SS&C Technologies [SSNC] Conference call transcript for 2022 q4
2023-02-07 22:14:06
Fiscal: 2022 q4
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the SS&C Technologies Fourth Quarter 2022 Earnings Conference Call. After the speakersâ remarks, there will be a question-and-answer session. It is now my pleasure to turn todayâs call over to Justine Stone, Head of Investor Relations. Please go ahead.
Justine Stone: Hi, everyone. Welcome and thank you for joining us for our fourth quarter 2020 earnings call. I am Justine Stone, Investor Relations for SS&C Technologies. With me today is Bill Stone, Chairman and Chief Executive Officer; Rahul Kanwar, President and Chief Operating Officer; and Patrick Pedonti, our Chief Financial Officer. Before we get started, we need to review the safe harbor statement. Please note the various remarks we make today about future expectations, plans and prospects including the financial outlook we provide, constitute forward-looking statements 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, including those discussed in the Risk Factors section of most of our most recent annual report on Form 10-K, which is on file with the SEC and can also be accessed on our website. These forward-looking statements represent our expectations only as of today, February 7, 2023. While the company may elect to update these forward-looking statements, it specifically disclaims any obligation to do so. During todayâs call, we will be referring to certain non-GAAP financial measures. A reconciliation of these non-GAAP financial to comparable GAAP financial measures is included in todayâs earnings release, which is located in the Investor Relations section of our website at www.ssctech.com. I will now turn the call over to Bill.
Bill Stone: Thanks, Justine, and thanks everyone for joining. Our results for the fourth quarter of $1.339 million in adjusted revenue, up 3.3% and our adjusted diluted earnings per share were $1.16, down 4 -- 9.4%. Adjusted consolidated EBITDA was $518.6 million, third highest in our history, and our EBITDA margin was 38.7%. Our fourth quarter adjusted organic revenue was flat in line with our expectations. For the year, total organic growth was 2%, while our Financial Services organic growth, which is 94% of our revenue was 3.7%. 2022 was a challenging operating environment for SS&C, but we are pleased that with the revenue performance from our software businesses, including Advent, Investment and Institutional Management and as -- and the resiliency of our Alternative Fund Administration and Intralinks business. In 2022, SS&C generated net cash from operating activities of $1.134 billion, including $67 million in deal related expenses. We paid down $166 million in debt in Q4, bringing our consolidated net leverage ratio to 3.4 times and our net secured leverage ratio to 2.4 times, sorry, 2.4 times consolidated EBITDA. This past January, as we were in our quarterly blackout three of our stock buybacks, we paid down debt an additional $101 million. In Q4, we bought back 1.8 million shares from $90.7 million at an average price of $50.14. For the year, we had stock buybacks of $476 million, for purchases of 7.8 million shares at an average price of $61.01. We will continue to allocate about 50% of our cash flow to stock buybacks and about 50% to debt pay down. In December, we acquired Complete Financial Ops, a specialized Colorado-based fund administrator that focuses on private equity and family offices. CFO Fund Services will augment SS&Câs capabilities in servicing venture capital and family office funds and CFO clients will enjoy the same outstanding service backed by SS&C size, scale and comprehensive solutions. We remain methodically opportunistic in our acquisition strategy, valuations have come down more in line with our disciplined strategy and we are evaluating several opportunities. We remain very bullish on our Blue Prism acquisition and we are wrapping our digital workers deployment throughout our business. I will now turn it over to Rahul to discuss the quarter in more detail.
Rahul Kanwar: Thanks, Bill. Q4 results demonstrate the strength of our business amidst a challenging operating environment and highlight our ability to drive margins despite inflationary pressures. We exited 2022 with 38.7% EBITDA margin, up 330 basis points from the low point in Q2. Cost controls, facilities reduction and productivity improvements enabled this quick turnaround. While labor markets remain volatile, we believe Blue Prismâs intelligent automation technology will be an important means to harnessing the productivity of our workforce in 2023 and beyond. As a business unit, Blue Prism continues to grow nicely and exited 2022 with 20% EBITDA margins. We continue to see opportunity in the private credit market, where we are investing in a highly scalable offering combining the strengths of Advent Software products and GlobeOp Services capabilities. A key component will be the build-out of a robust data platform that integrates multiple SS&C technologies, including Geneva, TNR, Precision LM and others. Private credit represents the latest example of SS&C developing technology, expertise and services to address the needs of a very specialized and complex set of fund managers. This is a strategy we have employed effectively and repeatedly as we have built the worldâs largest alternatives administration business. I will mention some key deals for Q4. Three existing SS&C clients upgraded to our newest platform, Aloha. We currently have over 30 clients live on Aloha. A $13 billion asset manager partnered with SS&C for fund accounting and reporting functions on their real assets portfolio, this partnership includes lifting out 60 employees in Texas. One of DSTâs largest clients expanded their relationship to include more transfer agency operations. A Canadian alternative asset manager chose SS&C for a suite of private equity administration services, including regulatory reporting, treasury services and investor vision citing their need for Canadian and international expertise, as well as scale for future growth. A $75 billion hedge fund chose Geneva for its superior functionality around loan processing and accounting. A Hong Kong-based asset manager chose EMS/OMS as they needed greater asset class coverage, flexibility, third-party integration and compliance functionality. Mine Super managing $12 billion in assets on behalf of 55,000 members became SS&Câs first Australian superannuation client. The partnership will deliver superior digital experiences for members, driving greater member engagement and stronger retirement outcomes. I will now turn it over to Patrick to run through the financials.
Patrick Pedonti: Thanks. The results for the fourth quarter 2022 were GAAP revenues of $1.338 billion, GAAP net income of $207.5 million and diluted EPS of $0.81. Adjusted revenues were $1.391 billion. Adjusted revenue was up 3.3% and adjusted operating income decreased 1.1% and adjusted diluted EPS was $1.16, a 9.4% decrease from Q4 2021. Overall, adjusted revenue increased $42.9 million or 3.3% from Q4 2021. Our acquisitions contributed $72.5 million. Foreign exchange had an unfavorable impact of $28.7 million or 2.2% in the quarter. Adjusted organic revenue was flat on a constant currency basis. We had strength in several product lines, including Alternatives, Institutional and Investment Management and the Intralinks business. That strength was impacted by weakness in our GIDS transfer agency business and Healthcare businesses. Adjusted operating income in the fourth quarter was $502.1 million, a decrease of $5.4 million or 1.1% from Q4 2021. Adjusted operating margins were 37.5% in the fourth quarter of 2022, compared to $39.2 million in the fourth quarter of 2021. Excluding acquisitions, expenses increased 2.6% on a constant currency basis. Acquisitions added $56.7 million in expenses and foreign currency decreased cost by $27.9 million. Our cost structure has been impacted by wage inflation and higher staffing to support our business. Adjusted consolidated EBITDA defined in note three of our earnings release, was $518.6 million or 38.7% of adjusted revenue, a decrease of $4.3 million or 0.8% from Q4 2021. Net interest expense for the quarter was $104.9 million and includes $3.7 million of non-cash amortized financing costs and OID. The average interest rate in the quarter for our amended credit facility including the senior notes was 5.64%, compared to 3.09% in the fourth quarter of 2021. Adjusted net income was $296.6 million and adjusted EPS of $1.16, and the effective tax rate used for adjusted net income was 26%. Diluted shares decreased to $256.4 million from $260.9 million in Q3. Share repurchases and the lower average stock price during the quarter led to the decrease. Fourth quarter -- in the fourth quarter of 2022, we reported GAAP fair value, unrealized gains totaling $68.8 million for investments we made in 2020 and 2021. These gains are excluded from our adjusted financial results. On the balance sheet, we ended the quarter with $440 million of cash and cash equivalents, and $7.1 billion of gross debt. SS&C net debt, which excludes the cash of $134 million at DomaniRx was $6.8 billion as of December 31st. Operating cash flow for the 12 months ended December 2022 was $1.134 billion. It includes the impact of $67 million of Blue Prism post-acquisition transaction costs. Adjusted for the transaction costs, cash flow was $1.21 billion or a decrease of $227 million or 15.9% compared to 2021. Cash flow was impacted by higher interest rates, lower EBITDA, and an increase in receivables, DSO. During the three months ended December 31st, we paid down $166 million of debt and purchased $90.7 million of stock buyback. Highlights for 12 months on the cash flow, we paid $1.36 billion for acquisitions, including Blue Prism, Hubwise, MineralWare, OâShares and Tier1 and Complete Financial Ops net of cash acquired. Treasury stock buybacks totaled $476 million. We purchase a 7.8 million shares at an average price of $61.01, compared to $487.9 million of treasury stock buyback in 2021. In July, the Board authorized the new stock purchase program up to $1 billion. Program to-date, stock buybacks totaled $305 million for purchases of 5.5 million shares at an average price of $55.78. For the year, we declared and paid dividends of $203 million, compared to $174 million last year, an increase of 16.7%. In 2022, we paid interest of $298 million, compared to $192.5 million in 2021. Income taxes paid this year totaled $281 million, compared to $310 million in 2021. Our accounts receivable DSO was 52.3 days as of December 2022 and that compares to $51.8 million as of September 2022 and 49.5% as of December 2021. Capital expenditures and capitalized software totaled $208 million or 3.9% of adjusted revenue, compared to approximately $137 million in 2021. The spending is predominantly for capitalized software and IT infrastructure. Our LTM consolidated EBITDA, which we use for covenant compliance was $2.010 billion as of December 2022. And based on the net debt of $6.8 billion, our total leverage was 3.4 times and our secured leverage was 2.4 times as of December 31st. On outlook for 2023, I will cover a few assumptions first. We will continue to focus on client services, and we expect our retention rates to continue a range of most recent results. We have assumed foreign currency exchange at the year end 2022 levels. As a result, adjusted organic growth for the year will be between 2% and 6%, and adjusted organic growth for Q1 will be in the range of negative 0.5% and to positive 2.5%. We have assumed interest rates will average approximately 6.35% for the year for our credit facility and senior notes. We expect staff productivity to improve by approximately 5% and we will manage expenses during this period by controlling variable costs to improve our operating margins in the rate of 50 basis points to 150 basis points compared to 2022. We will continue investing in our business long-term in the areas of capital expenditures, product development and sales and marketing. And we will continue allocating free cash flow to both to pay down debt and buy back stock and we have assumed that the tax rate will be approximately 26%. So for the first quarter of 2023, we expect revenue in the range of $1.332 billion to $1.372 billion, adjusted net income in the range of $282 million to $299 million and diluted shares in the range of $156 million to $157 million. For the full year 2023, we expect revenue in the range of $5.45 billion $5.655 billion, adjusted net income in the range of $1.190 billion to $1.285 billion and diluted shares in the range of $455 million to $258.5 million. And for the full year, we expect cash from operating activities to be in the range of $1.275 billion to $1.375 billion. Now I will turn it over to Bill for final comments.
Bill Stone: Thanks, Patrick. 2023âs improved operating environment will present more of our growth opportunities for SS&C. We look forward to capitalizing on these opportunities and delivering superior results to our shareholders. I will now open it up to questions.
Operator: Your first question comes from the line of Surinder Thind with Jefferies. Your line is open.
Surinder Thind: Thank you. Iâd like to start with a question or two around productivity. Can you maybe talk a little bit about just the digital workers and kind of the efficiencies that you are seeing there? So when you give metrics such as thereâs 180 digital workers, does that replace a certain amount of employee hours or how should we think about that and maybe just the kind of the targets that you have for the full year that you laid out relative to last quarter?
Bill Stone: Yeah. We expect on average conservatively that a digital worker will probably save us $50,000 per digital worker deployed. We are not replacing personnel on a one-for-one basis with digital workers. What we are doing is allowing ourselves to hire less and get more productivity through the deployment of digital workers and then also perhaps not to have -- to hire for some of the attrition. So we look at this as a win-win for our employees, the digital worker tends to take over repetitive tasks, which gives our employees a more interesting job. And then it also is obviously a cost savings and efficiency process for us and we would hope to deploy, I believe, somewhere around 1,500 to -- I think, 1,350 to 2,700 digital workers in 2023.
Surinder Thind: Got it. And then in terms of just what that means for the expense line item, the comment around a 5% improvement in productivity. Also -- so in terms of when we think about the revenue guide, does that mean expenses should be relatively flat year-over-year, just in absolute terms?
Bill Stone: I think I guess what it implies, and I think, obviously, we have to manage and we are subject to every other just as every other company depending on what inflation is and whatâs happening in the labor markets. But other than that, the productivity we expect out of the deployment of digital workers should offset some of the expenses that we would paid for higher salaries and other expenses.
Surinder Thind: Got it. And then just one quick follow-up, in terms of the commentary around the M&A, any additional color that you can provide there in terms of the types of opportunities you are looking at or the scale of opportunities, any color there would be helpful?
Bill Stone: Yeah. We see a number of dislocations in the fintech space. So thereâs going to be opportunities both large and small. And as always, SS&C is a disciplined acquirer, we are also somewhat of a reasonably voracious acquirer when prices are in our disciplined strategy and thatâs not 10 times revenue. So we think that the market is moving to where we are, we think that we have lots of productivity opportunities and we think we will be a good home for different types of ops companies we could acquire.
Surinder Thind: Thank you, Bill.
Operator: Your next question comes from the line of Alex Kramm with UBS. Please go ahead.
Alex Kramm: Okay. Good evening. Yeah. Hey. Good evening, everyone. Just to follow up on the, I guess, cost and margin question. I think Patrick specifically said 50-basis-point to 150-basis-point margin expansion. Maybe I didnât hear that right, but if thatâs the case.
Patrick Pedonti: Thatâs correct.
Alex Kramm: I guess --yeah. So I think it gets you in EBITDA terms to around 39% at the midpoint. Is the cadence of that and I guess we came back into the first quarter, but can you maybe just lay out any sort of seasonality or also if you are taking measures still this year? Is that a glide higher with revenue growth or how should we be thinking about the cadence of margins if you think about the four quarters?
Bill Stone: Yeah. I think we will have had Blue Prism for a year in the middle of March and we are rapidly deploying digital workers. But the ramp up will be obviously higher as each quarter goes and the savings that we will incur will be heavily weighted probably to Q3 and Q4, just as the use of those digital workers will be full time in those quarters and less so as much in Q1.
Alex Kramm: Okay. Fair enough. And then flipping to the revenue side, I think, 2% to 6% organic, thatâs an acceleration clearly from where we were in 2022. So, I mean, anything to point out, any puts and takes, but in particular, I mean, Healthcare obviously, was a big detractor in 2022. So is this now all in the run rate or is it actually a little bit more bleeding or should that business actually start growing again? And then since you just mentioned Blue Prism, I think, last quarter you actually gave the growth rates and now that itâs flipping organic, it would be very helpful to see how the business is doing on an external perspective. So any other comments on organic would be helpful? Thanks.
Bill Stone: Yeah. Well, again, I think, we have -- go ahead, Patrick.
Patrick Pedonti: Well, just to answer a few of your questions. I think, Blue Prism turns organic in mid-March, right, of 2023. But if you calculate the revenue growth this past year organically, I think, they have averaged in the mid-teens, maybe a little bit higher and they were about 13% in Q4 and we expect them to be around mid-teens in 2023.
Alex Kramm: And then on the Healthcare side, sorry, again, since that was the biggest area of weakness, is that behind us?
Patrick Pedonti: I think the -- on the Healthcare side, there will be a little bit of reduction in the revenue reduce. So I think they were down about 20% in 2022 and might be down about 10% in 2023, especially in the first half of the year with the comparables.
Alex Kramm: Okay. So is that still new client losses and should we just expect that, that business doesnât really grow organically until DomaniRx really kicks in or is it just a holding pattern that clients are in or how are you thinking about Healthcare in general, whatâs going on under the hood?
Bill Stone: Well, we send a lot of things in healthâ¦
Patrick Pedonti: I think thereâ¦
Bill Stone: â¦in Healthcare and I think that we have a lot of opportunity. The question is, obviously, is you have to hit those Healthcare systems on renewal dates. So we are cautiously optimistic that Domani is progressing well and we have some talented people working on that and I think that there is not gigantic optimism for 2023, but we think thereâs a pretty good ramp we can get to in 2024.
Alex Kramm: Excellent. Thank you very much guys.
Operator: Your next question comes from the line of Jeff Schmitt with William Blair.
Jeff Schmitt: Hi. Thank you. Alternative organic growth is holding up fairly well, 4.5% in the quarter. But it looks like private market is growing in the high-teens. So I presume the hedge fund business is it negative growth and maybe if you could speak to the disparity in growth in those two businesses.
Bill Stone: Rahul, you want to take that?
Rahul Kanwar: Sure. I actually think the hedge fund business is slightly positive. You are correct that itâs not -- itâs nowhere near the private markets growth. But we are probably assuming in 2023 and our plan, 2% to 3% growth in the hedge fund side of it and mid-teens or higher in the private markets and thatâs what kind of makes the sum of the two. I would say in commentary and specific on the hedge fund side is our sales performance continues to be strong. I think we have continued to see demand for middle office services and some of the additional modules and things that we have rolled out, including GoCentral. We are obviously not benefiting from a ton of inflows in hedge funds now. But as that turns around, we think we will be well positioned because we are taking market share, and in the meantime, the private markets and private credit businesses continue to become bigger parts of this, and so move the growth algorithm higher.
Jeff Schmitt: Okay. And then a question on the Healthcare business, it seems like itâs the medical business that is sort of you are downsizing and I think thatâs a lower margin business relative to the pharmacy. But I guess my question is, with that sort of going down, is it big enough, is it having a positive impact on overall margins or how big is the margin disparity there I guess?
Bill Stone: But I think Healthcare runs in the high 20s and the rest of the business is running in the high 30s. Is that about right, Rahul?
Rahul Kanwar: Thatâs about right, Bill.
Bill Stone: So and itâs about -- I guess about $280 million, $90 million business. So itâs still a substantial business with substantial opportunity and I just think itâs execution and attention, and I think we are putting execution and attention into that space.
Jeff Schmitt: Okay. Thank you.
Operator: Your next question comes from the line of Peter Heckmann with D.A. Davidson.
Peter Heckmann: Hey. Good evening. I had just a couple of follow-ups. There were a couple of larger customers that we talked about through last year. Can you talk about when you expect them to go live this year and then in terms of the couple of lift outs, you talked about the one in Texas, make sure if you talk about the others. But when we should see some of the bigger customers in the conversion backlog hitting and starting to contribute to organic?
Bill Stone: Yeah. A number of them we think are in the first quarter at the end, I think, primarily in March. Then we have a number of other ones that we would expect to be in the second quarter, and then hopefully, we will be able to with everything that started off and had been signed and closed in 2022 that we would be able to pretty much have them live by the end of the third quarter. So thereâs still substantial amount of sold revenue that we have not recognized yet. And I donât know, Rahul, if you have any more comment on that.
Rahul Kanwar: No. Bill, I think, thatâs exactly right. Itâs throughout the course of the year, some in Q1 and Q2, and we get pretty close to full towards the latter half of the year.
Peter Heckmann: Okay. And then I think you covered it in part, but I guess, how would you characterize the environment for new business in the fourth quarter, was it basically in line with your expectations, better or worse? And then how do you find customers kind of decision making, their willingness to make decisions here in the first half of 2023, given some of the uncertainties?
Bill Stone: Well, I think, Pete, thatâs right on, right? I mean itâs -- I think thereâs people that need to get efficiency. As Rahul said earlier, thereâs an awful lot of opportunities in middle office and I think thereâs a lot of pressure on our customers to get more efficient. And I think they are finding that maintaining software systems and large staffs of operations and accounting people is not necessarily their core competencies and thatâs really our opportunity. And we think we are taking advantage of it and we believe we have the best sales force and that they are executing at a pretty high level.
Peter Heckmann: All right. Thank you.
Operator: Your next question comes from the line of Andrew Schmidt with Citi.
Andrew Schmidt: Hey, guys. Good evening. Thanks for taking my questions. It kind of just drill down on organic growth. This has been asked a few different ways. But if you could just talk about your visibility in terms of the acceleration in growth as your progresses, part of it is obviously Blue Prism coming to the mix and then some of it is go-lives, which you have a pretty good sense, perhaps even a better sense now that implementation resources are a little bit more stable. But maybe talk through if thereâs any other drivers we should think about in terms of your confidence for achieving the organic growth outlook for this year? And then anything about just embedded macro assumptions goes back to other questions that have been asked, but any other color there would be helpful? Thank you.
Bill Stone: Yeah. We have been implementing price increases over the last couple of years and thatâs beginning to bring fruition to us and we would hope that those price increases start to approach 2% overall for the whole business and so that gives us some confidence and some lift. And we continue to bring out new systems and new services and successful new products like Aloha and Singularity and GoCentral are all positive things that drive the business forward and packages of products of ours that we sell like our trust system, combined with our wealth management product Diamond has been pretty effective and we think it will continue to be.
Andrew Schmidt: Got it. Thatâs helpful. And then, last year, obviously, the labor pressure, there were some pressure on implementation time lines and things like that. Has that now stabilized in terms of client implementation time frames and where you are seeing the retention with the implementation workforce, anything to call out there? Thanks a lot.
Bill Stone: Well, we all work here. So we are focusing on it and we have talented people that have hired more talented people and that group of people is focused on it and we are executing in an increasingly higher level. But these are big complex implementations and you have -- still have some work from home issues and other things that cause collaboration to be a little bit more difficult and stretch out some time lines. But I would say that we are optimistic that we are getting increasingly better, and then hopefully, those results will start showing up in our quarterly financials.
Andrew Schmidt: Perfect. Thank you very much, Bill.
Operator: Your next question comes from the line of Kevin McVeigh with Credit Suisse.
Kevin McVeigh: Great. Thanks so much. Hey. So again nice acceleration on the organic growth in 2023. Beyond Blue Prism, is there any way to disaggregate kind of the components that get to the 2% to 6% in terms of some of that Blue Prism, some of thatâs pricing, some of its retention, is there any way to maybe just ring fence those numbers a little bit?
Bill Stone: Well, I think we have talked about it. I think you got to allocate it probably to four buckets and you can put 1% to 2% to 3% in each one of the buckets. But I think it is price increases, itâs new business sold, itâs clearing the backlog and its new products and services that we are bringing to the market. So we are saying 2% to 6% and we would love to guide you to just 6%, but we want to be cautiously optimistic. And thereâs still a lot of things happening in the world, whether itâs the war in Ukraine, itâs inflation in the United States, itâs labor issues here in the United States, thereâs weakness in Europe and in the U.K. and so you heard a lot of things and we are trying to give you as much color as we can without trying to act like we have a crystal ball because we do not.
Kevin McVeigh: Thatâs helpful, Bill. And then maybe just -- it sounds like Blue Prism, you exited 2022 at 20% EBITDA, any sense of how that should scale over the course of 2023?
Bill Stone: I think we have said over the last year that we would expect Blue Prism to increase their margins in the 500 basis points to 1,000 basis points in 2023. And I will ask Rahul to add more color than thatâ¦
Rahul Kanwar: Yeah. Yeah.
Bill Stone: â¦but I think thatâs right.
Rahul Kanwar: No. I agree with that, Bill. I think the goal for us at the end of 2023 would be to exit about a 30% margin. So thatâs the, obviously, the upper end of what Bill just said.
Kevin McVeigh: Thank you.
Operator: Your next question comes from the line of Terry Tillman with Truist Securities.
Terry Tillman: Yeah. Thanks for taking the question. I guess the first one, Patrick, for you in terms of, I was trying to write this information on -- at a fast pace, but I may have missed some of it. The 3.7% organic growth for Financial Services, was that 4Q or the full year?
Patrick Pedonti: I think that was a full year.
Terry Tillman: Could you tell me, Patrick, or give me a sense how it was in 4Q?
Patrick Pedonti: I have so -- Iâd have to look it up. Let me look it up if you have got another question.
Terry Tillman: I do. Okay. Thanks for that. Hey, Bill. Nice to talk to you again. I was curious about the private credit opportunity. You all called that out in the prepared remarks. Is there anything you could share with us in terms of important technology milestones in 2023 and what about selling? And could this start to become a monetizable setting in a meaningful way in 2023 and just whatâs that market likeâ¦
Bill Stone: Yeah.
Terry Tillman: ⦠from just a size or a scale perspective?
Bill Stone: Well, welcome back, Terry, we havenât heard from you in a while.
Terry Tillman: Thank you.
Bill Stone: Welcome the Truist. And I would just say that, private credit is really -- you look around the world and you have companies like Apollo that has $550 billion under management and they also own the fee with another $330 billion. And you know the other large scale private equity firms and the deal is getting done like the -- I think the recent deal out of Emerson Electric or somebody where Blackstone did completely private spin out of a big division and I just think the private markets are becoming to rival the public market. So thereâs a lot of stuff that we have done and Rahul talked about it in his remarks about signing a bunch of our pieces of technology together and really distancing ourselves from our competitors with what our capabilities are. And I think thatâs why you see that growing as nicely as it is and I think that thereâs a number of funds better pivoting towards private credit and other private fund type investments, and I think, thatâs going to continue. Does that help.
Terry Tillman: Yeah. Got it. And maybe just one more -- yeah. It did. I had Patrick off on a goose chase.
Patrick Pedonti: I got the number for you, Terry. So the number forâ¦
Terry Tillman: Okay.
Patrick Pedonti: â¦Q4 for the Financial Services, excluding Healthcare, organic growth of 1.3%.
Terry Tillman: Wonderful. Okay. Thank you all very much.
Operator: Your next question comes from the line of James Faucette with Morgan Stanley.
James Faucette: Great. Thank you so much. You guys -- Bill you mentioned that you are seeing -- you want to be acquisitive and you are seeing some dislocations in the fintech space. I am wondering if you can talk about a little how you are thinking about potential structure of those deals financially, especially since the cost of capital now is obviously higher than has been at least pre-pandemic, et cetera. Just wondering if that changes the way that you have to approach those deals, what kind of companies you can look for and what would be a targeted structure for you there?
Bill Stone: Yeah. I think I -- I think that thereâs still money to be had out there and I donât think that you have to get to cute with the structures and we like to have a capital structure that is pretty easy to understand. And we have operated under quite a bit higher interest rates than what we are seeing today, even though interest rates today are quite a bit higher than they have been for the last five years to 10 years. And so I donât think that we would structure them very different. We might have a partner or we might have a large scale private fund or large scale pension be a big supplier of credit to us or even some equity. We give it at the right price, which was notâ¦
James Faucette: Got it.
Bill Stone: ⦠where we are now.
James Faucette: Got it. Okay. Thatâs really helpful. And then you mentioned that you felt like you were taking some share in the hedge fund space. Is this as, and I guess, kind of what I am looking at is one of your primary competitors, at least in the hedge fund launches has been going through some management transitions. How much of an opportunity is that presented and has that been chance for Eze Eclipse to grab some share in business?
Bill Stone: Well, we think we have very stuck pipelines. The question is, is obviously closing them, and as you well know, right, when the markets are as choppy as they have been for the last couple of quarters, you donât have nearly as many fund launches as you have had in the past. So we are cautiously optimistic that we can ramp our Eclipse product and then also tie in even with our fund administration capabilities. And so, yeah, we are optimistic about that, and yeah, thatâs just one other fintech company that has a few challenges.
James Faucette: Great. Hey. I appreciate that color, Bill. Thanks.
Operator: There are no further questions at this time. I will now turn the call back over to Bill Stone.
Bill Stone: Yeah. We really appreciate everybody getting on the call today. I would like to recommend that you recognize that the $518 million in adjusted EBITDA is the third largest in our history, which is 36 years. So we are pretty proud of that, we think we are doing the right things, we are thinking that we are keeping our nose the grindstone and getting stuff done, and I appreciate people that work with us and make things happen. And we are optimistic that when we talk to you at the end of Q1 that hopefully we have a positive story to tell. Thanks again.
Operator: This concludes todayâs call. You may now disconnect.
