SS&C Earnings: Elevated Expenses, Lowered Revenue Outlook Disappoint but Shares Cheap in Our View

Similar to the first quarter of 2023, narrow-moat-rated SS&C's second-quarter revenue was in line with expectations, but operating margins were showing some softness. Revenue of $1.36 billion (with 2.5% organic growth) was in line with the FactSet consensus estimate, while adjusted EBITDA of $502 million was 2% below the consensus estimate of $513 million. Looking ahead, while SS&C expects organic growth to accelerate to about 5% by the fourth quarter, management reduced its full-year estimate by 1% to 3% at the midpoint. After increasing our expense forecasts, we have lowered our fair value estimate to $75 per share from $78.