SS&C Technologies Holdings Inc (SSNC) 2010 Q1 法說會逐字稿

Good afternoon. I will be your conference operator. I would like to welcome everyone to SS&C Technologies 2010 first quarter earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. We will be taking questions in the order we receive them. Please note this conference is being recorded and will be made available on SS&C's website at www.ssctech.com. I would now like to turn the call over to Bill Stone, Chairman and Chief Operating Officer. Mr. Stone, you may begin your conference.

Thanks, Hughey. And welcome and thank you all for joining us for our Q1 2010 earnings call. I am Bill Stone. I'm the Chairman and Chief Executive Officer of SS&C. With me today are Norm Boulanger, our President and Chief Operating Officer and Patrick Pedonti, our Chief Financial Officer. Before we get started, we need to review the Safe Harbor Statement. Various remarks we may make on this conference call about our future expectations, plans and prospects constitute forward-looking statements for the purposes of the Safe Harbor Provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors. These are included in SS&C's filing with the Securities and Exchange Commission, in particular the Company's annual report on From 10-K for the year ended December 31st, 2001.

I will start with a brief overview of the quarter and then I'll turn it over to Norm who will take you through some operational highlights. Patrick will then get us through the financials and after that, I will summarize some business highlights and we will open it up for questions. Once again, we are happy to announce we are a public company. We took the Company public for the first time in 1996 and through today, we have successfully guided SS&C through the acquisition of 29 software and services firms. On July 28th, 2005, we announced and on November 23rd we closed going private. On March 31st of 2010, we went public again.

We have been delighted with the market's reception we have received so far, and and we are excited to be a public company that is striving in these challenging markets. Since 2005 we have had acquired key acquisitions, including the integration of [Financial Models Corporation], an acquisition that strengthened our front, middle and back office offerings for the institutional asset management market. Also, through the acquisitions of [Cogi] Northport and most recently Geller Investment Partnerships, we have substantially grown our fund administration business. The Zoologic Financial Services Corp. through acquisition has also paid dividends for us, as we continue to grow this business by cross selling to our existing clients and integrating its capabilities with our existing products and services.

Initially, we were primarily a software company that sold perpetual licenses with maintenance and professional services. That was our business model until 1995 when we shifted to offering software as a service. In Q1, SS&C did about $27 million in total revenue. In the first quarter of this year, we did $78.2 million in revenue. In Q1 2005, we had just over $10 million in software enabled services revenue, and approximately $17 million in software maintenance and professional services. Obviously, this was the perpetual license model. Today, of the $78.2 million of revenue in the first quarter, about $49 million in software enabled services revenue and the other $29 million comes from software licenses, maintenance and professional services.

In the future, I think our software enabled services business will continue to grow (inaudible) asset types, the accounting and the technology are all increasingly more sophisticated, complicated and comprehensive. But it requires our extremely well-trained people in each of these disciplines as SS&C has 1300 very talented people and we focus on delivering that information in a timely and accurate manner. Finally when we went on the IPO road show this year and had documented in our SEC filings the key elements of SS&C's story continues to be, we are seeing a revolution in the financial ser services industry brought on by increasing regulation and increased focus on transparency.

We have the leading portfolio proprietary mission critical software, coupled with deep domain knowledge and extensive expertise. This leads to very high level and highly desired products and services that we are able to sell at strong prices. We are also a proven trusted provider to over 4500 financial intermediary institutions, real estate companies and others around the world. We also have a very attractive operating model with over 85% recurring revenue that has been growing revenues -- you saw in the first quarter was up 23% and we have very strong cash flow. Finally, we have been able to demonstrate long-term value creation with a stable management team that we believe are talented.

For Q1, we reported revenue of $78.2 million, up from $63.7 million in the first quarter of 2009. This is a continuation of the recovery we started to see in the second quarter of 2009, and we are pleased with our first quarter results. Q1 results include Tradeware for the full quarter and Geller for two months. Revenues were up $14.5 million year-over-year. We continue to see momentum in our software enabled services business. Our software as a service business, revenue was up significantly over the first quarter of 2009, an increase of 32% or $12 million. We continue to be encouraged by the number of new deals and the extension of our services in current clients. This is happening throughout our fund services business.

We also implemented custom releases to strategic clients, such as our Global Debt Manager Version 10.0. In Q1, we did a major release to a major international bank as a Global Debt Manager and the CRA is approximately $1 million in revenue. The Global Debt Manager release for structured finance, medium and long term notes includes an enhanced dash board, broadcast messaging capability and a rich internet application. The RIA written in (inaudible) maximizes the interoperability because it is based on the most advanced and commonly used toolkits and platforms. Among them include dot net framework, java script, and windows communications foundation.

We also brought out the CAMRA impairment module -- impairments manual -- once again, CAMRAs impairments manager, which was sold to very large US pension fund in Q1 and goes into production this Friday. Impairments manager is a new module available via SS&C direct, and it is also integrated with our CAMRA platform. Norm will get into more details of the impairments manager, but it really helps on what is called OTTI or other than temporarily impaired securities.

In the first quarter of 2010, we acquired the assets and business of Tradeware Global Corporation -- actually it was in the fourth quarter of 2009, exactly December 30th. A New York based broker neutral trading solution provider, Tradeware supports middle and back office services for broker dealers. With this acquisition, we gained 250 clients and 60 staff based in New York and London. Tradeware currently provides services to brokers and institutions in 82 countries around the world. As part of the SS&C family of solutions, Tradeware can bridge the gap between institutional [diacide and cell side]markets to automate and improve execution and settlement processes with products such as Antares, SS&C net, [Givare and Recon].

We also purchased Geller Investment Partnership Services in early February of Q1. Acquiring Geller has allowed us to augment our well-recognized fund administration services for hedge funds, fund to funds, managed account managers and private equity funds. With the addition of Geller's 35 plus private equity fund administration staff and 25 clients with approximately 280 entities, SS&C now administers $50 billion in private equity assets. It is a strong compliment to our Q4 acquisition of private equity software provider, the NextRound, where we gained 225 clients in 25 countries as well as 45 skilled staff. We are highlighting our private equity prowess with a kick-off event in New York City on June 3rd, 2010 at the NASDAQ market site in Times Square. Please let us know if you would like an invitation. I'll now turn it over to Norm Boulanger to review the operational highlights.

Thanks, Stone. In Q1 we saw some good momentum (inaudible), including hedge fund administration and institutional outsourcing services. SS&C fund services continues to deliver leading fund administration services to hedge funds, fund to funds, private equity funds and managed account providers. During the past 18 months, market turmoil including the slide of the stock market restricted credit and highly visible scandals has made investors more cautious. Coupled with increased regulatory pressure, alternative investment managers are confronted with a need for independent checks and balances. Our capabilities have positioned us well for these market opportunities.

A number of key deals recently signed positively impacted Q1. A $1.6billion alternative investment group of fund to funds, [the need of] independent fund accounting and net asset value calculations [closed mutually reported services]. The $4.7 billion fund to fund (inaudible) partnership, will be placed in the house system. We signed three deals with credit driven complex hedge funds. We also saw existing license clients turn to us for independent fund administration services. For example, [Wexford] Capital, an assisted advisor and recon client, outsourced all of their hedge funds to SS&C fund services when they went live in Q1. We have recently expanded the alternative investment management global sales team to 16 sales professionals. We now have a presence in North America, Europe, Asia, and the Middle East. We signed several other outsourcing deals with SS&P direct, largely insurance companies and asset managers. The demand that they're seeking is GAAP stat and tax accounting services.

For the past 18 months, we've had a heavy focus on our outsourced and infrastructure in order to drive operational efficiencies and enhance our financial reporting. (inaudible) our proprietary technology, we are able to automatically take in data feeds, reconcile exceptions and deliver straight through processes for our outsourcing customers. In Q1, we delivered world class service that has maintained world class [40.3% margins]. Stone has already mentioned our recent acquisitions since November, Geller, the NextRound, Tradeware Global Corp. We have been working closely with these businesses, ramping up sales focus while working on increasing operational efficiencies and improving margins. We have a long successful history of acquiring new companies, accelerating growth while expanding margins.

Continue to invest in R&D and increase our total R&D spend by 32.2% in the first quarter of 2010 over the same period last year. This quarter resulted in a number of new software products and services, including risk analytics, Antares Trader, impairments manager, SS&C's global wealth platform and bank loan outsourcing services. Risk analytics, designed for asset managers who need better track and manage and reporting of risk including value at risk, key rate duration, delta, gamma and other measures. Our risk reporting is integrated with accounting data to tie risk to end-of-day trading. These are all driven by our proprietary three factor interest rate model and global markets generator.

We launched Antares Trader which provides connectivity and execution management through straight through process and from front to back office with seemless integration to portfolio management and accounting systems. Some of the features include pre-trade compliance, reporting of realtime position in P&L and what-if analysis. SS&C's CAMRA manager helps find management data collection, analysis, and calculations to work flow surround an impairment processing with a focus on US GAAP and regulatory guidance. This solution can be used to address the latest concerns about FAS 157 and again show SS&C's committment to staying ahead of the rapid changing regulatory environment. SS&C's global ware platform is a software as a service platform that services managed account programs and is a fully integrated, end-to-end solution including investor prospecting, account aggregation and reconciliation, account management, trade orgs management, portfolio common and reporting. And last is our bank loan outsourcing service, we have been selling the bank loan software products for a number of quarters now, and are recently started offering an outsourced basis -- it allows our clients to track facilities and underlying contracts. With that, I will turn it over to Patrick Pedonti who will go over our financials for the quarter.

Thank you, Norm. The results for our Q1 2010 or GAAP revenues of $78.2 million and reported GAAP net income of $9 million and diluted EPS of $0.14. The reported net income includes acquisition amortization of $8.7 million, stock-based compensation of $1.4 million, capital based taxes of $200,000, and other nonrecurring and extraordinary items of $600,000. Adjusted revenue excluding one-time purchase accounting adjustments was $78.3 million, an increase of 14.5 or 23% over Q1 of 2009. Excluding acquisition revenue and the positive impacts of foreign currency, organic revenue increased 1.7% in the quarter.

Acquisitions including [Avare, Maximus], the NextRound, Tradeware, the Geller [gifts] business contributed $10.9 million in the quarter and foreign exchange positively impacted us by $2.6 million or 4.1% as foreign currency strengthened compared to Q1 '09. The business had strong growth in a fund services business that provided services to hedge funds, fund to fund, and private equity fund, and also in our municipal finance business. In addition, we had strong contributions from the recent acquisitions. Adjusted operating income from the first quarter was $30.1 million, an increase of $6.3 million or 26% from the first quarter of 2009. Operating margins improved to 38.5% from 37.5% in Q1 of 2009, as cost controls and process improvements in our software as a service business that we initiated in 2009, resulted in improved margin in this quarter.

Consolidated EBITDA which is defined in note three and is defined in our credit agreement and is used in calculating our covenant compliance was $31.8 million in the quarter and includes $192,000 of acquired EBITDA to affect the gift acquisition as [it was] for the full quarter. Adjusted EBITDA excluding the adjustment for acquisitions was $31.6 million or 40.3% of adjusted revenue. This was an improvement of $6.5 million compared to Q1 of 2009 or 26%. EBITDA margins in Q1 2010 are down slightly from the margins for full year in 2009 due to the impact of the recent acquisitions we closed in Q4 of '09 and Q1 2010 which has lower margins than our core business.

Net interest expense for the first quarter was $9 million and includes $584,000 of noncash amortized financing costs. We recorded a tax provision in the quarter of $1.3 million or 12% of pretax income. Included in the tax provision is a one-time benefit of $1.9 million for the release of reserves for the completed -- for a completed US based audit and a prior tax year refund and also the impact of newly and active statutory rate changes in Canada which reduced our corporate tax rate at the end of 2009. Adjusted net income defined in note four of the financial statement was $14.1 million and adjusted diluted EPS was $0.22. The adjusted net income [excludes] $8.7 million of amortization of intangible asset, $1.4 million of stock comp, $226,000 of capital based taxes, $351,000 of unusual and nonrecurring items, mostly legal and accounting expenses related to the acquisitions and foreign exchange losses, and other expenses of $206,000 which are mostly sponsor management fees that will not continue after the end of Q1.

As far as our balance sheet and cash flow, we ended the quarter with $21.2 million in cash and $396.2 million of debt -- the net debt position of $375 million. The (inaudible) proceeds and the issuance of common stock will be recorded in Q2 since the closing date of the IPO was officially in April. On April 26th, we also -- we provided our bond holders with a partial redemption notice of $71.7 million for our senior subordinated notes. The redemption will be effective May 21st and we will record a redemption fee of 5.87% or $4.2 million in the second quarter. We generated $15.5 million of operating cash flow in the quarter, a $4.5 million or 41% improvement over the first quarter of '09.

A couple of highlights in the quarter as far as cash usage, we used $11.4 million to acquire the Geller business. We used $1 million for capital expenditures, about 1.3% of revenue. And we paid down $2.7 million in debt which included the required payment in the quarter, and the $2 million revolver we had drawn down at the end of 2009. In addition, we paid $5.9 million of taxes compared to $7.8 million in Q1 '09. Our accounts receivable DSO was down to 51 days as of March 2010, an improvement from 52 days at the end of December and 60 days as of March 2009. Our LTM consolidated EBITDA which is used for covenant compliance and includes acquisitions as if owned was $124.8 million as of March 2010. This has reduced our leverage from 6.8 as of the close when went private in '05 to three times on December 31st 2010.

As far as our outlook for this year, on an ongoing basis, we expect to issue an outlook for the next quarter and also for the full year. For the second quarter of 2010, we expect revenues in the range of $80 million to $81 million which will represent growth of 19% to 20%. EBITDA margins are expected to be in the range of 40% to 45% of revenue. Adjusted net income as defined in our financials will be between $15.8 million and $16.2 million. We expect fully diluted shares of $74.5 million to $75 million in Q2.

Stock compensation will increase in Q2 to approximately $4 million as the Company [bored out right] the transfer of superior options that we are going to invest on a exit strategy and converted them to performance auction [that best on EBITDA target] in 2010 in 2011. For the full year of 2010 we expect revenues of $324 million to $328 million, EBITDA also in the range of 40% to 40.5%, and adjusted net income of $62 million to $63 million. We expect outstanding fully diluted shares to increase by approximately $0.5 million per quarter starting in Q3 through the end of 2010. Now I will turn it over -- back to Bill for a final comment.

Thanks, Patrick. Despite tight controls of budgets by financial institutions in many of our segments, I am encouraged by the pipeline activity we are seeing around the globe. At our recent European climate summit held in London last month, I was lucky enough to meet 75 of our clients and new personnel from our Tradeware and the NextRound acquisitions. Our clients were enthusiastic and demanding. This is our business and we relish these opportunities to meet our clients' high standards. We have been aggressively marketing our new T&R solution as well as our [years] platform. Norm and I are meeting with our clients at our North American client summit starting today here in Fort Lauderdale where we have a 30% increase in attendance from last year. With our new products and new services along with 200 new personnel from SS&C, we are poised to deliver. And we will. I would now like to open the audience up for questions.

Thank you, sir. (Operator Instructions). Our first question in queue comes from [Tim Fox] with Deutsche Bank. Your line is open.

Hi. Thanks. Good afternoon. My first question was around the -- you mentioned the pipeline, Bill, encourage signs there. I was wondering if you can speak to the sales cycle, relative to where we were a year ago, given what's gone on in the broader asset management industry. Have things improved to the point now where you've got some visibility out on that sales cycle past a couple of quarters?

I think what we have, Tim, is that we have a lot more people that are engaging with us and we also have large deals, as well as a really tremendous number of deals in fund services where people are really scrambling to have a transparent solution, and for their investors to get reports from an independent administrator such as SS&C. Also that we are not a custodian, not a prime broker, that we are not a competitor, we are not an asset manager, has also been ringing more and more true to these prospects. We do believe that we have a very good pipeline. We believe it will bring out some new products to -- people are getting excited about. We are cautiously optimistic.

For Patrick, in looking at the guidance, how should we think about the FX assumptions that you are baking in and a broad range of what the organic growth rate might look like for the full year?

We are -- our foreign currency exposure on revenue is mostly the Canadian dollar and the British pound. We have very little exposure on the Euro. And so the Canadian dollar has continued to be strong so our current expectation for Q2 is that it hangs around where it is right now. As far as organic growth, for the guidance we have given for the full year, assuming we don't get very large fluctuations on foreign currency from where we are now, we would expect 5% to 6% organic growth from the guidance we gave for the full year

Thank you. Congratulations on your first quarter out.

Thank you. The next question comes from [Brian King] with Credit Suisse. Your line is now open.

Good afternoon. Patrick, looking at that organic growth of 5% to 6% for the year, what do you guys think should be the long-term organic growth of the Company? That's question one. Question two is in the quarter, organic growth is 1.7%. Can you just help us understand what's weighing down the organic growth in the first quarter?

On the first quarter of organic growth, you need to keep in mind that this is the first quarter we've had organic growth since I think Q4 '08. And in the fourth quarter of '09, we have had negative 6% organic growth in Q4 '09. We have seen strong momentum going from Q4 '09 to Q1 of 2010, where we had negative organic growth of 6% in Q4 to just under 2% increase in Q4 so we feel good about that. We think that this momentum in the business is trending upward. We have always thought that our business in normal economic times -- and it is pretty much proven if you look at our historical organic growth from '05 through '08, that that business can grow between 8% to 15% organically a year on a more long-term basis under normal market conditions.

Okay.

We also think we have momentum going into second quarter and third quarter on organic growth. We have a number of things that should be hitting in the next couple of quarters that should be pretty positive.

That's helpful. And then can you just remind us how the models affected by transactions and assets under management? Maybe give us a sense of -- if the financial markets continue to improve or if transaction volumes grow, how that affects your model?

With the strength -- if the stock market continues to strengthen, we have a lot of assets where we get paid on assets under management. That will give us some lift. And at the same time, same with transaction volumes. Although I would say that is a 1% to 2% increase in organic growth rates, based on those volumes.

Okay. Last question for me, just the acquisition pipeline, how does it look out there? What is your guys' appetite to make further acquisitions?

We are very inquisitive. We are look at several of them currently. We are very disciplined. We have some that are attractively priced, but we are afraid they should be very attractively priced. We are not sure we want to pounce yet. We want to watch . I think that there will be additional things coming into the market, as we went through our road show in last -- for the last couple weeks in March, there was a lot of people from different investment banks. There were a number of additional items even in that two-week period. There's an awful lot of people in this financial services technology and services business and we will be able to continue on our historical trends on acquisitions.

Okay. Congratulations on the solid start.

Thanks.

Thank you. Our next question in queue comes from [Adam Friche] with Morgan Stanley. Your line is now open.

Hi. It is [Glenn Photo] for Friche. Our apologies, Adam was supposed to be on the call, but was unexpectedly stuck in mid flight. Congratulations on the solid quarter out of the gate. Just wanted to turn to the regulatory front. It is not hard to see how more complexity out there can help you. But just wanted to know if you can point to any examples of how this environment we are in has benefited you over over the last six months say perhaps. What is built in into your guidance in this regard? Can you call out any specific legislation you are monitoring in particular?

Yes. I think that the primary things on the regulatory front is that we mentioned the OTTI which is the other than temporarily impaired module we put together. That's really in response to FAS 157, and also for large asset managers that need to track and deliver information on securities and other assets that are not in temporary decline on value. I think that is something that is one real clear definition. We think we will be rolling that module out to general release in June. We think that given our client make-up, we think that's very attractive. We also think that derivatives legislation that is being kicked around in Washington would really help us with our derivative capability and our outsourcing capability, as people are required to report more information on derivatives and also to have evaluated prices, rather than and in some ways so-called market prices. Right now, I think the primary provider of pricing is market which is owned by a consortium of banks.

There is going to be some challenge to have some independent valuations there. We think that will help us. We are pretty confident in and pretty bullish on our securities valuation corporation, SCC. We think it has a tremendous opportunity here as we sell prices and we create evaluating prices with our various model. There are a number of things that we think are very -- are very uplifting to us, again, But again, I would caution that this is -- we are an 85%, 86% recurring revenue model. This is generating 1% to 2% of organic revenue growth for us.

Okay. And then just turning to the guidance, just wonder if you can just provide some color on the underlying assumptions under the guidance. What needs to happen out there to make the guidance, as far as say, new sales growth? And the underlying fundamental bands, how wide are they? How much flexibility are there in the underlying fundamentals before guidance might have to change? And what has been your approach in laying out these goals? Is there a stretch component in there or are they set, such that every quarter we might see some provisions here? Just want to get a little background on your thinking of how you approach that. Thank you.

Again we -- Patrick, I will let you talk after a second. But we approach guidance in what we think is a wise way. We look at our business, we try to understand macro, what the trends are in our business, and the underlying strengths. Again going back to an 85%, 86% recurring revenue business with 90%, 95% retention rates, we can see, we have some visibility out two, three, two or three quarters. Then we also feather in -- we have 50 sales people -- 75 people in sales and marketing. We are getting updates every week on how that is going.

We are confident in what we deliver out to the marketplace on our guidance. We are not trying to see how far we can stick our neck out, but we also realize that we are not turtles. We have to have our head out there. We have got to look at what is going on in the market place. And we have to deliver growth. I think that the first quarter -- again, at 23% revenue growth and I think that the -- I think Patrick's said that he is estimating revenue growth in the second quarter between 19% to 20%. I think that is something that we think is pretty attractive at this time and something that is not necessarily 100% (inaudible). But we are also not taking a basketball out at half court to see if we can make it. Patrick.

I think that -- I want to emphasize what Bill said, we have got a lot visibility in our business. We have got 85% recurring revenue and maintenance and outsourcing. But in addition to that, we have got about $2 million a quarter of recurring license revenue and we have high visibility in our professional services. When we enter a quarter, we -- I think we talked about this before, we can easily identify 90% of our business in the quarter. And now we are already May 12th so we have very high visibility in Q2. Then we also have are our business unit managers are very focused on managing their business and forecasting their business and they provide Norm with weekly forecasts of each one of their businesses. We stay close to the businesses through their managers and their weekly forecasts.

And in addition to that, we have over the last 12 months really have made significant investments in sales force. The biggest gap on a quarterly basis to close from a projection perspective is the license number which is a relatively small percentage of our business these days. A lot of what we are dealing with is the timing of deals we are in the process of negotiating and in closing. I think if you look at that in totality with the sales force that is geared upright now, and the pipeline Bill referred to, I feel comfortable that we have acceptable ranges to deliver.

That's great. Thanks for the color and again congratulations.

Thanks.

Thank you. Our next question in queue comes from [Sterling Auti] with JPMorgan. Your line is now open.

Thanks. Hi, guys.

Hey, Sterling.

A couple of questions. First, with all of the market volatility and the disruption last week, has there been any feedback coming back from sales, either from customers that got spooked that were close to signing on the dotted line or the reversal, given that people are still trying to figure out what the heck happened with the drop of a thousand points and maybe people are looking at other solutions that you might have?

I think, Sterling, in this instance, the primary drivers here were -- are networks. Our fixed network that we acquired with Tradeware, we had no outages and no slow downs in that network. Similar with our SSCNet product, we didn't have any slow downs or problems in that product. I think those are the two biggest things that we have. We also run a ticker plant in Canada. We had two very sharp time periods of -- who is going into that ticker plant. As you can imagine, that ticker plant is a realtime delivery, as you put a symbol in, we deliver back a price. I think that underlying strength of our networks was validated. I think that gave our customers a lot of confidence. I think it gives us a chance to make them even better than they are today. I don't know of any particular client that is have given us much feedback from a two-day spike.

Okay. Just wanted to check. Now, in terms of -- you mentioned the pipeline and you look at the growth in the pipeline. But can you also comment on once you sign the customers, a lot of times there's that on-ramp process, in other words bringing that customer up to speed so they will start to contribute revenue. Can you give us a sense as to -- obviously it is in the guidance. It is in the disability, but how does that on-ramp in some of your customers and maybe some of your larger customers look over the next couple of quarters?

Most of the deals that we sign, regardless of the structure of that deal, there's some revenue recognition throughout the of life of the relationship. We will start to immediately recognize whether it is a license component, a professional services or outsourcing. But we (inaudible) paid the monthly fee and outsourcing and then we will get payment from the [finishing] services and then a monthly fee. But for the most part, that is going to be spread out over the term of the relationship. There's not going to be a lot of -- we do a lot of work and don't get paid and then rush through -- revenue when it goes live.

Okay. And then, two more questions. One is we talked about a number of customers increasing the frequency of some of the performance evaluations stuff, given all that is happened. Can you give us an update in terms of how those trends are going?

I didn't understand the question.

I think that what Sterling is asking is that things used to be monthly reporting, now daily reporting and weekly reporting.

Yes. In our business, that trend has been ongoing for a long time. A lot of our customers are getting daily from us or closing their books, and monthly with daily valuations. We expect that to continue. It is actually one of our core strengths. It is helpful that we have been been doing it for a long time. And more and more customers are actually leaning towards how do I now integrate my risk management with my accounting information on a daily basis. And that's where our business is trying to drive the current opportunity that we think is out there.

Okay. And last question is on the recent acquisitions that you have done, can you give us an update? Is everybody on the sales side fully up to speed and trained and out there for cross sell opportunities? And then, Patrick, on the expense side, any news that you have made to help improve the cost efficiencies on those deals?

I will answer the training question. Training process is ongoing. What we do is in each of the organizations that we either have built or acquired have some independent sales people focused on their business. They're also participating in presentations that we do in the sales force, mostly every Monday or so. After our sales call, they get a chance to see all of the other products in the business and get up to speed and they are allowed to immediately begin to present that as an opportunity for our prospects to consider and to leverage the resources available to each of these groups to provide the some of the subject matter expertise to close it. That's an evolving process. I think everyone is familiar with all of our solutions. We can articulate why it makes sense for profits to consider it and they know how to organize the resources to help execute on the sales.

And as you can imagine, with 50 sales people, some of them learn faster than others.

On the cost side, on acquisitions, both -- the next round of Tradeware and then the Geller gift business we bought in February, we view those businesses as having a lot of growth potential so I don't think it is a cost cutting scenario. We are looking at costs and applying our corporate leverage to reduce some costs in some areas. And then the Geller business, we are integrating them into our facilities in New York to get some cost reductions that way. And then we will also integrate some data centers and that will save us some costs. But we really view those businesses as they can grow and expand their margins.

But even impact -- each one of those acquisitions, we have not taken all of the top level people. We have been able to review some of the top heavy expenses, probably to the tune on all three of them of over $1million. I think that $1 million of expense reduction, we don't think we need to replace. And I think we are doing some. We are aggressively going after the growth side, as Patrick said, and so we would add to sales and marketing in each of those businesses. We have seen a lot of positive momentum there.

Great. Thank you.

Thank you, sir. Our next question in queue comes from [Terry Tillman] with Raymond James. Your line is now open.

Thanks, guys. Congrats. Just a couple of questions. First, in terms of the next round itself, can you maybe help us quantify a little bit, just what you are seeing in terms of the strength of the pipeline and just how rapidly that is expanding. How do we think about the next round, in terms of potentially an upside driver? Is that something that the pipeline could mature fast enough and you could harvest in 2010 or do you see it more of an upside driver into 2011?

That's a really good question. I think that the next round has a very attractive product. As Norm mentioned before, we have the sixteen global sales executives that are in our fund services business that we have unleashed on the private equity world to market. Next round, they have made over 1100 calls into the private equity market. We are getting in a great queue of opportunities. Will they pull the trigger? I would say we are probably looking late Q3, Q4 to have a real substantial impact and probably into 2011. We think it is a very attractive business. As I said before, our June 3rd roll out of some of our new capabilities and private equity administration -- having $50 billion across 3,000 different private equity entities, we really have a very powerful statement to make and I think T&R will be highly prized in that roll out.

For us to understand the balance of new customer logos, so getting new customers versus just taking your existing customers, making them happy and selling more product, how do we think about the 5% to 6% organic growth this year on maybe what would be the mix of business that relates to new logos as opposed to add-on sales?

My guess is it is going to be 50/50. We have a great pipeline of people that want to upgrade to new data bases in our current client base. We have a sequel version of our CAMRA system that is very attractive. And Norm talked a little bid about our impairments module. We have the global debt manager that's being rolled out to one of the top five international banks in the country or in the world. We have a lot of very positive momentum and a number of things into our current client base. And we also are making a lot of demonstrations into new names. My guess it is going to ultimately be about half and half.

Thanks. Maybe the last question, Patrick, relates to -- unless I have fuzzy math here, I am calculating about $0.85 to $0.91 for adjusted EPS. Are you where about you expected to be from an operating profit standpoint? Is actually the variable here higher taxes versus the four or are you about where you expected to be on tax rate on a non-GAAP basis? Thanks, guys.

On a GAAP basis, we are going to be lower on a tax rate than we thought because we have got some one-time things. But on a non-GAAP basis, we are pretty much where we thought we would be. At this point, the increase in EPS in the guidance is probably mostly from increased revenue, and not margin expansion at this point.

Okay. Thank you.

Our next question in queue comes from [Brad Meek with MorningStar]. You're line is now open.

Thanks for taking the question. Just one question on my end. I just want to think back on the cost, it looks like if I back into your Q2 and full-year guidance, your costs are a little lower than I had anticipated. You talked a little about your -- the leverage and the margin inherent in that. Can you talk about any of the process improvement initiatives that you instituted last year and how those are paying off for you?

Sure. We have an entire organization, that we centralize the management of the data gathering and the transformation and the processing into our common platforms, that we have also automated all of the outputs for the reporting for our clients. As we add new clients to integrate those new interfaces, whether it is trading systems or defined brokers or (inaudible), we have got the foundation already built. Each new client costs add those back on. It is relatively small and as those organizations grow their assets under management, the margins on that growth are obviously higher than the margins would be on a base new account. We are -- it is an ongoing process. I would actually view it as cultural process and we have ingrained in our organization that every week we will change something to improve the process. And over time, it really has tremendous capability and efficiencies. And that is why we are able to deliver such strong margins on outsourcing business which is labor intensive, relative to the services that you are providing and I also believe that's why we will continue to expand margins going forward.

Okay. Great. That's all I had. Thanks.

Another thing that we have done also on the expense side is that we really have some top people that are running our data centers and we are rolling out BM ware throughout our data centers. We are also rolling out some new storage devices. As we said on the road show, at the end of 2009, we made significant purchases because we got prices that were very attractive to us and now we are deploying all of that equipment and that's making things run faster and giving us a really stronger environment at a better price point.

Okay. Great. Congrats, guys.

Thank you, sir. Our next question comes from [Tim Willie] with Wells Fargo. Your line is now open.

Thanks. Good afternoon. The question first -- came off of the last one. Around your margin outlook, could you talk a little bit about any goals you have, thinking about margin expansion from the 8% to 15% organic revenue growth rate you talked about. And then where your M&A activity could impact that from the plus or minus -- in the near term, should we expect that there's a flurry of acquisition activity or a sizable acquisition, it might press the margins relative to what happened from organic revenue growth and the Company over the next couple of years.

We are -- I would tell you that we are pretty sensitive to that depress the margin stuff. We don't like that particularly. If we were to buy something that would significantly suppress our margins, we would significantly cut costs, significantly quickly. I don't have anything on the radar right now that would require that. There are a number of things that are in the queue that we are looking at. But in general, they're very similar to what we have done -- people with 20%, 25% margins, we think we can drive to 35% to 40% margins. In general, they're $10 million to $20 million businesses so they are -- there again, they're in the 5% range of our revenue, and it is not really a big margin drag.

It is a little -- 50 basis points here or so. But we think it gives us a tremendous opportunity to have cross sell and up sell opportunities and it gives us a richer environment in which to pitch -- some times here at our user group, we are showing everybody our Tradeware product, our P&R product. People get to take a look -- to see all of the new stuff we have built, all the new stuff that we have acquired and it creates a very good environment in which to be able to up sell and cross sell. I don't see us doing anything to really suppress margins over the next years. As we said on the road show, we think over the medium term, we can drive margins into the mid-40s.

Mid 40s from -- would that generally be true from an organic growth perspective? And then M&A would just help you get there sooner rather than later, just based upon what you just said?

That's probably true. I think we would be a bigger company as we did acquisitions, but the organic is going to drive margins higher. And we see a number of opportunities for us to deploy the quality of people that we have that are improving our processes and we think that that -- again if you could have more assets under management per person, if you could do more funds per person, then obviously you are going to have a better profit picture.

The other thing I would tell people is that we are in primarily regulated businesses. You have got to produce [the many leads] for your limited partners or you cannot be a partnership. You have got to file schedule D, schedule DA, schedule DB if you are an an insurance company and if you don't, you get fined everyday for the time you were late. If you are a bank, you have to file fed call reports. There's just regulation in what we do. What that does is it gives us that visibility and it gives us that momentum in which to be able to come out with new products, come out with new services, meet with our clients, figure out what they want because they have to do it. Other people that are in the financial services sector that we continue to gain often are not in regulated businesses that have requirements that our customers have.

If I can ask a follow up on the M&A pipelines in general, what is the competitive environment look like in the M&A pipeline? Are you seeing lots more potential bidders against you than maybe you saw in the last two years? Or is it still generally of your own [volition] if you will to decide whether you do a deal or not just based upon your relationship with the target? Or are you seeing things go away from you because competition is picking up for these deals?

The investment banks always tell us there's tons of competition, but we are not sure that's really true. I would say that right now, what you see is a reemergence of the private equity firms starting to look at more things. But in general, in the $10 million to $30 million in revenue, is in general not their sweet spot. It is too small. As far as strategic [requirers, Advent] really has been on the sidelines for most of the last five to ten years, and we bought [Tamale and we bought Gueya] or whatever the name of at that place was in Norway. Sunguard has got a lot of debt and hasn't been as active as they were in the past. Again the large banks, that is just not something that they're into at the present. Right now we have a pretty nice playing field for our ability to make bids and be able to have them accepted.

Great. That's all I have. Thanks very much.

Thank you, sir. At this time, I am showing no further questions in the queue. I would like to turn the program over -- back to Mr. Bill Stone. Sir?

Thanks, Hughey. Again, we really do appreciate everybody being on this call. SS&C, I can asure you is working hard for all of our shareholders and we will continue to do so. And again, we look forward to talking to you after the second quarter. Thanks, again.

Thank you, sir. Ladies and gentlemen, this does conclude today's program. Thank you for your participation and have a wonderful day. Attendees, you may now disconnect.