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SS&C Technologies, Inc. (SSNC) |
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CEOCFO Current
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This is a printer friendly page! SS&C
Technologies is a worldwide provider of software and services to the financial services
industry BIO: William C. Stone is Chairman of the Board, President
and Chief Executive Officer of SS&C Technologies, Inc. (SS&C). SS&C is a
worldwide enterprise applications software company serving the institutional investments
industry. Mr. Stone founded SS&C in 1986 and SS&C went
public in 1996. Mr. Stone has grown SS&C to a company of 325 people with offices
in Europe, Asia, and throughout North America. SS&C has acquired 11 software
firms over the past seven years, most recently, DBC of New York, Digital Visions of
Minneapolis, and Real-Time USA of Chicago. Mr. Stone is a graduate of Marquette University.
He holds or has held National Association of Securities Dealers (NASD) securities
series licenses 6, 7, 8 and 22, was a New York Stock Exchange and Municipal Securities
Rulemaking Board Principal and an Associated Person with the Commodity Futures Trading
Commission. Mr. Stone is a member of the Board of Advisors of the University of
Connecticut’s School of Business. Headquartered in Windsor, CT, SS&C delivers investment and financial management software and related services in seven vertical markets: 1) commercial lending, 2) financial institutions, 3) hedge funds and family offices, 4) institutional asset management, 5) insurance entities and pension funds, 6) municipal finance, and 7) real estate property management. In each of these markets, SS&C's solutions are in the top tier of competitive product offerings. Company Profile: SS&C Technologies, Inc.
(SSNC - NASD) is an investment software and services company that focuses exclusively on
the financial services industry and has a global client base that manages over $4 trillion
in assets. Each of the products in SS&C’s suite of highly specialized
solutions is in the top tier of competitive offerings in the marketplace. By
leveraging expertise in common investment business functions, SS&C cost-effectively
serves clients across the different industry segments. SS&C championed the concept of
"Straight-Thru Processing" for investment management with a suite of software
solutions that provides total integration of front-end trading and modeling… straight
through to portfolio management and reporting... to back-office processing, clearing and
accounting. Whether clients need to manage growth profitably, maximize market
opportunities, or reduce operational costs, SS&C’s value-driven products give
them flexible, scalable solutions. Mr. Stone: “SS&C is a 17 year old company, which I founded in 1986. We are based in Windsor, Connecticut and have about three hundred people. We offer the financial services industry software products and services targeted at seven specific market segments: 1) commercial lending, 2) financial institutions, 3) hedge funds and family offices, 4) insurance entities and pension funds, 5) institutional asset management, 6) municipal finance, and 7) real estate property management.” CEOCFOinterviews: Where are you the strongest, and in which areas would you like to build? Mr. Stone: “In each of our segments, our products are recognized as top tier. The industry we serve is very dynamic and where we build depends on market demand, which is driven by economic conditions. For example, take the hedge fund market, which has been particularly active in the last few years even with the bear market. Unlike mutual funds, which are only long, hedge funds tend to be market neutral so that they will be long or short depending on individual stocks and sectors. Another example is commercial lending, where markets have been off 40% over the last three years. Recently though, a number of institutions have gotten more active which is why we responded with a new product for commercial loan originations.” CEOCFOinterviews: What do you supply to your customers? Mr. Stone: “Simply stated, we deliver systems and services that help clients manage all classes of assets across the entire spectrum of financial services. We supply trading and decision support systems, accounting and administration systems, and client management and regulatory reporting systems. Our people have the expertise and industry knowledge to provide solutions that fit our customer’ needs, and we can deliver those solutions on either a licensed or outsourced basis.” CEOCFOinterviews: Do you customize your products for each client? Mr. Stone: “No. We primarily sell packaged software products. Implementations are customized to the client’s specific environment. That said, we do have a very talented development group that occasionally does some customized programming, but it amounts to less than 3% of our total revenue.” CEOCFOinterviews: You have just announced your results and they are quite good. What are you doing that is right and what needs work? Mr. Stone: “We have done a good job of managing our business, growing our earnings, and increasing shareholder value. As with most technology companies and the financial services industry in general, our bigger challenge is growing our top-line revenue. To that end, we have been hiring and training sales personnel, looking at different marketing programs, and building additional functionality into our products in order to make them more attractive.” CEOCFOinterviews: Are there any new products in the works? Mr. Stone: “Our product line is already quite broad and deep, so we don’t foresee any major new product rollouts. Our primary focus will be on enhancing the products we have. As I said, we did introduce a new loan origination system. Our outsourcing business is continually being asked to deliver new tax services for hedge funds. We also launched a new reporting and data visualization tool for our actuarial software.” CEOCFOinterviews: Where are your customers located? Mr. Stone: “We have a high concentration of customers in the world’s financial centers, particularly New York, Chicago, Amsterdam, London and Tokyo, as well as in Switzerland." CEOCFOinterviews: Do your customers tend to take your whole package or does it come in modules where they can increase the service? How does this affect the financial status of the company? Mr. Stone: “We sell 15 different products and 8 different services. Depending upon the type of company and the classes of assets they invest in, we can ‘slice and dice’ our product suite in order to meet their needs.” “About 75% of our business is licensed based, and the rest is on an outsourcing basis. Most of our licensed based business is now in a recurring revenue mode on which we get about a 95% renewal rate. Our outsourcing deals are typically three-year contracts which also renew at better than 95%.” CEOCFOinterviews: How do you reach potential new customers? Mr. Stone: “We rely heavily on e-marketing to get our message out. Every week, we send out over 100,000 e-newsletters targeted at the different vertical markets we serve. These e-briefings have topical articles highlighting business issues, software tips and other items of interest for each specific market. With our blue chip client base, we are pretty well known in the markets we serve, and therefore do only a limited amount of print advertising. We also have a strong presence at industry tradeshows and events, both as speakers and exhibitors.” CEOCFOinterviews: What sets you apart from your competition? Mr. Stone: “What sets us apart from the competition is our deep understanding of our customers’ specific business. Using our consultative approach, we can apply what we know to what makes the most sense for each customer. Our broad and diverse client base is a major asset from the point of view of both customers and investors. Last quarter, 68% of our total revenues were recurring. We are a highly profitable and focused company with a tremendous amount of expertise.” CEOCFOinterviews: Do you see a trend toward outsourcing in the industries that you cover? Mr. Stone: “Yes. Outsourcing was extremely popular at the beginning of 2000 when unemployment was low and it was very difficult for companies to attract, hire and train good people. Those factors have changed somewhat in the current economy, but I still think outsourcing is a wise choice for organizations looking to build an operation having both flexibility and expertise.” CEOCFOinterviews: You have a number of partnerships; what are you looking to increase in that area? Mr. Stone: “We look for partnerships that can bring added value to our customers. We have an ongoing effort to partner with a select group of complementary service, technology, and information providers that are interested in jointly servicing the financial services industry. The objective is to increase the overall level of quality and service our clients receive, and to improve communication among key industry influencers. We work with leading service providers, like INTEX, which is a large purveyor of data for the CMO and MBS industry. We have relationships with a number of custodian banks. We just entered into a new agreement with LiveVault, which provides online data protection and back-up.” CEOCFOinterviews: You have a lot of cash and that gives you the ability to aggressively pursue accretive acquisitions as mentioned in your recent earnings release. What are your plans? Mr. Stone: “When it comes to acquisitions, we try to be opportunistic. We are looking to extend our product reach and add talented people and quality customers, but to stay focused on the financial services industry.” CEOCFOinterviews: What are your biggest challenges going forward, and how do you prepare? Mr. Stone: “As always with any business, the challenge is finding and motivating talented people. We want people who can grasp opportunities and drive them forward. To date, we have done a pretty good job, but the challenge will always remain.” CEOCFOinterviews: What do you look for in addition to the technical expertise? Mr. Stone: “We look for two things: energy and gray matter. First, people have to work hard. It’s not the number of hours one puts in; it’s the intensity of those hours that counts. Second, people have to be smart. They need to be able to listen to prospects and customers, think through questions, and devise solutions that make sense and can be delivered on a cost effective basis.” CEOCFOinterviews: What should potential investors know that is not readily apparent at first look? Mr. Stone: “The analysts have us making eighty cents per-share this year. Our stock sells for $14.00, but we have almost $4 a share in cash. Take out the cash, and we are trading at little more than 12 times earnings, which have been growing in excess of 25% over the last three years.”
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