SS&C Technologies Holdings Inc (SSNC)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is intended to provide readers of our Condensed Consolidated Financial Statements with the perspectives of management. It presents, in narrative form, information regarding our financial condition, results of operations, liquidity and certain other factors that may affect our future results. It should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (the “SEC”) on February 26, 2026 (the “2025 Form 10-K”) and the Condensed Consolidated Financial Statements included in this Form 10-Q. Within the condensed consolidated financial statements, the line items named technology-enabled services were previously named software-enabled services.

We use the term organic to refer to the businesses and operations that are included in the comparable prior year period on a constant currency basis. Organic includes the change in an acquired business, but excludes the impact of any business which we acquired for the time period which would impact the comparable prior year period.

Ongoing macroeconomic conditions, such as changes in interest rates and inflation, volatility in capital markets, global trade issues, geopolitical tensions, foreign currency exchange rate fluctuations, and other similar factors, could impact our results that are uncertain and, in many respects, outside our control. The situations remain dynamic and subject to rapid and possibly material change, which ultimately could result in material negative effects on our business and results of operations. We will continue to evaluate the nature and extent of the potential impacts to our business, consolidated results of operations, liquidity and capital resources.

Critical Accounting Estimates

A number of our accounting policies require the application of significant judgment by our management, and such judgments are reflected in the amounts reported in our Condensed Consolidated Financial Statements. In applying these policies, our management uses its judgment to determine the appropriate assumptions to be used in the determination of estimates. Those estimates are based on our historical experience, terms of existing contracts, management’s observation of trends in the industry, information

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provided by our clients and information available from other outside sources, as appropriate. Actual results may differ significantly from the estimates contained in our Condensed Consolidated Financial Statements. There have been no material changes to our critical accounting estimates and assumptions or the judgments affecting the application of those estimates and assumptions since the filing of our 2025 Form 10-K. Our critical accounting policies are described in the 2025 Form 10-K and include:

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Acquisition Accounting, Intangible Assets and Goodwill

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Software Capitalization

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Revenue Recognition

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Stock-based Compensation

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Income Taxes

Results of Operations

Our results of operations below include the results of our recent acquisitions from the date of acquisition. FPS Trust Company was acquired in February 2025, Calastone Limited in October 2025 and Curo Fund Services in November 2025.

Revenues

We derive our revenues from two sources: technology-enabled services revenues and license, maintenance and related revenues. As a general matter, fluctuations in our technology-enabled services revenues are attributable to our customer retention, the number of new technology-enabled services, total assets under management in our clients’ portfolios and the number of outsourced transactions managed for our existing clients. Technology-enabled services revenues also fluctuate as a result of reimbursements received for “out-of-pocket” expenses, such as postage and telecommunications charges. Because these additional revenues are offset by the reimbursable expenses incurred, there is no impact on gross profit, operating income and net income, however the reimbursements billed and expenses incurred can lead to fluctuations in revenues, cost of revenues and gross margin percentage each period. License, maintenance and related revenues consist primarily of term and perpetual license fees, maintenance fees and professional services. Maintenance revenues vary based on customer retention and on the annual increases in fees, which are generally tied to the consumer price index. 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.

The following table provides the percentage of total revenue derived by the two sources of revenue:

The following table sets forth revenues (dollars in millions) and percent change in revenues for the periods indicated:

Three Months Ended June 30, 2026 and 2025. Our revenues increased $158.9 million, or 10.3%, primarily due to an increase of $117.6 million in organic revenue growth primarily driven by strength in the SS&C GlobeOp fund administration, Wealth and Investment Technology, and Global Investor and Distribution Solutions businesses. Our revenues also increased due to acquisitions, which contributed $35.9 million, and the favorable impact from foreign currency translation of $5.4 million.

Technology-enabled services revenues increased $140.5 million, or 11.1%, primarily due to an increase in organic revenues of $101.6 million as well as acquisitions, which added $35.9 million in revenues, and the favorable impact from foreign currency translation of $3.0 million. License, maintenance and related revenues increased $18.4 million, or 6.8%, due to an increase in organic revenues of $16.0 million and the favorable impact from foreign currency translation of $2.4 million.

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Six Months Ended June 30, 2026 and 2025. Our revenues increased $292.1 million, or 9.6%, primarily due to an increase of $193.6 million in organic revenue growth primarily driven by strength in the SS&C GlobeOp fund administration and Global Investor and Distribution Solutions businesses. Our revenues also increased due to acquisitions, which contributed $70.8 million, and the favorable impact from foreign currency translation of $27.7 million.

Technology-enabled services revenues increased $277.9 million, or 11.0%, primarily due to an increase in organic revenues of $187.9 million as well as acquisitions, which added $70.8 million in revenues, and the favorable impact from foreign currency translation of $19.2 million. License, maintenance and related revenues increased $14.2 million, or 2.8%, due to the favorable impact from foreign currency translation of $8.5 million and an increase in organic revenues of $5.7 million.

Cost of Revenues

Cost of technology-enabled services revenues consists primarily of costs related to personnel who deliver our technology-enabled services and amortization of certain intangible assets. Cost of license, maintenance and other related revenues consists primarily of the costs related to personnel utilized in servicing our maintenance contracts and to provide implementation, conversion and training services to our software licensees, as well as system integration and custom programming consulting services and amortization of intangible assets.

The following tables set forth each of the following cost of revenues as a percentage of their respective revenue source for the periods indicated:

The following table sets forth cost of revenues (dollars in millions) and percent change in cost of revenues for the periods indicated:

Three Months Ended June 30, 2026 and 2025. Our total cost of revenues increased by $77.5 million, or 9.7%, primarily due to an increase of $54.5 million in organic costs as well as acquisitions, which added $20.2 million in costs, and the unfavorable impact from foreign currency translation, which increased costs by $2.8 million. Our organic cost increase reflects continued investment in delivering client service.

Cost of technology-enabled services revenues increased $77.7 million, or 11.2%, due to an increase of $55.1 million in organic costs, acquisitions, which added $20.2 million in costs, and the unfavorable impact from foreign currency translation of $2.4 million. Cost of license, maintenance and related revenues decreased $0.2 million, or 0.2%, due to a decrease of $0.6 million in organic costs, partially offset by the unfavorable impact from foreign currency translation of $0.4 million.

Six Months Ended June 30, 2026 and 2025. Our total cost of revenues increased by $156.0 million, or 10.0%, primarily due to an increase of $97.4 million in organic costs as well as acquisitions, which added $40.0 million in costs, and the unfavorable impact from foreign currency translation, which increased costs by $18.6 million. Our organic cost increase reflects continued investment in delivering client service.

Cost of technology-enabled services revenues increased $150.9 million, or 11.1%, due to an increase of $95.3 million in organic costs, acquisitions, which added $40.0 million in costs, and the unfavorable impact from foreign currency translation of $15.6 million. Cost of license, maintenance and related revenues increased $5.1 million, or 2.5%, due to the unfavorable impact from foreign currency translation of $3.0 million and an increase of $2.1 million in organic costs.

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Operating

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Business. 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. 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. In addition, we provide solutions to the healthcare industry including pharmacy, healthcare administration and health outcomes optimization solutions to satisfy their information processing, quality of care, cost management and payment integrity needs. Our healthcare solutions include claims adjudication, benefit management, care management and business intelligence services.

Acquisitions. To supplement our growth, we evaluate and execute acquisitions that provide complementary products or services, add proven technology and an established client base, expand our intellectual property portfolio or address a highly specialized problem or a market niche.

The following table lists the businesses we have acquired since January 1, 2023:

The discussion in this Part II, Item 7 of this Annual Report on Form 10-K includes the operations of the businesses listed in the table above for the respective time periods each was owned by SS&C.

Revenues. As we have expanded our business, we have focused on increasing our software-enabled services. Since 2023, we have seen increased demand in the financial services industry for these services from existing and new customers. We have taken a number of steps to support that demand, such as automating our software-enabled services delivery methods and expanding our service offerings. We have also acquired businesses that offer software-enabled services or have a large base of term license or maintenance clients. In particular, the acquisition of Blue Prism increased our term license and maintenance revenues. Our software-enabled services revenues increased from $4,488.3 million in 2023 to $5,211.1 million in 2025. 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.

Liquidity. In October 2025, in connection with our acquisition of Calastone, we entered into an Incremental Joinder to our Credit Agreement, resulting in $1,050.0 million of additional Term B-8 Loans, which is described in Contractual Obligations.

We generated $1,744.8 million in cash from operating activities in 2025, compared to $1,388.6 million and $1,215.1 million in 2024 and 2023, respectively. In 2025, we used our operating cash flow, cash received from debt borrowings, $425.5 million in proceeds from the exercise of stock options and existing cash to fund the Calastone acquisition, purchase $1,036.0 million of common stock for treasury, pay $253.8 million in dividends and invest in capital expenditures in our business.

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Results of Operations

We use the term organic to refer to the businesses and operations that are included in the comparable prior year period on a constant currency basis. Organic includes the change in an acquired business, but excludes the impact of any business which we acquired for the time period which would impact the comparable prior year period.

Ongoing macroeconomic conditions, such as changes in interest rates and inflation, volatility in capital markets, global trade issues, geopolitical tensions, foreign currency exchange rate fluctuations, and other similar factors could have impacts on our results that are uncertain and, in many respects, outside our control. The situations remain dynamic and subject to rapid and possibly material change, which ultimately could result in material negative effects on our business and results of operations. We will continue to evaluate the nature and extent of the potential impacts to our business, consolidated results of operations, liquidity and capital resources.

Our results of operations below include the results of our recent acquisitions from the date which they were acquired, including the Iress Managed Funds Administration Business in October 2023, Battea in September 2024, FPS Trust Company in February 2025, Calastone Limited in October 2025 and Curo Fund Services in November 2025.

Revenues

We derive our revenues from two sources: software-enabled services revenues and license, maintenance and related revenues. As a general matter, fluctuations in our software-enabled services revenues are attributable to our customer retention, the number of new software-enabled services clients as well as total assets under management in our clients’ portfolios and the number of outsourced transactions managed for our existing clients. Software-enabled services revenues also fluctuate as a result of reimbursements received for “out-of-pocket” expenses, such as postage and telecommunications charges, which are recorded as revenues on an accrual basis. Total out-of-pocket revenue was $100.1 million, $93.2 million and $93.6 million for the years ended December 31, 2025, 2024 and 2023, respectively. Because these additional revenues are offset by the reimbursable expenses incurred, there is no impact on gross profit, operating income and net income; however, the reimbursements billed and expenses incurred can lead to fluctuations in revenues, cost of revenues and gross margin percentage each period. License, maintenance and related revenues consist primarily of term and perpetual license fees, maintenance fees and professional services. Maintenance revenues vary based on customer retention and on the annual increases in fees, which are generally tied to the consumer price index. License and related revenues tend to fluctuate based on the number of new licensing clients, the timing and terms of contract renewals and demand for consulting services.

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

The following table sets forth revenues (dollars in millions) and percent change in revenues for the periods indicated:

Fiscal 2025 versus Fiscal 2024. Our revenues increased $390.2 million, or 6.6%, primarily due to an increase of $281.2 million in organic revenues driven by strength in the SS&C GlobeOp fund administration, Global Investor and Distribution Solutions and Wealth and Investment Technologies businesses. Our revenues also increased due to acquisitions, which contributed $77.5 million in revenues as well as the favorable impact from foreign currency translation of $31.5 million.

Software-enabled services revenues increased $370.8 million, or 7.7%, primarily due to an increase in organic revenues of $268.8 million, and acquisitions, which added $77.5 million in revenues, as well as the favorable impact from foreign currency translation of $24.5 million. License, maintenance and related revenues increased $19.4 million, or 1.9%, primarily due to an increase in organic revenues of $12.4 million and the favorable impact from foreign currency translation of $7.0 million.

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Fiscal 2024 versus Fiscal 2023. 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.

Cost of Revenues

Cost of software-enabled services revenues consists primarily of costs related to personnel utilized in servicing our software-enabled services and amortization of intangible assets. Cost of license, maintenance and other related revenues consists primarily of the costs related to personnel utilized in servicing our maintenance contracts and to provide implementation, conversion and training services to our software licensees, as well as system integration and custom programming consulting services and amortization of intangible assets.

The following tables set forth each of the following cost of revenues as a percentage of their respective revenue source for the periods indicated:

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