Justine Stone - William C. Stone - Founder, Chairman and Chief Executive Officer Normand A. Boulanger - President, Chief Operating Officer and Director Rahul Kanwar - Senior Vice President and Managing Director of Alternative Assets Patrick J. Pedonti - Chief Financial Officer, Principal Accounting Officer and Senior Vice President.

Christopher Shutler - William Blair & Company L.L.C., Research Division Ashish Sabadra - Deutsche Bank AG, Research Division Peter J. Heckmann - Avondale Partners, LLC, Research Division Patrick J. O'Shaughnessy - Raymond James & Associates, Inc., Research Division Mayank Tandon - Needham & Company, LLC, Research Division Darren R.

Jue - JP Morgan Chase & Co, Research Division Vignesh Murali - Sidoti & Company, Inc..

Good day, ladies and gentlemen, and welcome to the SS&C Technologies Third Quarter 2014 Earnings Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the call over to Justine Stone..

Hello, and welcome, and thank you for joining our Q3 2014 earnings call. I'm Justine Stone, Investor Relations Coordinator for SS&C.

With me today is Bill Stone, Chairman and Chief Executive Officer; Norm Boulanger, President and Chief Operating Officer; Rahul Kanwar, Senior Vice President and Managing Director of Alternative Assets; and Patrick Pedonti, our Chief Financial Officer. Before we get started, let me 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 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 Factors section 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, October 29, 2014. While the company may elect to update these forward-looking statements, it specifically disclaims any obligation to do so. During today's call, we will be referring to certain non-GAAP financial 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 website at www.ssctech.com. I will now turn the call over to Bill..

Thanks, Justine. I will start with a brief overview of the quarter, then turn it over to Norm, who will take you through some Q3 highlights. Rahul will then comment on our Q3 alternatives results, then Patrick will explain the Q3 financials. We delivered our 10th straight quarter of record revenue at $192.6 million, up from $179.5 million in Q3 '13.

We delivered adjusted EPS of $0.61 per share, an increase of 17.3%. Over the last quarter, we've announced that we were expanding our efforts in Asia Pacific, where we believe we can grow our existing client base and bring our world-class technologies and services throughout Asia.

We also announced we are gaining traction with our fully integrated front-to-back funds services solutions. We believe being the single provider from trade order management through back-office accounting adds value, and we expect to see a shift towards this offering.

Our sales pipeline is robust, and we're beginning to close big deals on a regular basis. While the implementation and revenue recognition takes time, we believe this will begin to emerge over the next few quarters. We also continue to be active in the M&A market and will not hesitate to act if we see an attractive asset at good price.

With that, I'll turn it over to Norm..

Thanks, Bill. SS&C had a strong quarter in Q3, defined by 2 positive trends. First, our Global Wealth Platform solution has gained significant traction. The increased interest in our wealth management solution is driven by the need for a scalable single platform to manage both the portfolio and customer relationship management.

Lucie and Andre Chagnon Foundation and VanCity are notable clients who are now live on SS&C's Global Wealth Platform SaaS solution. The signing of these 2 firms illustrates the breadth of our GWP solution and its ability to fairly integrate the front, middle and back offices, enable an operational efficiency and better customer experience.

We currently have 17 GWP implementations in process, and we believe this momentum will continue. Secondly, the performance for alternative business remains strong.

The health of this business is driven by a general need to have the highest quality provider with advanced technology and expertise to keep up the demands of the regulatory environment and investors. SS&C is considered a blue chip administrator, which is key to win the larger funds where institutions are likely investors.

We are well positioned on our growth, and our growth will be driven by larger more complex funds. SS&C will also remain active in the startup market, and we continue to win business from funds that developed from under an administrator. Now I'd like to go over Q3 key deals. A large insurance firm and a Bermuda-based bank expanded their use of PORTIA.

One of the largest global providers of technology services for the banking sector expanded the use of our data management and aggregation services to support swift-enabled messaging. A vantage family office with a complex portfolio chose SS&C to handle portfolio management.

A $20 billion quantitative hedge fund expanded the use of our reconciliation tool across middle and back-office operations. Two wealth managers, whose combined assets are over $4 billion, chose SS&C's GWP solution to replace competitor solution. A mortgage REIT of $10 billion health care insurance company took quality institutional wins.

And last, a global bank's trust and securities division selected SS&C to replace their trough and agency system. Now I'll turn it over to Rahul to discuss alternative business in more detail..

Thanks, Norm. As reflected in this quarter's results, we continue to see a strong pipeline and healthy conversion of that pipeline into closed deals. Revenue for alternative assets grew 10% over Q3 2013.

As Bill mentioned previously, we're increasing our focus on the Asia-Pacific region and have hired Stewart Bent, a veteran of the funds services industry, to spearhead our efforts. Based in Hong Kong, Stewart is reporting to Nandini Sankar, who manages the alternatives business in Asia.

Stewart's experience in the industry spans across 20 years and includes deep roots in the Asia-Pacific region. We believe we can capitalize on the growing alternatives industry there. We continue to offer new products and services that build on our administration platform and offer increasing value to our customers.

This quarter, we announced our newest client to go live with our fully integrated front-to-back office solution.

The end-to-end offering features a comprehensive order management system, includes state-of-the-art trading and execution management tools, realtime P&L, fix connectivity, mobile application access to performance information, dedicated service and hosting facilities and is combined with our fund administration services.

Sales were strong for us in Q3. Amongst others, we were selected by 2 very large fund of funds with combined assets of over $20 billion and 1 very large institutional allocator to hedge funds.

The ability for investors and funds and across other asset types to see portfolio analytics and information in one web and mobility-enabled services offering is an important differentiator for us. We expect that these services will continue to gain traction. I will now turn it over to Patrick..

Thanks, Rahul. Results for the third quarter were revenue of $192.6 million, GAAP net income was $40.8 million and GAAP diluted per share was $0.47. Revenue increased $13.1 million or 7.3% over Q3 2013. Strong license revenue and year-over-year 8.1% growth in our software-enabled services business drove the growth in the quarter.

Foreign exchange had an impact -- a negative impact of $200,000 in the quarter. Adjusted operating income for the third quarter was $78.6 million, an increase of $7.5 million or 10.5% from the third quarter 2013. Operating margins increased to 40.8% of revenue from 39.6% in Q3 2013.

Revenue growth and cost controls contributed to the margin expansion in the quarter. In addition, we continue to make progress on implementing the GlobeOp and PORTIA acquisition cost synergies, and we currently expect to generate about $24 million in savings for the full year 2014.

Consolidated EBITDA was $82.1 million or 42.6% of revenue, an improvement of 10.1% compared to Q3 2013. Net interest expense for the quarter was $6.1 million and includes $1.4 million of noncash, amortized financing costs and OID. Interest expense decreased due to the $236 million debt paydown we've made since the third quarter of 2013.

We recorded a GAAP tax provision in the quarter of $9 million or 18% of pretax income to bring the year-to-date rate to about a little over 26%. We currently expect the full year GAAP effective tax rate to be in the range of 26% to 28%. Adjusted net income was $53.3 million, and adjusted diluted EPS was $0.61.

Adjusted net income excludes $21.3 million of amortization of intangible assets, $2.8 million of stock-based compensation, $1.4 million of noncash debt issuance costs and $1.3 million of unusual gains, mostly related to FX translation of certain balance sheet items. And the effective tax rate we used for the adjusted income was 28%.

On the balance sheet and cash flow, we ended the quarter with $75.1 million of cash and $608 million of gross debt for a net debt position of about $533 million. We had strong operating cash flow for the first 9 months at $164.3 million, a 6% increase over the same period in 2013.

Cash flow was driven by improved earnings, improved working capital management and the lower accounts receivable DSO, but this was offset by higher tax payments in 2014.

So the highlights on the cash flow for the year is we paid $174 million of debt, that brings the total of debt we paid since the GlobeOp and PORTIA acquisition in June 2012 to about $549 million.

We purchased 275,000 shares of SS&C stock for a total of $11.2 million, and we used $14.6 million for capital expenditures and capitalized software, which represents about 2.6% of revenue. In the 9 months so far this year, we've paid $27.8 million of cash taxes, and that compares to $17.9 million in the same period 2013.

Our accounts receivable DSO was 41 days as of September, and that compares to 45 days, a 4 day improvement from December 2013. In the financing activities, we recorded proceeds from option exercises of $16 million and a tax benefit related to those option exercises of $10.7 million.

Consolidated EBITDA -- LTM consolidated EBITDA, which includes any acquisitions as a fund for the full period was $312 million as of September. And based on the current net debt, our leverage ratio was 1.7x.

On our outlook for Q4, we currently expect fourth quarter revenue to be in the range of $193 million to $199 million, adjusted net income in the range of $53.3 million to $54.7 million and diluted shares in the range of 87.7 million to 88 million.

And for the full year, we expect cash from operating activity to be in the range of $225 million to $235 million and capital expenditures for the full year at 2.3% to 2.6% of revenues. And we'll continue to use excess cash flow to fund potential acquisitions, buy back shares in the open market and pay down debt.

And I'll turn it over to Bill for final comments..

Thanks, Patrick. Our revenue's up 7.3%, adjusted net income was up almost 20% and we are at 1.7x levered. We have a great business, a very strong business model and above all, we have great people.

Today, I was with a large institutional manager in New York and I heard great things about Christine Donnelly [ph] and Steve Campbell from our Global Wealth Platform group. From Los Angeles to London and from Mumbai to [indiscernible], SS&C employs bright, dedicated people who care about their clients. And now we'll open it up for questions..

[Operator Instructions] The first question comes from Chris Shutler from William Blair..

Patrick, as you look ahead to 2015, right now, you don't give guidance, but at this point, but how confident are you in your ability to continue to expand EBITDA margins at that kind of 50% plus -- or 50 basis point plus range you talked about? And from here, where should we expect most of the margin expansion to come from? Should it mainly come from a cost of software-enabled services line or somewhere else?.

Sure. Yes, we continue to believe that excluding any acquisitions that might affect our operating margins that we can continue to expand operating margin by about 50 bps a year. And at this point, we think we'll get the majority of it from the gross margin line. And obviously, the highest cost line item there is the software-enabled services cost.

So most of it come from there. But at the same time, we think we can continue to leverage R&D and G&A costs, but we'll continue to invest in selling and marketing..

All right, great. And then on the -- in the press release, you obviously mentioned that the 2 large fund admin deals that closed in the quarter, I think you said that those were over $20 billion combined. You also talked about 2 large asset managers you sold to in the quarter.

Can you just describe in a little bit more detail the services provided to each of those? And how much of the revenue for those, I guess, for clients is actually in the Q4 guidance?.

Yes, this is Bill. I think that the -- what were you talking about is the 2 deals that we sold in Q3 and then the 2 deals that we sold early in Q4? So....

Correct..

Yes. So the 2 deals that we sold in Q3 will begin ramping up in Q4, and very little of the guidance is really tied to those 2 big funds. And then secondly, for the new ones that we sold in Q4, again, they're ramping up now too, but again very little of the revenue will be recognized in Q4.

And the ones we sold in Q3 are full admin services, so fund accounting and a variety of services that we provide there. And then in Q4, the services that we have sold, one is fund -- more fund administration services and then another one is a couple of our licensed products in reconciliation and reporting.

So there's a lot of opportunity in all 4 of those deals, and we believe that we've done a very good job of finding replacements in our pipeline for that as well. And that's something that we've focused on and I believe we're getting pretty good at..

The next question comes from Ashish Sabadra from Deutsche Bank..

Quick question regarding the professional services, we saw that accelerate in the quarter, wondering that was related to implementations of the 2 deals that you won in third quarter.

And also, you're working on certain deals [indiscernible] and another large REIT conversion [ph], did those contribute as well to profit and services growth?.

I think the answer to that is yes. It's almost entirely implementation-related revenue. So obviously, as we onboard these new customers and get them live, we start to see the pickup in professional services.

So there's been a lot of demand in the customer base, in addition to the implementation services core business and engineering, so those 2 things together combined to give us a better result on the professional service line this quarter..

Okay, that's great. That's good. Just a quick question on the guidance. You normally guide within a range of like a $4 million for revenues. This time, the range for fourth quarter is slightly wide. I don't know if I'm reading too much into it or....

Well, I think that we're a bigger business, right? So even at $193 million to $199 million, right, really you're talking about 3% of our revenue. Again, we're a highly recurring revenue business, but when things start and when revenue recognition policies kick in, can make our revenues fluctuate in the 1% to 2% range.

And now we're having a range of 3%. So I don't think it's particularly wide and I don't think it's particularly wide in the industry..

No, that's fair. That's fair. Just quickly on the alternative assets that's growing 10% -- that grew 10% in the quarter, pretty solid results there.

And with all the deals that you've signed, the 4 deals that you've highlighted, what's the expectations for alternative assets going forward? Can we continue to expect this kind of accelerated growth in that business?.

We think we feel -- this is Rahul. We feel really good about our opportunities in the space. We've got a pretty deep pipeline, as Bill suggested that, as we convert big deals out of that pipeline, we are finding replacements for those big deals. And we think we've got a very compelling offering that differentiates us in the marketplace.

So we feel pretty good about our opportunity to drive growth..

No, that's great. That's great. Quickly on the M&A pipeline. So Bill, you mentioned you have a pretty good M&A -- you always are looking for M&A opportunities.

So I just wanted to quickly ask, is this more on the fund administration side or more on the financial technology aspect of the business? And then, again, like we haven't really seen a big deal since 2012, so it's been almost 2 years since we have seen a big deal.

And what would you say would be the constraint for getting a big deal? Is it just lack of good assets out there or assets are becoming very expensive?.

Yes, I think there's a lot of good assets out there. I think in low interest rate environments, in private equity firms flushed with cash, you're going to have assets commanding premium prices.

And there's been a lot of stuff in the marketplace about what some of the deals that are out there are going for, and you're starting to talk about 15x EBITDA, and that's a little rich for us. It's not that we couldn't be accretive to our earnings, but we would have to be perfect in our execution or close to perfect.

And we like to have things where we get a chance to stumble a little bit, but still have a chance to really make a great, great return on our investment.

And we also don't want to have a bunch of things that 5 years from now, when interest rates go back to some semblance of normal, that we have this collection of technologies and services that we can't leverage. Patrick has just said that we think we can get the 50 bps.

And as you've seen, right, we did a little bit better than 50 bps, I think 120 bps on the operating income line and 110 on the adjusted EBITDA line. So I'm not saying we're always going to do 120 and 110, or we're going to do 50.

But it's obvious that the collection of assets and services that we have, have tremendous opportunities for synergies, and that's synergies that allow us to automate more things, allow us to get more productive, allow us to have more assets under administration per person.

And what that allows us to do is expand margins while improving service to our clients, which is again the key aspect of this entire business..

No, that's very helpful.

So Bill, maybe just a quick follow-up on that would be, in case if you're not able to find the right M&A opportunity and constrained your leverages, gone down all the way to 1.7, is there an option to do an accelerated buyback or some other -- a good use of capital in that sense?.

I think that we would be extremely friendly towards anything that we -- would raise shareholder value. All of the management team at SS&C and I think upwards to 1,500 people get compensated in some way by equity. So there's a lot of spreadsheets at SS&C that track SS&C stock price, and so I think we're very sensitive to that.

At the same time, we're not money managers. We're not running a portfolio. We're operators, right? So we're going to run a business. And the capital transactions and the assistance we can get from many of the great banks that are out there, but we try not to have that to be a predominant thing that we do as a company.

As a company, we operate products and services in order to be able to help our clients run their business in a more efficient way, gather more assets in a cheaper way and be able to take advantage of opportunities they see as quickly as possible..

The next question comes from Peter Heckmann from Avondale Partners..

I guess a question for Rahul, but in terms of some of that new business and the strength that you're seeing in alternatives, are those share gains or first-time outsourcing? Can you narrow it down, first of all, in terms of what areas are particularly strong? Or is it truly across the board?.

I think that the examples that we laid out are share gains, so they're takeaways. I think, generally, on the larger end of our pipeline, we are seeing market share opportunities where we can convert them from other administrators. That's not to say that there aren't in-house processes.

We're also seeing examples where folks are doing things internally that they realize that if they gave to us, they mitigate some risk and get some scale, so we're seeing that too. And then in terms of where it is, we're seeing it really across hedge funds, private equity funds, fund of funds. So that is pretty widespread..

Okay, okay.

And would you say that in terms of investor appetite, are we in an environment where we continue to see more new fund creation net of closing?.

We certainly are. Our new launch and fund formation pipeline remains as healthy as ever..

The next question comes from Patrick O'Shaughnessy from Raymond James..

I know a big topic of conversation in the last earnings call was your hiring of new salespeople to kind of build out your sales efforts and accelerate some of these growth initiatives. And you kind of talked about how you were kind of changing your hiring strategies and probably had a little bit more measured expectations this year.

So as the year has progressed, how has that gone? And are you starting to see a little bit of a pickup in your hiring of qualified good salespeople?.

Well, our hiring has picked up and we're praying that they're qualified good salespeople.

So I think that, that kind of stuff is the -- the ability to see whether or not someone's really going to be able to execute in an environment that's very competitive requires a tremendous amount of knowledge and requires an ability to be resilient and positive is not something that we know day 1 or even day 30.

So I think we're getting better at evaluating that. I think we're being more selective in who we hire. We're having more people interview the people. And we believe that we're getting to the top of the list at the best recruiters to bring us the people first. We also believe that we're a beacon.

So that the really good salespeople want to come work for us because they can make more money, we don't have caps, right, we're excited when our people sell, and everyone in the company is really behind our salespeople making as much money as they can. And anybody that wants to get into sales can get into sales.

So there's not much sniping on the sidelines about somebody's commission, right? Put up or shut up, right? We're pretty good at that, and so we're pretty excited about what we've done with our sales force. And I believe that it will continue to expand throughout 2015 and beyond.

I mean, I think that our target would be that sometime over the next 5 to 10 years, that 1/4 of our workforce is in sales, right, sales and marketing. Right now, we have already 4,300 people and we have about 110 or 115 in sales and marketing. And so I mean, I think that needs to go to 1,000. So we're going to be on a recruitment kick for a long time..

Got it. That's helpful. And then I guess to follow up on the M&A question, you've obviously been doing this for a while and the cycles come and go.

What do you think kind of needs to happen for valuations to become a little bit more reasonable to the names that you're getting shown? Do you kind of need to wait for the overall market to turn down? Do you need to have rates go up? Is there something else that you're kind of looking for that might be that catalyst that kind of pushes people in your direction?.

I don't think so. I just think you need to fish harder, right, you need to go to more remote spots, you need to expand your lens a little bit, right, be able to remain rigorous, but at the same time, recognize to get something done you're going to have to move quickly and you're going to have to pay a little more.

Now the question is, is do you want to pay way more? And I think on some assets that are looking for 5x to 10x revenue and upwards 20x EBITDA, we're going to still kick the tires and try to see if we can understand it, but we're not going to move away from what's been successful for us for 20 years.

And I think that when the dam breaks, there'll be a number of acquisitions that come into SS&C, and my guess is, is that we will execute like we have in the past..

The next question comes from Mayank Tandon from Needham & Company..

Bill or Rahul, maybe you could answer this, you talked about the big deals you won. You said $20 billion combined value for the deals you won in Q3.

What about the deals that you won in Q4? And also, could you share with us the geographic split of these deal wins?.

So I think that the $20 billion are the assets for the ones we won in Q3. The ones we won in Q4, one in particular has a lot more assets. But as Bill said, we're providing a certain subset of services. And in terms of geography, some are in North America and we also -- one of the big ones is in Europe..

Okay. And then as you look ahead in terms of the pipeline for these big deals, what is the makeup as we go into fiscal '15? Does it look better or worse, even with what you saw coming into this year? I'm just trying to get a gauge of the landscape versus, say, 12 months ago for you versus your peers..

I think it's more deals than we had coming into this year, and we're also further along on deals than we were coming into the year. So we feel good about both of those..

And we also think, Mayank, that we have invested heavily in our sales force over the last couple of years, and we've got very talented people that are helping our people sell deals out in the marketplace.

And when we can put people like Fred Jacobs and Eamonn Greaves and Jay Maher and George Schnell and Frank Scotti and a whole bunch of other people out into the marketplace with this talented group of salespeople we have, then we expect to win more often, and our sales force, I think, in alternatives is probably as big as the next 5 companies combined.

So we are out there. We're -- this is our business. This is what we focus on.

Don't come to us for a credit card, right? Don't come to us for a loan, right? And we're not in the ATM business, right? So -- but when you're coming for something that's a sophisticated service, that needs to have attention to detail and needs to have it on a 24x5 to 24x7 basis, I think SS&C is a really good home for people..

Right. And then, Bill, clearly, regulation has been an important driver of your business.

Are there anything on the horizon that we should be aware of, that could be incrementally more positive for '15 versus '14?.

Well, I think, Mayank, it really comes back to the robustness of the market.

When the markets took a swoon just 6 weeks ago or 4 weeks ago, everyone's jumping for the brake, and how far is the car going to screech and hopefully that damn thing doesn't stop, right? And so then you see the thing turn back a little bit the last, what, 10 days maybe or 7, 8 days, and confidence starts coming back in the market.

So there's a lot going to happen based on the political environment after November. There's going to be a lot to determine on whether or not there's pro-growth policies or not.

How much more taxes are we going to do here in North America? Or what are they going to do in Europe? And there's a number of other things that are going on in the world that's going to put a damper on things like emerging markets growth or on the BRICS countries and other stuff like that that's a little bit outside of SS&C's control, but is something that we pay a lot of attention to so that we can find niches and spots where we can still grow, at the same time, we don't quite have as wide a field as we would like..

Okay. And then a couple of housekeeping items for maybe Patrick. Patrick, what was the AUA level at the end of the quarter and how have fees been tracking? And then last but not least, you mentioned the synergies from GlobeOp and PORTIA of $24 million, so that's close to your initial target.

How much more is left on that front? Should we expect some to flow into '15? Or is that actually behind us?.

I think Rahul did comment on the AUM, but I don't think we released the third quarter yet. I think the second quarter might be out there on the market right now. And on the GlobeOp and PORTIA synergies, I mean, like I -- like our target was $25 million. We're still working hard in consolidating and eliminating some costs in that area.

And we think -- I think June 15 will be the third year target. I mean, our view is, we'll be ahead of that $25 million at that point..

A couple of things on that, too, Mayank, is just that we're just now consolidating a number of offices in Boston. So we've just opened up on Milk Street, and Christy Bremner from the PORTIA organization is coordinating that for us. That's going very well.

And I know that Rahul is still guiding a number of projects going on, on how we're going to leverage the talent and capability we have in Mumbai across the entire business. And we're also up to 155 people in Evansville and I think about 60 or so in Los Angeles..

Great.

And then did you say that you don't have the AUA numbers currently? Will that be coming out soon?.

Yes, that's right. We're in the process of tabulating the 9/30 AUA numbers..

Any comments on the fee structure? Has that changed based on the market volatility? Or has that been fairly stable that you've been generating on the assets?.

So I think that it's been fairly stable. Obviously, the deeper we can get into the places and the more services and value-added services we can provide, the more ability we have to charge more. But it's been relatively stable..

The next question comes from Sterling Auty from JPMorgan..

It's Darren Jue on for Sterling. Just want to follow up on the topic of sales hiring, because your sales and marketing expense actually declined quarter-over-quarter by about 5%, and that's somewhat out of the norm for you guys.

I'm just wondering if there was any delays in hiring at all in the quarter or what else might explain that?.

Yes. I think that's more of a timing issue as to why sales and marketing would have been down. I think what I'm looking at is September 30, 2013, we spent $10,849,000 and September 30, 2014, we spent $11,581,000. So that's still 5%, 6%, 7% higher than it was last year. And for the 9 months, it's up 15%.

So I think that we'll continue to invest in selling and marketing, and I think that the spread from year-over-year quarters will increase..

I think if you look at our run rate on sales and marketing expenses, it will probably for the year be up 13% to 15% compared to 2013, and that's double the revenue growth. So we're still committed to increasing the cost. And on the sequential cost decline, I think that is more related to expenses than it is to personnel costs.

Personnel costs and sales and marketing were up a little bit, sequentially, and it's mostly other expenses that were down..

Okay. Actually, other expenses such as....

Travel, marketing, other types of discretionary type of expenses in there, consultants....

Yes. And we've had large sales pitches going on in more remote places. So we're in all 50 states, and we've done a lot travel to Europe as well as Asia last year more so or last quarter more so than this quarter..

[Operator Instructions] The next question comes from Vignesh Murali from Sidoti..

My question is on your expansion of funds in Asia.

Can you briefly size up the opportunities there? And what stage of the pipeline would you say you're at right now?.

We think it's a -- we don't have great data on the size of the opportunity. We're really just getting started there. I think in a lot of ways -- both Bill and I were in Hong Kong earlier this year. In a lot of ways, the startup and hedge fund market there looks a little bit like New York did 10 years ago, but there seems to be a lot of activity.

And how many of those funds launch and then how many of them growing to real institutions remains to be seen. But we're pretty excited to get in there. We've already got about a dozen clients in Hong Kong, and we hope to build on that..

Got it.

And in terms of the maintenance segment, do you see any improvement coming in the foreseeable future, given that your software license sales has been pretty robust?.

Yes, I think that one of the things that has been the most robust for us in the past has been that we've got upticks because of interest rates and then the CPI plus 100, 200, 300 basis points. When CPI was 4%, that means you've got 5%, 6%, 7%. Whereas now, we're lucky if we get 1% or 2% increases.

So I would not see a lot of improvement in maintenance for the next several quarters, but after that, I think we might have some upticks. We've got some new products and services coming out that we're selling on a licensed basis that we think will improve both our license and our maintenance..

At this time, I'm showing no further questions..

Thanks, everybody, for participating in our Q3 call, and we look forward to talking to you again in 2015. Thank you..

Ladies and gentlemen, that does conclude the conference for today. Again, thank you for your participation. You may all disconnect. Have a good day..