SS&C reported healthy fourth-quarter results that were roughly in line with expectations on the top line but above expectations on the bottom line. The company delivered revenue of $182.5 million (growth of 6.3% year-over-year), slightly below consensus at $182.6 million, and non-GAAP EPS of $0.53, which was a penny ahead of the Street ($0.52).
The software-enabled services and software license segments continue to benefit from the GlobeOp and Portia acquisitions, experiencing 7% and 12% year-over-year growth during the quarter, respectively. In addition to the strong top-line performance, the company drove over $20 million in cost savings from these acquisitions. This is a very strong start to achieving the original target of roughly $25 million in savings over three years.
We therefore suspect margins will improve throughout fiscal 2014. In addition to strong growth in the company’s annual run-rate business (up 5.9% year-over-year), we were pleased to hear that one of the core underlying business metrics, assets under management (AUM), increased roughly 31% from 2012, to $506 billion. We believe that the strong performance in these metrics demonstrates that customers are placing increased importance on and trust in SS&C and its products, as they continue to realize the cost benefits and become more comfortable with outsourcing parts of their noncore operations.
Analysts are encouraged by the larger deal sizes in the pipeline and expect the recognition of deferred revenue from these deals and a seasonally stronger regulatory business to drive revenue reacceleration throughout 2014. In addition to the positive commentary about pipeline activity and expansion, we were pleased to hear of a handful of operational developments. First, the company continues to invest in new product initiatives with several new releases including its European Market Infrastructure Regulation (EMIR) product, which already has 20 live customers, and Alternative Investment Fund Manager Directive (AIFMD) reporting solution. These solutions focus on the increasingly complex regulatory environment abroad. In addition to the increased investments in its product portfolio, the company plans to continue to hire aggressively in its salesforce. The company has 110 individuals within its salesforce, but management plans to increase that number by 20%-30% throughout 2014.
Management provided reasonable first quarter and full year 2014 guidance, with the midpoint of revenue guidance slightly below Street expectations while the bottom line was guided above. Full-year revenue is expected to be between $755 million and $775 million (growth of 6%-9%). The Street had been modeling $772 million. Full-year adjusted net income guidance was above the Street’s expectation at $195 million-$204 million (the Street was looking for $193 million). Despite the somewhat conservative fullyear revenue guidance (given the strong deal and pipeline commentary), we believe investors will be satisfied with the better-than-expected adjusted net income guidance.