Why SS&C Technologies Holdings Stock Skyrocketed on Friday
Key Points
Both revenue and adjusted profitability rose at double-digit rates in the second quarter.
The pair also beat the consensus analyst estimates.
The under-the-radar tech stock SS&C Technologies Holdings (NASDAQ: SSNC) was a double-digit winner on Friday. Investors eagerly bought shares of the company, which specializes in software solutions for healthcare and finance sector clients. An earnings-beating quarterly report had much to do with this surge.
Strong quarterly bounces
SS&C took the wraps off its second-quarter numbers just after market close on Thursday. Its revenue for the period was $1.7 billion, which was more than 10% higher year over year. More impressively, net income not under generally accepted accounting principles (non-GAAP, or adjusted) advanced by 13% to almost $426 million, or $1.76 per share.
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That meant a double beat on consensus analyst estimates for SS&C. Collectively, prognosticators following the stock were expecting $1.66 billion on the top line and $1.68 per share for adjusted net profit.
In its earnings release, the company said that it was firing on all cylinders. It quoted CEO Bill Stone as saying that its growth was fueled by "strong sales, robust renewal performance, healthy retention, and steady margin expansion."
"Our clients continue to invest in the relationship because our expertise, technology, and innovation are essential to their operations," he added.
A resilient operator
Stone and his team proffered guidance for both the current (third) quarter and the entirety of 2026. For the latter period, SS&C is forecasting revenue of just over $6.67 billion to more than $6.83 billion, with adjusted net income landing at $1.67 billion to $1.77 billion ($6.93 to $7.25 per share). The consensus analyst estimates are, respectively, $6.75 billion and $6.89 per share.
SS&C's Friday bounce was especially notable because software stocks have been under pressure due to fears that companies will devote more of their IT budgets to artificial intelligence (AI) hardware. Yet the company's trailing results, and its confident guidance, indicate that it's got compelling products that customers are willing to keep paying for.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends SS&C Technologies. The Motley Fool has a disclosure policy.