Good day, ladies and gentlemen, and welcome to SS&C Technologies Fourth Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] And as a reminder, this conference is being recorded. Now I would like to turn the conference over to Justine Stone. Please go ahead.

Hi, everyone. Welcome and thank you for joining us for our Q4 and full-year 2017 earnings call. I'm Justine Stone, Investor Relations for SS&C. Today on the call with me is Bill Stone, Chairman and Chief Executive Officer; Norm Boulanger, President and Chief Operating Officer; Rahul Kanwar, Executive Vice President and Head of SS&C GlobeOp; and Patrick Pedonti, SVP and our Chief Financial Officer. Before we get started, we need to review the Safe Harbor statement. Please note that various remarks we make today about future expectations, plans and prospects, including the financial outlook we provide constitute forward-looking statements for the purposes of the Safe Harbor 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 factor section of our most recent annual report on Form 10-K, which is on file with the SEC, and can also be accessed via our Web site. These forward-looking statements represent our expectations only on of today February 15, 2018. While the company may elect to update these forward-looking statements, it specifically disclaims any obligation to do so. During today's call, we'll be referring to certain non-GAAP measures. A reconciliation of these non-GAAP financial measures to comparable GAAP financial measures is included in today's earnings release, which is located in the Investor Relations section of our Web site at www.ssctech.com. I'll now turn the call over to Bill.

Thanks, Justine, and thanks everyone for being with us on our fourth quarter and 2017 year-end call. We're proud to report record revenue and earnings for both the fourth quarter and the year, and adjusted consolidated EBITDA margins over 43%. That's 43%. We now have annual adjusted revenue over $1.68 billion; over $695 million adjusted consolidated EBITDA, and over $470 million in operating cash flow. We earned $1.93 in adjusted diluted earnings per share, up from $1.64 in 2016. And for those of you that would like 2015, at $1.33. But from '16 to '17 that's a 17.7% increase. SS&C success in 2017 was widespread around our organizations. The integrations of Citi Alternative Investment Services, Conifer, and Wells Fund Administration Businesses are nearly complete with EBITDA margins approach 40%. We acquired Modestspark, an enhancement to our Black Diamond platform and CommonWealth Canadian fund administrator. Product adoption was strong across all our addressable markets. Geneva continues to be a market leader for complex asset managers and fund administrators. Technology and services targeting loan portfolio accounting including SS&C Primatics, Precision LM, and our loan and credit fund administration systems have been major contributors to the company's growth. In fund administration, while hedge funds have regained strength in 2017, our private equity business and our real assets remained our fastest growing market. A few weeks ago, we announced our plan to acquire DST Systems, a publicly listed company providing solutions in the financial services and healthcare industries. The acquisition is consistent with our capital allocation strategy, and we expect to close in Q2 or Q3 of this year. And now, I'll turn it over to Norm.

Thanks, Bill. SS&C had a strong fourth quarter. We had better focus and execution across the business as a whole which led to our strong results. The fourth quarter typically sees a large number of licensed deals and signed several perpetual licenses across our institutional investment management businesses. Our Asia Pacific operations continue to grow, and we are adding a new client in that region every quarter. The adoption of hosted service and SaaS ASP delivering models are trending upward, reducing our clients' operating costs and giving us more return on revenue. Demand for our products and services throughout the financial industry remains high. SS&C Primatics is one solution we expect growth from in the near-term. The current expect loss CSO requirements are mandatory for banking institutions by 2020. Yet an SS&C survey revealed that, as of September, only 8% of banks were implementing the requirements. 46% of the banks were in the information gathering and planning stages. SS&C Primatics is one of the only full service solutions on the market and is well received by our current client base. Now, I'd like to review some of the key deals for Q4. A Swiss-based private bank chose MarginMan for their trading operations at their Hong Kong and Singapore branches. Financial technology firm chose to partner with SS&C for our M3 product, the market leader in commercial paper processing. A French asset servicer purchased high portfolio license for new modules needed to support their global platform. An investment manager based in Connecticut bought a term license for GWP, Recon, and Evare. They needed the ability to aggregate data from a large number of custodians in its high volumes of accounts to measure individual performance. An existing client, a Canadian bank, required expansion of their GWP ASP services to support their business. And Australian insurance company bought a license of our reporting tool, Vision FI. Functional strength of the product enforcing capability led to the win. An $8 billion asset manager with over 4,000 accounts bought a bundled solution of SS&C Advent parts, including APX and Moxy. $4 billion hedge fund and an existing SS&C GlobeOp fund administrator client chose to license Geneva as a hosted solution for their internal accounting. A $5.4 billion financial advisor, an Access client, since 2003, upgraded to APX to support further. Three existing SS&C Primatics clients continue to engage SS&C to support their loan portfolio accounting and valuation, and buying license and service deals or multimillion dollar transformations. And with that I'll turn it over to Rahul to take you though alternatives business.

Thanks, Norm. SS&C GlobeOp saw a 12% increase in revenue for the quarter ended December 31, 2017, compared to the same quarter in 2016. Our position in the alternatives market continues to strengthen as we add talent capability and functionality both organically and through acquisition. Our acquisition of CommonWealth Fund Services gives us added expertise in Canada and a larger presence in the Toronto area. We have made great strides with the integrations of Citi, Wells, and Conifer, and the acquired senior executives and their teams have played a big role in this year's success. These acquisitions have added experts, depth, and geographical coverage and additional services to our offering, and allow us to provide more value to our customers. We continue to develop new products and services. In addition to providing us with differentiators in the sales process, these products and modules are extensively used by our customers and help us become an integral part of their workflow. Client usage on some of our largest customer-facing applications has doubled from this time a year ago, a positive sign for how our technology is being received. Now, I will mention some key deals for Q4. One of Canada's largest wealth management firms with investments across equity, fixed income, and alternative assets outsourced their fund administration operations with SS&C. A fixed income spin-off from a large client managing nearly $2 billion in assets selected SS&C as their fund administrator. A bulge bracket bank's investment management arm chose SS&C's middle-office services for their U.K. operations. A $20 billion private equity firm based in the Midwest chose SS&C for private equity fund administration. I will now turn it over to Patrick to run through the financials.

Thanks, Rahul. Results for the fourth quarter of 2017 were GAAP revenue of $438.4 million, GAAP net income of $165.3 million, and diluted EPS of $0.77. Adjusted revenue was $439.4 million excluding the adjustment for the acquired deferred revenue in the Advent acquisition. Net income for the fourth quarter of fiscal 2017 includes a tax benefit for the estimated impact from the enactment of the Tax Cuts and Job Act in December 2017 related to the transition tax on accumulated overseas profits and the revaluation of our U.S. deferred tax assets and liabilities. Approximately $121.6 million in tax benefit was recorded related to revaluation of U.S. deferred tax asset. And this was offset by approximately $33.6 million in tax expense that was recorded for the transition tax on overseas earnings. And that resulted in a net tax benefit of $88 million. The impacts of tax reform may differ from this estimate, and we'll continue to refine them as we go through 2018. Overall, we had a strong quarter. Adjusted revenue was up 8.6%. Adjusted operating income increased 13.7%, and adjusted EPS was $0.54 or a 17.4% increase from 2016. The acquisitions of Modestspark, CommonWealth, and partially from Wells Fargo Fund Services, Selentica, and Conifer contributed $16.4 million in revenue in the quarter. Foreign exchange had a favorable impact of $2.6 million or 0.7% in the quarter mostly due to the strength of the British pound, the euro, and the Canadian dollar. And then adjusting the prior year for only acquired Citi Fund Admin revenue and adjusting for the impact of the loss Advent revenue as a result of the acquisition, organic growth on a constant currency basis was 5.5% in Q4. Adjusted operating income for the fourth quarter was $182.4 million, and increased 13.7% from the fourth quarter of 2016.…

Thanks, Patrick. Thanks everybody for being on the call again. As you can see, we have some momentum and we've been able to find a very nice acquisition in DST. We are busy shaping our plans, and we expect a smooth transition. We have strong pipelines, new products and services coming online, and a number of additional acquisition candidates. With that, I will open it up to questions.

Thank you. [Operator Instructions] Our first question comes from Mayank Tandon of Needham. Your line is now open.

Good evening. Bill, I just wanted to get your thoughts on the environment coming into this year in terms of just the big deal pipeline, the potential for conversion of that pipeline versus, say, 12 months ago. And especially in terms of the size and scope of opportunities you're seeing this year versus, say, 12 months ago.

Yes, Mayank, I think we have a number of big deals in the pipeline from -- probably the big deals are starting at $7 million or $8 million and go up to say $20 million. I would say that we have a stronger pipeline going into '18 than we had in '17. And I think that our notional sales in '17 in think were up, say, 20% from what they were in '16. So we don't get all that revenue in the year that we sell. But we sold a lot of big deals in 2017, and we think we'll do the same thing in 2018.

And Bill, what is driving that increase in pipeline and just the environment versus last year? Like why do you feel better? It sounds like you feel better this year versus last year. And last year you had a good year as well. So just wanted to get a sense of what are the main catalysts that are driving the improvement potentially in your business.

Well, I mean, it's February of 2018, and in February of 2017 Tony James and Warren Buffett and a crowd of others said the hedge fund industry was going out of business. You know that's a pretty tough backdrop in which to compete. Today, I think you might have seen our performance index that we released yesterday was up 3% in January. And I think that there's just a -- obviously the market is up 6,000-7,000 points. There's confidence in the country. And when there's confidence people make decisions. And they want their processes, and procedures, and systems, and compliance, and risk to be better. And they want the experience for their investors to be better. And when they want all that to happen we're the place for them to come to. And that's why we're the largest in the world now.

Great. That's helpful. Thank you.

Thank you. Our next question comes from John DiFucci with Jefferies. Your line is now open.

Hey guys, this is AJ Ljubich on for John. Congrats on a strong quarter. I was wondering, if we remember back to the last quarter, you had a number of deals split than it appears given the robust top line results that you did see some of those deals close. If you could give us some color on what percentage you actually were able to close, and what in the quarter you were able to sort of improve upon in terms of execution.

Yes, we -- this is Norm. There's a couple of ways to measure the number of deals versus revenue. But I would say about half we closed. And we did certainly focus more on the sales process than the individual sales calls that myself and Rahul were doing with our team. And we continue to do those things. And then, look, there's a lot of things that go into being successful for the quarter, but paying attention, and focus, and showing a sense of urgency is a big part of that. And I think we did that well in Q4, and we're going to continue to do that going forward.

Great, thanks. And just one quick follow-up, on the operating cash flow, I mean the number for the year I think sort of missed the low end of guidance. But I believe there are some one-time type of tax impact there. Can you just walk us through what that impact was, and if there was anything else that sort of held back the cash flow from where you thought it would be?

Yes, this is Patrick. I think what we did is, I think as you know, the new tax reform act required companies to make a tax payment for any cash balances overseas. So to kind of reduce that tax liability we deliberately made some payments earlier than we would have, so that kind of impacted operating cash flow for the quarter, but it reduced our tax liability.

Okay. And that would be the only sort of one-time impact that did impact the cash flow in the quarter?

That's right. I think we're showing -- expecting approximately $100 million improvement in 2018 in cash flow.

Got it. Great, thanks very much.

Thank you. Our next question comes from Alex Kramm with UBS. Your line is now open.

Yes, hey everyone. Maybe on the guidance, I guess for Patrick. I think at the midpoint of the revenue guide is I think 5.2%. Can you break that down a little bit between organic, FX, and I think there's still a little bit of acquisition revenue left as well. And while you're on FX maybe can you tell us what kind of currency rates you're using in your forecast.

So, at the midpoint of the guidance for the full-year it's about 4.8% organic growth, and then the range is 3.9% or 5.6%. We expect about -- I mean, we're basically using current average FX rates over the last week to 10 days for -- we're not predicting rates for 2018, so we're using what the average rates were over the last 10 days. And so we expect to have about 0.4% to 0.5% negative impact on growth on FX. And then the acquisitions are pretty small. They might contribute $4 million or $5 million during the year.

Okay, great. And then just secondly, I thin you made a comment in your prepared remarks that the tax rate, you expect 23% but you're still doing work on that. Can you just elaborate a little bit? I mean, I don't know, this was maybe a different comment, but are there still opportunities…

Yes, that was a different comment. I mean we're fairly confident with the -- our best estimate at this point is that tax rate will be 23% next year. And it could fluctuate a point or two up or down, but we think somewhere around 23%, what was an estimate far as the benefit we booked in December for the tax reform act on deferred taxes and unremitted earnings overseas. So, we booked an estimate on that, and we will find that $88 million over the year as we gather more information, but that won't affect the 23%.

All right, fair enough. I'll jump back in the queue. Thanks.

Thank you. Our next question comes from Chris Donat with Sandler O'Neill. Your line is now open.

Good afternoon. Thanks for taking my questions. Wanted, in term of the guidance, to see if I can understand the sequential decrease in the first quarter of '18 from fourth quarter of '17 in terms of revenue, is that a function of the perpetual licenses which tend to be stronger in the fourth quarter or is there something else going on? Just trying to understand what's causing the downtick in revenue in the first quarter.

I think primarily if you went back over the last several years you'd see that this is pretty standard. The fourth quarter tends to be our strongest and the first quarter tends to be a little bit softer. At the same time, right, I think the number that we're looking at from Q1 of 2017 is $404 million. And I think midpoint is $432 million here. So we're still growing, and we think we have a reasonably ambitious target in Q1, and we're working hard to get it.

Okay. And then, Bill, in the text for the press release you mentioned progress on synergies. Was just curious of that's mostly with the fund administration side or anything legacy from Advent or anything specific to call out on the expense synergies realized?

I think that most of it had to do with fund administration businesses, so Citi, Wells, and Conifer. Although there are probably couple other things that we did. But yes, that's the bulk of it.

Okay, thanks very much, Rahul.

Thank you. Our next question comes from Peter Heckmann with Davidson. Your line is now open.

Hey, good afternoon. Could you give us an update, Rahul, on the AUA mix, if the mix is shifting it sounds like private equity is growing very nicely in real asset, but just a quick update on the mix, and then how we're thinking about pricing on some of the bigger deals. It seems anecdotally maybe some of the prime brokers got a little bit more aggressive. Could you update on those two things.

Sure. So total AUA at the end of Q4 was $1.52 trillion, and private equity is roughly a third of that asset mix. And like Bill said, the private equity and real assets are growing faster than hedge funds although hedge funds did come back. And I think from a pricing standpoint we really spent a lot of time and effort and added products and services and capability. So when we go into large investment organizations we're typically able to service in a broader and more comprehensive way than others. And we find that that helps us hold to our pricing. So we're not really seeing downward pressure.

Okay, that's helpful. And then Norm, could you maybe give us an update on growth just within the Black Diamond product. And I believe the Modestspark acquisition was done there to supplement -- the existing active clients. Do you think that'll maybe stem the growth of Black Diamond or you think that continues at a pretty good clip?

No, I think we're still very bullish on the Black Diamond business and its future growth. In this quarter, we actually got growth across many of our -- actually almost every one of our major businesses contributed strongly to the quarter. It was very positive.

Again, Peter, I think we're still looking at Black Diamond to grow 20% or better.

Great, okay. I appreciate the update.

Thank you. Our next question comes from Rayna Kumar with Evercore. Your line is now open.

Good evening. Thanks for taking my question. Bill, could you talk a little bit about your outlook for hedge fund formation in 2018, and could you also call out the organic revenue growth rate specifically for the alternatives business in the fourth quarter?

This is Rahul. In terms of hedge fund formation I think we're pretty optimistic. We're seeing a number of people spinning out of other organizations and starting funds. And we've won several of those, and we have others in our pipeline, so we feel good about that. I think organic revenue, Patrick, you can confirm, was 7% for the alternatives business in Q4.

That's right.

Great. Thank you.

Thank you. Our next question comes from Brian Essex with Morgan Stanley. Your line is now open.

Hi, good afternoon, and thank you for taking the question. Bill, I was wondering if you could maybe comment. I know it's only been a couple of weeks, but with regard to DST, commentary that you maybe be hearing from customers that you may have overlap with their -- just the overall environment in terms of revenue retention. And then any work that you're doing ahead of the transaction, either on the DST side or the assets and fee side with regard to positioning your sales force adjusting for potential synergies prior to the confirmation of the transaction.

Yes, Brian. I think that we're full bore on the planning, and trying to get our ducks in a row so that immediately upon closing we will be in a position to kind of occupy our new house. Right, and be able to really find the best spots in which to cross sell and up-sell and see where we can add technological improvement, and where they can add technological improvement to us. So we're optimistic about what we can do there. We've gotten to know some of the people and we're impressed with their people, and we think that -- we're cautiously optimistic on these things. And we've done a bunch of acquisitions, and we're not precipitous, we're methodical. And I think that's the right approach. We're spending $5.5 million of our shareholders' money, and we have been, and we intend to continue to be good custodians of that. So we're going to make sure that we protect that, and that we don't do anything that people say, "You know, they're off their rocker." We're not doing any of that.

I guess the follow-up on, conversations with customers; I know that they can have some high customer concentration. They've lost some big customers in the past. I mean have you started to have conversations with their clients and you feel good about what's coming over in terms of your ability to retain that business?

Yes, we've had some conversations. Obviously it's still quite preliminary. But we've had a number of conversations with a lot of their biggest clients who are anxious. But they also know that they can talk to other parts of their business. Often there are a lot of our large scale clients that we have around the world. And I think that in general our acquisitions result in improved customer satisfaction, a broader range of capability, and a deeper and broader depth of fundamental expertise in these various intersections of the financial services industry. And I think that when you look at a strategic acquisition and a strategic acquirer like us, it's all about what are all the alternatives. And most high quality companies like DST don't really want to be acquired by private equity. They prefer to be bought by strategic. And the customers prefer that the strategic know something about the businesses that we're acquiring, which we have a deep understanding of this business.

Great. Good color, thank you.

Thank you. Our next question comes from Sterling Auty of J.P. Morgan. Your line is now open.

Great, thanks. Hi guys, this is Jackson Ader on for Sterling tonight. Norm, I think you mentioned a couple of times in your prepared remarks about the SS&C Primatics solution for banks. So how big can that total opportunity be, and where do you feel like we are into that opportunity, either percentage or on an innings basis?

First of all, I think there's a lot of opportunity in that space. I think there's a lot of upside for the size of that business. Maybe…

But I mean is there any -- sorry, go ahead.

I think it has a chance to get to $500 million over time, I think. I mean, I think we have a very competitive solution there. It's a very highly expert-driven business which is in our sweet spot, and it's a matter of continuing the focus on rounding out our services and improving our sales organization and driving that opportunity.

And just to comment. We work closely with Primatics, and it is purely in the banking business, right. And they are still 9,000-10,000 banks here in the United States, and that that's going to drive, obviously with, like Norm said, that $500 million, that's going to mean we have to do really great execution. So we've got a good team at Primatics. And we have high expectations. And I think that it's a question of getting people to adopt our evolved product and our SESO [ph] solution. And I think that there's an awful lot of banks that need this solution.

Sure. Great, that's helpful. And then one quick follow-up for you, Patrick, the 606 impact, I just want to make sure that I heard you correctly, it's a $40 million headwind here in 2018 and $20 million thereafter, or $20 million in 2019 and then you'll be finished with that retained earnings slush?

No, it's $40 million in vigorous; $40 million in 2018. By quarter, it's approximately -- starting with Q1 is personally $12 million, $10 million, $7 million, and $11 million approximately. And then, the $21 million is '18 and '19, is '19 and '20; I don't have the breakout between the years.

Okay, all right. Thank you. That's all from us.

Thank you. Our next question comes from Chris Shutler with William Blair. Your line is now open.

Yes, good afternoon. Can you just talk about what's in the guidance for organic revenue growth in the alternatives business for 2018?

Go ahead, Patrick…

It's approximately somewhere between 5% and 6%.

Okay, perfect. And then, just a couple others on the guidance just so that we're clear, so that's the kind of the pricing and inflation impacts you're expecting in the guidance, and then I guess stepping back, how are you thinking about adjusted EBITDA that's in that guidance, little bit difficult to get to with the -- we just don't have all the pieces. Thanks.

I think we -- on the cost side, we expect somewhere around 3% inflation on the cost side. And at the midpoint of the guidance, the EBITDA margins are little over 42% for the year.

Little over for the year, right, okay, got it.

For the year, yes, which is an improvement from about 41 -- little above 41 in'17 for the full-year.

Got it. Okay. And then just one more, the software-enabled services revenue in the quarter, I think it was up around 30 basis points or so quarter-over-quarter. I'm trying to understand why it was up that amount given the strength in the fund admin business and the continued growth, and the AUA numbers, is it simply kind of going back to Peter's comment earlier, is it more just growth and hedge funds, or private equity rather than hedge funds, or what else is going on there, because it does feel like you would might maybe expect it to be a little bit higher. Thanks.

Well, I think we went from $257 million to $282 million in software-enabled services. I guess $25 million on $257 million. That's about 10%. Is that the number the line item, the top line item in revenue?

Yes, I guess I was just looking at it sequentially, Bill, trying to strip out any kind of acquisition activity.

So, you mean from Q3 to Q4?

Correct.

Well, I don't have Q3 in front of me.

It went from $282 million to $283 million. There's really very little acquisition in there, right?

Right.

It's just -- with fund admin being strong I guess I just thought it would have been up a little more, but I know it's vary quarter-to-quarter, I just…

Yes, I think here also some seasonality in terms of timing of tax work in particular but some special item even within the fund admin business.

Okay, thank you.

Thank you. Our next question comes from Patrick O'Shaughnessy with Raymond James. Your line is now open.

Hey, good afternoon. So, Bill, last couple times you guys did take deals -- Advent and GlobeOp, I think there was some commentary around organic growth slipped a little bit, but as you are focused on closing those deals, to make sure that it works. So, this time around with DST, how do you make sure what sort of processes are you putting in place to make sure that organic growth stays where you wanted to be?

Hi, I would say, Patrick that mostly that comes through a concerted prior effort. Right? I mean, come on, we're spent of $5.5 billion, and it's $2 billion in revenue. The focus of this management team is not screw that up, right? So if our organic revenue was to tick down three tens of a percent, but we blew it away on synergies and stuff with this, I mean I'm a pretty serious shareholder of this place and I think that I for one would be a pretty happy shareholder, but again I don't -- we have momentum, right, so as long as we can fire through on that I think we're in good shape, but we're bringing 16,500 employees and contractors into this business. Like I said, $2 billion in revenue, and we have to put some focus here, and I think that while organic revenue is the absolute manna for heaven from for all the analysts we are going to be about a $4 billion revenue company. And if we can manage to move this to our traditional earnings and cash flow characteristics, I think that there's an awfully big upside here.

All right, fair enough. And then, Rahul maybe question for you, so of your growth that you guys saw in the fund administration business in 2017, and it looks like there is high single-digits on average over the course of the year. How much of that would you say was from general market appreciation hedge funds and private equity? And how much would you say is from client wins and other areas?

I'd say most of it. At least two-thirds is probably from new client wins, and the rest is probably current clients subscribing to new services adding funds or taking some additional module.

Great, thank you.

Thank you. And our final question is a follow up from Alex Kramm with UBS. Your line is now open.

Hey, thanks for squeezing me in again. Maybe I missed this, but for the first quarter, Patrick, can you also run down the organic acquisition FX contributions that I asked about the full-year earlier?

Sure. So, at the -- well, in the range, okay, the organic growth is 6.3%, 3.8% on the low-end of the range, and average is 2.5% at the midpoint of the range for Q1. And the FX is pretty similar. It's negative 0.5%. And there's $1.5 million or so of acquisition revenue in the quarter.

Great. And then, just I guess my last question on the day, just coming back to the investment management business for a second, if I look at your disclosures in the presentation, like, with the percentages of the different businesses, I get to the investment management business shrinking 4% last year. So, maybe just -- when you put it altogether and looking for 2018, Bill, like, what's your confidence level that you can actually grow that business again? I know you mentioned a couple of things, but I think you've also talked about the new product launches that you're excited about. Obviously you're still hoping to turn around the Russell arrangement into more customer wins of that size. I mean, any update you can give us on is the management actually growing again next year?

Well, I think Q4 was the best quarter that the investment management side of business is having in a number of quarters. And I think that we have to build on that momentum. We have some really talented people that we brought into the business, and guys like John Underhill and Justin Nottag are doing a good job for us. And we have high expectations that they're going to continue to do a good job for us, and we have -- again, we were off to Q1 in a pretty strong faction in that business. And again, it's halfway through and we'll have to see what happens in next 35 days, but we're cautiously optimistic, Alex, that there's a lot of opportunity in that space. And we also think that DST has 48 of the top 50 institutional investment managers, and we think we're going to have increasingly tight relationship with those people. And that generally offers you opportunity to show your entire set of capability.

I'll squeeze one last one, and real quick; you made a comment at the beginning about M&A and still looking and still seeing deals out there, I mean you just said a couple questions ago that you've got your hands full with DST or you expect to have your hands full of DST, I mean any other comments there, I mean you're going to be fairly levered, but are there still like hedge fund administration assets develop there that more discussions happening? Any incremental color and readiness I guess would be helpful.

Yes. I mean, I wouldn't say there's another DST out there, but certainly we're not closing shop. I mean we talked to people all the time, and you know, bringing an incremental technology or bringing another incremental fund administrator, I don't think that's necessarily something that would take a tremendous amount of our management comment, right? So we're still looking at these attractive opportunities, and we have plenty of flexibility to do tuck-in acquisitions, and I think we would continue to do that.

Excellent, thank you. Have a good night.

Thank you. We do have another follow-up from John DiFucci with Jefferies. Your line is now open.

Hey, guys. This is AJ Ljubich on for John. This is for Patrick. And sorry if I'm just confused or sort of missed it, but upon ASC 606, if I understood correctly, your guidance is under 605. Some of the commentary you gave is how you expect to be impacted one 606 is actually implemented probably next quarter, so I have that correctly or what's the sort of your plan for implementation there?

So, our guidance for all new business is on the new revenue standard 606. The only thing we didn't reflect in the guidance just so you have a little bit of comparability till last year is the $40 million of revenue we're going to lose that was in deferred revenue on 12/13/17. We are required to write off the retained earnings. So, on 11/18, any term license that you have in deferred revenue, you're going to have the write-offs, the retained earnings, and that's the $60 million of which -- it's going to impact us $40 million in 2018. And then, going forward on term licenses, you got a determined fair value of maintenance and fair value of the term license, and then you recognize term license upon signing the deal, and you recognize the maintenance portion ratably. So, the guidance we provided is based on new 606. The only thing we didn't reflect is the deferred revenue for the $40 million that we're going to have to write-off. So, GAAP revenue will be a little bit lower.

Got it. So, for comparability purposes, that was the right way to think about it, that if you added that $40 million back to the guidance that would be comparable to 605?

It's going to be fairly comparable. I mean it's going to depend on -- you mean comparable to 2017, correct. It's going to be fairly comparable. I mean it's going to be very difficult because it's going to depend on how the contracts are structured and exactly, but it's fairly comparable. We didn't go back and take our forecasts and restructure completely on the old revenue stand.

Got it. Okay, thank you.

Thank you. With no other questions in queue, I'd like to turn the conference back over to Mr. Stone for closing remarks.

Well, again, we appreciate everybody being on there, and we're working hard for our shareholders, and all of you that are looking forward to the securities we're going to offer in connection with the DST acquisition, should be in contact with Credit Suisse and Morgan Stanley and the rest of our really high quality team of bankers we have. So, thanks a lot, and we'll see you next quarter.

Thank you. Ladies and gentlemen, that does conclude today's conference. Thank you very much for your participation. You may all disconnect.