and assets, including capital stock of our subsidiaries, pay dividends on our capital stock or redeem, repurchase or retire our capital stock, alter the business we conduct, amend, prepay, redeem or purchase subordinated debt, or engage in transactions with our affiliates.

The amended senior secured credit facility also contains customary representations and warranties, affirmative covenants and events of default, subject to customary thresholds and exceptions.

In addition, the amended senior secured credit facility contains a financial covenant for the benefit of the Revolving Credit Facility requiring us to maintain a maximum consolidated net secured leverage ratio.

The amended senior secured credit facility also contains a financial maintenance covenant for the benefit of the Term A-9 Loans that will require us to maintain a separate maximum consolidated net secured leverage ratio.

In addition, under the amended senior secured credit facility, certain defaults under agreements governing other material indebtedness could result in an event of default under the amended senior secured credit facility, in which case the lenders could elect to accelerate payments under the amended senior secured credit facility and terminate any commitments they have to provide future borrowings.

As of December 31, 2024, we were in compliance with all financial and non-financial covenants.

The 5.5% Senior Notes are guaranteed, jointly and severally, by SS&C Holdings and all of its existing and future domestic restricted subsidiaries that guarantee our existing senior secured credit facilities or certain other indebtedness.

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Interest on the 5.5% Senior Notes is payable on March 30 and September 30 of each year.

At any time on or after March 30, 2022, we may redeem some or all of the Senior Notes, in whole or in part, at the redemption prices set forth in the following table, expressed as a percentage of the principal amount, plus accrued and unpaid interest to the redemption date:

At any time and from time to time, we may, at our option, redeem some or all of the 5.5% Senior Notes, in whole or in part, at the redemption prices set forth in the following table, expressed as a percentage of the principal amount, plus accrued and unpaid interest to the redemption date:

Redemption Date

On or after March 30, 2024

March 30, 2025 and thereafter

We may also, from time to time in our sole discretion, purchase, redeem, or retire our existing senior notes, through tender offers, in privately negotiated or open market transactions, or otherwise.

The indenture governing the Senior Notes contains a number of covenants that restrict, subject to certain thresholds and exceptions, our ability and the ability of our domestic restricted subsidiaries to incur debt or liens, make certain investments, pay dividends, dispose of certain assets, or enter into transactions with its affiliates.

Any event of default under the Credit Agreement that leads to an acceleration of those amounts due also results in a default under the indenture governing the Senior Notes.

At any time prior to June 1, 2027, we may, at our option, redeem some or all of the 6.5% Senior Notes, in whole or in part, at a price equal to 100% of the principal amount of the 6.5% Senior Notes, plus a “make-whole” premium, plus accrued and unpaid interest, if any, to, the date of redemption.

On and after June 1, 2027, we may, at our option, redeem some or all of the 6.5% Senior Notes, in whole or in part, at the redemption prices set forth in the following table, expressed as a percentage of the principal amount, plus accrued and unpaid interest to the redemption date:

On or after June 1, 2027

On or after June 1, 2028

June 1, 2029 and thereafter

We may also, from time to time in our sole discretion, purchase, redeem, or retire any outstanding 5.5% Senior Notes and 6.5% Senior Notes, through tender offers, in privately negotiated or open market transactions, or otherwise.

The indentures governing the 5.5% Senior Notes and 6.5% Senior Notes contain a number of covenants that restrict, subject to certain thresholds and exceptions, our ability and the ability of our domestic restricted subsidiaries to incur debt or liens, make certain investments, pay dividends, dispose of certain assets, or enter into transactions with its affiliates.

Any event of default under the amended senior secured credit facility that leads to an acceleration of those amounts due also results in a default under the indenture governing each of the Senior Notes.

Debt Issuance Costs and Loss on Extinguishment of Debt

We evaluated the borrowing of our Term B-8 Loans and issuance of 6.5% Senior Notes and the repayment of our Existing Term Loans in accordance with FASB Accounting Standards Codification 470-50, Debt Modifications and Extinguishments .

We determined that the new debt borrowing and issuance and existing debt repayment were two independent transactions due to the fact that (i) no single investor held a significant concentration of both the old and the new debt, (ii) none of the old investors were included in negotiations with creditors about modifying the old debt, and (iii) all lenders were provided the same opportunity to participate in the new debt regardless of whether they were an existing lender.

Consequently, the refinancing was accounted for as a debt extinguishment.

As a result, the Existing Term Loans borrowing costs of $27.7 million were expensed and are included in Loss on extinguishment of debt in the Consolidated Statement of Comprehensive Income during the year ended December 31, 2024.

In connection with the May 2024 and September 2024 debt transactions, we capitalized an aggregate of $39.4 million during year ended December 31, 2024 in financing costs, which represent new third-party costs.

We made additional principal payments prior to their scheduled maturity in 2024, 2023 and 2022, which resulted in a loss on extinguishment of debt of $3.5 million, $2.1 million and $5.5 million, respectively, due to the write-off of a portion of the unamortized capitalized financing fees and the unamortized original issue discount.

Covenant Compliance

Under the Revolving Credit Facility portion of the Credit Agreement, we are required to satisfy and maintain a specified financial ratio at the end of each fiscal quarter if the sum of (i) outstanding amount of all loans under the Revolving Credit Facility and (ii) all non-cash collateralized letters of credit issued under the Revolving Credit Facility in excess of $20 million is equal to or greater than 30% of the total commitments under the Revolving Credit Facility.

Our ability to meet this financial ratio can be affected by events beyond our control, and we cannot assure you that we will meet this ratio.

Any breach of this covenant could result in an event of default under the Credit Agreement.

Upon the occurrence of any event of default under the Credit Agreement, the lenders could elect to declare all amounts outstanding under the Credit Agreement to be immediately due and payable and terminate all commitments to extend further credit.

Any default and subsequent acceleration of payments under the Credit Agreement would have a material adverse effect on our results of operations, financial position and cash flows.

Additionally, under the Credit Agreement, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is also tied to baskets and ratios based on Consolidated EBITDA.

Consolidated EBITDA is a non-GAAP financial measure used in key financial covenants contained in the Credit Agreement, which is the material facility supporting our capital structure and providing liquidity to our business.

Consolidated EBITDA is defined as earnings before interest, taxes, depreciation and amortization (“EBITDA”), further adjusted to exclude unusual items and other adjustments permitted in calculating covenant compliance under the Credit Agreement.

We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Consolidated EBITDA is appropriate to provide additional information to investors to demonstrate compliance with the specified financial ratio and other financial condition tests contained in the Credit Agreement.

Under the Revolving Credit Facility portion of the amended senior secured credit facility, we are required to satisfy and maintain a specified financial ratio at the end of each fiscal quarter if the sum of (i) outstanding amount of all loans under the Revolving Credit Facility and (ii) all non-cash collateralized letters of credit issued under the Revolving Credit Facility in excess of $20 million is equal to or greater than 30% of the total commitments under the Revolving Credit Facility.

In addition, the Term A-9 Loans will be subject to a 5.25x consolidated net secured leverage ratio commencing at the fiscal quarter ending December 31, 2024, which will, at our option, increase to 5.75x for four consecutive fiscal quarters following a material permitted acquisition.

Our ability to meet either financial ratio can be affected by events beyond our control, and we cannot assure you that we will meet either ratio.

Any breach of either financial covenant could result in an event of default under the amended senior secured credit facility.

Upon the occurrence of any event of default under the amended senior secured credit facility, the lenders could elect to declare all amounts outstanding under the amended senior secured credit facility to be immediately due and payable and terminate all commitments to extend further credit.

Any default and subsequent acceleration of payments under the amended senior secured credit facility would have a material adverse effect on our results of operations, financial position and cash flows.

Additionally, under the amended senior secured credit facility, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is also tied to baskets and ratios based on Consolidated EBITDA.

Consolidated EBITDA is a non-GAAP financial measure used in key financial covenants contained in the amended senior secured credit facility, which is the material facility supporting our capital structure and providing liquidity to our business.

Management uses Consolidated EBITDA to gauge the costs of our capital structure on a day-to-day basis when full financial statements are unavailable.

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Consolidated EBITDA does not represent net income or cash flow from operations as those terms are defined by generally accepted accounting principles, or GAAP, and does not necessarily indicate whether cash flows will be sufficient to fund cash needs.

Further, the Credit Agreement requires that Consolidated EBITDA be calculated for the most recent four fiscal quarters.

Further, the amended senior secured credit facility requires that Consolidated EBITDA be calculated for the most recent four fiscal quarters.

As a result, the measure can be disproportionately affected by a particularly strong or weak quarter.

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• Consolidated EBITDA excludes expenses and income that are permitted to be excluded per the terms of our Credit Agreement, but which others may believe are normal expenses for the operation of a business.

The following is a reconciliation of net income to Consolidated EBITDA attributable to SS&C common stockholders, as defined in our Credit Agreement.

The following is a reconciliation of net income to Consolidated EBITDA attributable to SS&C common stockholders, as defined in our amended senior secured credit facility.

Year Ended December 31,

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ASC 606 adoption impact

Foreign currency translation (gains) losses

Foreign currency translation losses (gains)

Investment gains (3)

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(2) Purchase accounting adjustments include (a) an adjustment to increase revenues by the amount that would have been recognized if deferred revenue were not adjusted to fair value at the date of acquisitions, (b) an adjustment to increase personnel and commissions expense by the amount that would have been recognized if prepaid commissions and deferred personnel costs were not adjusted to fair value at the date of the acquisitions and (c) an adjustment to increase or decrease rent expense by the amount that would have been recognized if lease obligations were not adjusted to fair value at the date of acquisitions.

(3) Investment gains includes unrealized fair value adjustments of investments and dividend income received on investments.

(4) Acquisition related includes costs related to both current acquisitions and the resolution of pre-acquisition matters.

(4) Other includes additional expenses and income that are permitted to be excluded per the terms of our Credit Agreement from Consolidated EBITDA, a financial measure used in calculating our covenant compliance.

(5) Other includes additional expenses and income that are permitted to be excluded per the terms of our amended senior secured credit facility from Consolidated EBITDA, a financial measure used in calculating our covenant compliance.

(6) Consolidated EBITDA attributable to noncontrolling interest represents Consolidated EBITDA based on the ownership interest retained by the noncontrolling parties of DomaniRx, our consolidated variable interest entity.

Our covenant requirement for net senior secured leverage ratio and the actual ratio for the year ended December 31, 2023 are as follows:

Our covenant requirement for consolidated net secured leverage ratio for the benefit of the Revolving Credit Facility and the actual ratio as of December 31, 2024 are as follows:

Maximum consolidated net secured leverage to

Consolidated EBITDA ratio (1)

(1) Calculated as the ratio of consolidated net secured funded indebtedness, net of cash and cash equivalents, excluding $100.2 million of cash and cash equivalents held at DomaniRx, to Consolidated EBITDA, as defined by the Credit Agreement, for the period of four consecutive fiscal quarters ended on the measurement date.

Consolidated net secured funded indebtedness

is comprised of indebtedness for borrowed money, letters of credit, deferred purchase price obligations and capital lease obligations, all of which is secured by liens on our property.

(1) Calculated as the ratio of consolidated net secured funded indebtedness, net of cash and cash equivalents, excluding $155.2 million of cash and cash equivalents held at DomaniRx, to Consolidated EBITDA, as defined by the amended senior secured credit facility, for the period of four consecutive fiscal quarters ended on the measurement date.

Consolidated net secured funded indebtedness is comprised of indebtedness for borrowed money, letters of credit, deferred purchase price obligations and capital lease obligations, all of which is secured by liens on our property.

Critical Accounting Estimates

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We recognize our proportionate share of the results of the unconsolidated affiliates and amortization expense related to basis differences in equity in earnings of unconsolidated affiliates, net on our Consolidated Statements of Comprehensive Income.

Our partnership interests in private equity funds, marketable equity securities and seed capital investments, other than those accounted for under the equity method of accounting or those that result in consolidation of the investee, are recorded at fair value, with changes in the fair value recognized in other income (expense), net on our Consolidated Statements of Comprehensive Income.

Our partnership interests in private equity funds, marketable equity securities and seed capital investments, other than those accounted for under the equity method of accounting or those that result in consolidation of the investee, are recorded at fair value, with changes in the fair value recognized in other income, net on our Consolidated Statements of Comprehensive Income.

Our marketable equity securities and seed capital investments have readily determinable fair values in the market.

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For example, we have determined the fair value of existing client contracts based on the discounted estimated net future cash flows from such client contracts existing at the date of acquisition and the fair value of the completed technology based on the relief-from-royalties method on estimated future revenues of such completed technology and assumed obsolescence factors.

While actual results during the years ended December 31, 2023, 2022 and 2021 were consistent with our estimated cash flows and we did not incur

any impairment charges during those years, different estimates and assumptions in valuing acquired assets could yield materially different results.

While actual results during the years ended December 31, 2024, 2023 and 2022 were consistent with our estimated cash flows and we did not incur any impairment charges during those years, different estimates and assumptions in valuing acquired assets could yield materially different results.

We must test goodwill annually for impairment (and in interim periods if certain events occur indicating that the carrying value of goodwill or indefinite-lived intangible assets may be impaired) by comparing the fair value of a reporting unit to its carrying value.

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We review, on a quarterly basis, our capitalized software for possible impairment.

Acquisition Accounting

In connection with our acquisitions, we allocate the purchase price to the assets and liabilities we acquire, such as net tangible assets, completed technology, customer relationships, other identifiable intangible assets, deferred revenue and goodwill.

We apply significant judgments and estimates in determining the fair market value of the assets acquired and their useful lives.

For example, we

have determined the fair value of existing client contracts based on the discounted estimated net future cash flows from such client contracts existing at the date of acquisition and the fair value of the completed technology based on the relief-from-royalties method on estimated future revenues of such completed technology and assumed obsolescence factors.

Revenue Recognition

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License fees include perpetual license fees and term license fees that differ mainly in the duration over which the customer benefits from the software.

Maintenance and services primarily consist of fees for maintenance services (including support and unspecified upgrades and

enhancements when and if they are available) and, in some cases, professional services which focus on both deployment and training our customers to fully leverage the use of our products.

Maintenance and services primarily consist of fees for maintenance services (including support and unspecified upgrades and enhancements when and if they are available) and, in some cases, professional services which focus on both deployment and training our customers to fully leverage the use of our products.

Software license revenues are recognized at the point of time when the software license has been delivered.

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Differences between actual results and these estimates could have a material effect on our financial results.

We have recorded stock-based compensation expense of $50.3 million to date relating to performance awards that are still in the vesting period.

If we do not achieve our estimated earnings per share growth, previously recorded stock-based compensation expense could be reversed.

If we exceed our estimate earnings per share growth, we may need to record additional stock-based compensation expense.

A deferred income tax asset is recorded over the vesting period as stock compensation expense is recorded for non-qualified stock options.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis