Good afternoon. My name is Chantelle and I'll be your conference operator today. At this time, I would like to welcome everyone to the SS&C Technologies Fourth Quarter and Full Year 2018 Earnings Call. [Operator Instructions] Thank you. Justine Stone, you may begin your conference.

Hi, everyone. Welcome Happy Valentine’s Day and thank you for joining us for our Q4 and full year 2018 earnings call. I'm Justine Stone, Head of 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 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 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, February 14, 2019. 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, and thanks, everyone. Our results are 1,132.8 million in revenue adjusted revenue and we earned $0.95 a share in diluted adjusted earnings per share. Both the adjusted revenue and the adjusted diluted earnings per share are very robust. Our consolidated EBITDA was $444 million and our margin was 39.3%. Our core businesses drove our strong performance. Q4 topline organic growth was solid at 3.3 and for the year 4.3. Board of Directors approved 25% increase in our quarterly dividends from $0.08 per share $0.10 per share or $0.40 annually. We believe our financial results warrant rewarding our shareholders while we continue to rapidly paydown debt. We have paid down over $926 million in debt since we closed our acquisition of DST last April and our current leverage ratio is 4.54. Last November we hosted an Analyst Day attended by over 100 buy-side and sell-side analysts. Each of our business units presented their opportunities and key initiatives and we had demo boost of several of our newest product. The Analyst Day also featured a demo of singularity our first smart accounting system which is embedded with artificial intelligence, machine learning, robotic process automation and predictive analytics. There is significant traction in the U.S., Canada and U.K. regions with more than 25 active pursuits the biggest being in the insurance and asset management markets. I’ll now turn it over to Rahul.

Thanks Bill. We had a strong quarter in terms of winning new mandate identify new opportunities and remain focused on high service levels for our customers. We have made progress with integration of our recent acquisitions, and have hired some very talented people. Bernie O'Connor is now Chief Revenue Officer in our Domestic Financial Services business at DST and Daniel DelMastro is the new Chief Revenue Officer in our Healthcare business. Joe Maxwell joined as Head of Technology for our Hedge Fund Administration business. We've added the responsibility for our financial markets group to Jeff Shoreman, Primatics to Christy Bremner and the DVC Time Share warrant and Zologic businesses to Robert Rowley. Just last week I had all of our business unit heads in New York to review the start of 2019 and to add focus to our new initiatives. We are building and rolling out several new products and services and our combined capabilities including acquisitions of DST, Intralinks and Eze in 2018 differentiate us in the marketplace. We continue to find synergy opportunities at all of our recent acquisitions and we now expect DST to generate 300 million annual run rate synergies by April 2021. We also continue to see strong organic growth in several of our businesses including Black Diamond alternatives particularly real estate and our regulatory and analytic business. Now I will mention some key deals for Q4 2018. Two advisory firms each over 1 billion in assets selected Black Diamond for their operations sighting our partnership approach as key to the win. A spinoff from an existing client with 2.5 billion in assets chose SS&C GlobeOp fund administration and regulatory solutions. A Hong Kong-based investment firm chose SS&C GlobeOp fund services for their new fund launch. A large future shop looking to launch an equity business chose Eze OMS for its advanced rating and compliance capabilities. A 20 billion plus firm who is an existing GlobeOp fund administration client chose Intralinks platform for all fundraising investor reporting portfolio management and M&A activity across all regions and lines of business. Four individual clients chose DST's business product process solutions product AWD. I will now turn it over to Patrick to run through the financials.

Thank you, Rahul. Results for the fourth quarter of 2018 were GAAP revenues of 1,111 million. GAAP net income of $58.7 million and diluted EPS of $0.23, adjusted revenue was 1,132,000,000 excluding the adjustments for implementing the new revenue recognition standard and the acquired deferred revenue adjustment for the DST Advent and Intralinks acquisitions. We had a very strong quarter, adjusted revenue was up 157%, adjusted operating income increased 131%, and adjusted EPS was $0.95 or 75% increase over Q4 2017. Total adjusted revenue increased $693.4 million over Q4 2017. The acquisitions of DST, Eze and Intralinks and Commonwealth and a couple other smaller acquisitions contributes $680.8 million in the quarter. Foreign exchange had an unfavorable impact of $1.9 million or 0.4% due to weakness of foreign currencies in the quarter. Organic growth on a constant currency basis was 3.3% in the quarter driven by the strength in the alternatives business. Adjusted operating income for the fourth quarter was $421.5 million, an increase of $239.1 million or 131% for the fourth quarter 2017. Operating margins improved sequentially from 34.4% in the third quarter and 37.2% in the fourth quarter as margins improved in the DST business and our core businesses. DST’s operating margins were 33.3% in the fourth quarter and annual run rate implemented cost synergies reached $245 million as of December 2018. We have increased our DST cost synergies target to $300 million annual run rate by April 2021. Foreign exchange had an impact of $3.5 million on expenses in the quarter - positive impact. Adjusted consolidated EBITDA was $444.8 million or 39.3% of adjusted revenue and increased to 132% from Q4 2017. Net interest expense for the fourth quarter was $97.3 million and includes $4.2 million of non-cash amortized financing costs in OID. The average interest rate in…

Thanks Patrick. You know we're proud of our accomplishments in 2018 and looking back to when we went public in 2010, when we finished with $329 million in revenue. Looking forward we see significant opportunities throughout the world. As we ramp up our sales force and deliver on our technology initiatives, we expect to succeed. We will be at conferences and investor meetings throughout the year and hope to see some of you at those. Now I'll turn it over to question.

[Operator Instructions] Your first question comes from Rayna Kumar with Evercore ISI, Your line is open.

Could you pull out the organic revenue growth rate for the alternatives business in the fourth quarter and then your expectations for - in 2019 and [indiscernible]?

Yes, I'm not sure the alternatives organic growth rate in the fourth quarter is that the question? I really didn't hear it.

Yes, in Q1 and the guidance.

In the fourth quarter the alternatives organic growth was 5.9%, fourth quarter 2018, and the guidance in Q1 is also 5.9%.

And if you can also talk a little bit about DST's healthcare business, the client retention in that business, new bookings growth and does SS&C see that as - is SS&C looking at strategic options for the healthcare business?

We are not. The business is getting stronger. We brought in some great people. Danny DelMastro as Chief Revenue Officer, [indiscernible] as Senior Vice President in Sales. We're optimistic and we look forward to reporting on our successes in the following quarters.

Your next question comes from Alex Kramm with UBS. Your line is open.

Just staying on the topic of organic growth for a second here, if I heard you right at the guidance 1.9 to 4.1, I think 3% at the mid-point, I think if I remember correctly at the Analyst Day you were kind of pointing everyone to like maybe like a 3.5% growth rate not to be too focusy on that but that obviously seems a little bit lower. So just maybe discuss little bit what has changed in last few months? I mean obviously everybody has seen what's going on in the fourth quarter and hedge fund land et cetera. So has your thinking changed a little bit or what's the change here? Thanks.

I don't think there's really a whole big change here, Alex. I think it's just that as we get deeper and deeper into these acquisitions that a lot of that is taking a lot of time and we also have lumpier kinds of size businesses, our deals here. So I think the range we're trying to have is wider. They're just based on the sides of the deals that we have and so I just think that that is how a few tenth of a percent in organic growth still out.

And then maybe just on kind of all these deals that you're integrating right now. I heard in some of the prepared remarks you talked about I think even like existing customer buyings or switching to Intralinks or using Intralinks now. I mean are these real cross selling wins already or this just stuff that everybody was individually working on before and then you know just on that same topic given that you are restructuring a DST sales team anything that you seen already in terms of early fruits of labor that they are doing a better job over there may be hopeful that the organic growth at DST can improve from what’s been a little bit reckless in the past any sort of color what's happening not just on the cost but more on the revenue opportunity side?

Yes, as I said right and Rahul commented Bernie O'Connor came in Chief Revenue Officer of Domestic Financial Services business. He is already reorganized that and has people on the ground I think since January 1. I think he has increased our pipeline by $50 million. I think Danny DelMastro has been all over the country in the healthcare business. We see opportunities everywhere as we spoken on the last two or three calls we really see an opportunity in the midmarket otherwise the midmarket has to go one of their big behemoth competitors. So we think that's a tremendous opportunity for us and we plan on exploiting it. So we’re pretty optimistic about where we sit and we hope to report similar progress in 90 days or so.

Your next question comes from Dan Perlin with RBC Capital Markets. Your line is open.

I’m obviously happy to see the synergies for DST getting raised here. My question I guess is twofold, one is kind of what did you get - what led you to be able to kind of crank him up so fast from the original guide like it was - it’s clearly been significant. And secondly to kind of put that bogie out there all the way out to 2021 I'm wondering why what is going to take to get the incremental 55 million or so?

Again Dan it's a pretty big place right 14,400 employees, 1600 contractors when we took them over, 2.2 billion or so in revenue. We were trying to be somewhat sober and conservative about what we were doing and wanted to make sure that we were stepping on trap doors, right. So the more we got our sea legs the more Mike Sleightholme has made a nice contribution. The people at DST whether it's Terry Metzger in Domestic Financial Services or Willie Slattery internationally or John retirement or Jonathan Boehm in Healthcare. They are smart capable hardworking people and I think we kind of release them to go after the opportunities that we have and I think that they've done a really good job. Nick Wright who is Willie's right hand guy and a number of other ones have really participated in ways that have really helped us. Anthony Caiafa, our Chief Technology Officer is getting his arms around the big data centers and they had a big spend and they still have a big spend, it just not quite as big.

Understood and can I just get you update just sort of clear you're at 4.5 turns leverage right now your target is always to get down to kind of 4 by the of 2019, is that changed in anyway and the pace of deleveraging has been pretty significant?

Based on our current plan certainly you use it all free cash flow to paydown debt in 2019 we’ll be around 3.9 times. So we’ll be below four times.

And then just on that same vein, can you just remind us your appetite I know you got a lot going on and you've already done lot of acquisitions. But it is part of D&A to do more deals and so as you get down towards that, should we be expecting kind of that to be the leverage so that you can get to before you step back in and look at other additional opportunities in the market or is there appetite to do so and how is that pipeline looks? Thanks.

Yes, so I wouldn’t say that we're glued on the sidelines. We would certainly buy anything that's been in our strategic radar. We may not use as much debt as we did in the past and all that’s unfortunate that's what happens when you get leverage to the point of 4.5x. But we’re going to do what's best for our shareholders and that’s increase our earnings and hopefully, increase our cash flow. We’re going to paydown debt quickly as we've said 926 million since April 16 of 2018 that's a pretty good number. And I think that tuck-in acquisitions we’re looking at all the time we probably have four or five of them that were in some semblance of possibly purchasing. Now larger one there's a few that are out there that are 100 million in revenue 30 million in EBITDA. We’re not spending a 1.5 billion for one of those. So we’ll have to see what kind of properties are out there and whether or not we can get what we believe is discipline price.

Your next question comes from Brad Zelnick with Credit Suisse. Your line is open.

It's Kevin Ma for Brad, thanks for taking the question. Can you give us an update on progress with Intralinks as so far in terms of synergy targets. And I know it’s still early into those acquisitions but what sort of cross opportunities are you seeing that may be become more apparent now that weren’t so obvious early?

So this is Rahul, we’re really positive about both Intralinks and Eze and three full year we had Intralinks and Jeff Shoreman and their teams have done a nice job of starting the integration process. We have already implemented some synergies. We’re certainly on target or on plan for the timeline that we had at the start of the process. And you know as you pointed out the thing that were most focused on is the joint revenue creation opportunities. So in conjunction with as we've already sold some deals whereas the order management system and we’re doing middle and back-office services. We expect that to continue. We’re also looking at our development plans for Eze and their new product Eclipse and trying to bring that close to the things that we’re building. And then Intralinks has some of the biggest private equity firm and real asset firms in the world and in their customer base and those are many of the same firms that we’re providing fund administration services or seek to provide funded administration services to. So there's some natural cross-sell and overlap and that process is getting started so good progress so far.

And I missed it but would you mind breaking down with the cost synergies that were achieved in the quarter for each of the acquisitions?

These are implemented right annual run rate synergies.

That’s right.

So DST was 445 million and Intralinks as combined are at about 14 million.

Your next question comes from Hugh Miller with Buckingham. Your line is open.

You guys had mentioned about the DST opportunity in the middle market I was wondering if you could flush that out a little bit more and maybe provide a little color on the current revenue for DST in that segment. And kind of how you're viewing the addressable market opportunity for that business?

The current revenue is approximately 450 million in revenue for450 million to 470 million I think. And again obviously a national business we have any number of large opportunities in our pipeline. We have closed some additional businesses in our pharmacy business and we’re optimistic about that. And we just think that there is lots of health plans around the country. And right now most of the health insurance and health administration pharmacy benefit management businesses are dominated by United Healthcare with Optum or CVS with Aetna or Cigna and Express Scripts. So we think we have a great shot if we execute to be number four in a relatively short period of time over the next two or three years. And currently we’re about number 10.

That's great color and thank you. One other follow-up just the diluted share count guidance for 2019 was a bit below what we are looking for. Is there any assumption for share repurchase in that number?

There is no share repurchase in that number.

Your next question comes from Peter Heckmann with Davidson. Your line is open.

Just a clarification and apologize if you’ve gone through this, Patrick, I think you had said that organic growth implied in first quarter guidance was 5.9, did you mean that 5.9 was for admin? If so, what would be the overall organic growth?

Yes, the fact that 5.9 in Q1 of 2019 was for the alternatives business. For Q1, 2019, the mid-point is 3.3% organic growth and the range is 5% to 1.7% on the low end.

And then if I remember correctly, DST has some attrition in the U.K. and that it was going to hit this year. Are you thinking about that and how are you treating it from organic growth calculation basis?

I mean DST becomes organic right in mid-April. So not in the first quarter, still acquisition revenue. And at this point the calculations that we gave you, we're not making any adjustments for business that they might have lost before we acquired them. So this is just a straight calculation right now.

And then Rahul, you had made a comment, the Black Diamond was seeing strong growth; can you talk about that adviser space? Seems like an area that it's benefiting from several secular trends. Haven't really seen as much acquisition activity from SS&C in that space in terms of expanding the present solution; how are you thinking about that space right now? Are valuations prohibited?

I think that we're really focused on our own growth opportunities. We've looked at some things and I think we'll continue to look at some things and we will look at deals particularly as they are complementary to our solution set, but I think in general we've got a really good business with a combination of core growth in our customer base to the things we do now, as well as new products that we're building out such as rebalance (ph) or Black Diamond link and a couple of other ones. And we have done some small acquisitions. We bought Salentica and we bought Modestspark, and that's primarily a way to extend the capability and we'll keep doing that.

Your next question comes from Chris Shutler with William Blair. Your line is open.

This is actually Andrew Nicholas on for Chris. A lot of my questions have been asked but I did have one about the alts business. I think you said around 6% or 5.9% organic growth that you expect in the first quarter which is particularly strong at least from my perspective given negative fourth quarter market. So just wondering if you could expand a little bit on where you're seeing strength in that business and where you expect that growth to come from whether it be from net new assets, new fund launches, pricing or something else?

Yes, so I think 5.9% is what we did in Q4, right, and that I think in the middle of those choppy markets as well. So we really do have very good momentum from a sales standpoint, right. That's the primary source for new revenue where – we're competing everyday for no mandates than a lot of them are competitive takeaways, then as people look at our technology and services capability relative those of our competitors, we've got some pretty good opportunity. So I would say that's the predominant source for kind of growth and that's true in our hedge business, it's also very true in our private equity and real assets business. Real assets in particular has been going very strong and we think we're going to keep continuing that in 2019, so that's the basis for the guidance.

And then maybe one for Patrick; looking into P&L it looks like license and maintenance revenue grew about $10 million or $11 million in each of the last two quarters looking at quarter-over-quarter, but the cost of licensing and maintenance revenue actually went down a touch over that same period. Can you help me understand why that might be the case?

There were several one-time license deals in the DST business that helped that growth over the last couple of quarters. And I think their cost structure is down as [indiscernible]. So I think that's the biggest impact there.

Okay, so primarily to DST.

Your next question comes from Mayank Tandon with Needham & Company. Your line is open.

Bill, can you talk about any of the regulatory changes globally that might be a tailwind or headwind for you over time? I think in the past it's been more of a tailwind but I would be curious to see if there's anything out there on the horizon that investors might not be focused on that could be a driver for your business over time?

Well, I think Mayank, that we have a really good regulatory analytics business. Mike McCall runs that for us, and there's a number of things that we're rolling out such as GDPR and some other ones along those lines. Whether or not the DOL rules on how that finally get flushed out is a little hard to tell. Same with what's going on with the changes in Dodd-Frank. But we think on either side, right, whether or not there's going to be more regulatory which means we are going to sell into that or there's going to be an easier regulatory environment which means there's going to be more start ups and we'll get our fair share of that too.

Then a couple of housekeeping items; what was the AUA levels at year end? I think I may have missed that if you've already mentioned it and also for Patrick, what is the FX headwind you're expecting on revenue for 2019 and also is there any expense item that is impacted by FX and how we should account for that?

So AUA at the end of Q4 was $1.69 trillion.

And on FX there's about, we're currently - our forecast is currently saying average January 2019 FX rate. And if you compare those to 2018 rate, it's about $11 million of negative FX in the year, of which majority is in the first 6 months a year. So it's about $2 million in Q1 and when DST comes on as organic in Q2, there's about $7 million to $8 million of FX, since they have a lot of business in British pounds. So right now the current estimate is about $2 million $7 million to $8 million in the second $2 million in the third and kind of flat the fourth. That's based on current FX rates.

Is that offset on the expense side from hedges or should we expect some expense items to be also affected by FX in the same vein?

DST has some legacy hedges on the Indian rupee that are going to terminate in March. But other than that we don't have any expense hedges. So we had I think a $3.5 million benefit in Q4 for expenses and based on where rates are today, it'd probably be pretty similar in Q1, and then would taper down.

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

Patrick, want to ask one question about the 2019 guidance and putting the first quarter in there with it. Because with simple math it implies you'd pick up about $0.05 a quarter in EPS over the course of the year, I'm just wondering if you expect faster EPS growth in the front-half of the year, back-half of the year? Is there anything notable in terms of expense synergies we should be thinking about just as we make our quarterly estimates for the course of 2019?

We do expect growth to be a little stronger in the second half of the year, essentially in Q4 when Eze becomes organic and Intralinks becomes organic for partial quarter. So I think we'll see a little bit of a jump in Q2 in revenue and then see stronger growth in Q3 and Q4.

And on the expense side anything notable in terms of I don’t know the facility like duplicative facility cost eliminator anything like that we should just be aware of or nothing big?

I don't think anything big I mean we’re going to transition from DST’s India operations to contractors to in-house. I mean we’ll have some double cost for a while, but it probably won't be significant it might be $2 million $4 million or something like that. As we transition from contractors to in-house operation and with that kind of duplication facilities. So there will be a little bit of that - the first quarter is seasonally a higher cost because benefit costs are higher in the first quarter when you’ve got payroll related taxes they are much higher until employees hit the cap. We particularly have higher expenses in the first quarter and then we might have to 2 million or 4 million of duplicate costs in facilities in India as we transition to in-house operations.

And then Bill wanted to ask one question about the dividend and how the Board look at it. I'm sure most equity holders are happy to have a higher dividend, but I wondered if they kind of look at the trade-off between the paydown of debt. Was the board looking at the year-end 2019 leverage ratio and saying okay we’re below our threshold so we can afford another $0.01 on the quarterly dividend or did that factor into your thought process?

I think Chris the whole Q2, Q3, Q4 I think the outperformance created tremendous amount of confidence in our ability to generate cash flow I think we saw that – we were in Q4 at 47 and we ended 454 on a two-tenths of turn that will cover $100 million. And I think the increase in our dividend is about $20 million. Yeah we’re trying to be good custodians of the shareholders money and try to allocate that money in ways that the vast majority of our shareholders would applaud.

Your next question comes from Andrew Schmidt with Citi. Your line is open.

Just a clarification when you talk about lumpy deal pipeline is that mostly a comment on DST. And then correspondingly we think about your organic revenue outlook for FY 2019 what does the low and high end of the outlook assume for DST performance?

Well first on the lumpy side I would say it's both our fund administration businesses and the DST businesses. The size of the deals are getting larger as we expand our capabilities both from a breadth standpoint and a depth standpoint we become an increasingly capable competitor. So the size of the deals that we could ask to bid on have become larger and then the size of the deals that we win have become larger. So I think that's going to create some lumpiness as we swallow these bigger deals and I would say that's really what I am talking about on a lumpy deal. So then maybe Patrick you could take the second half of that question.

Yes, let me try to answer that question so I think for the year we’ve got about $100 million in the range of revenue okay. And in that guidance the range for the acquisitions which is mostly DST and large portion of the acquisition revenue is probably about $25 million that was a 100, yes, 25 million is acquisitions. So does that answer your question.

It was more around in terms of just the variation kind of the low end and the high-end what the assumption for DST growth?

Well I think at the midpoint of the range DST is of 0.5% or so for the year but.

Okay.

There is probably it’s probably something like another percent shift between the ranges.

And then just if you could discuss hedge fund performance in the fourth quarter and then I guess at a high-level how revenue retention performed that will be helpful. And then just a follow-up to that just expectation for hedge fund performance into 2019?

So I’ll talk about hedge fund performance look in general right we’re not as focused on hedge fund performance as we are on sales execution and how many of our products and services we can cross-sell into clients we already have because ultimately that far more correlated to our revenue. So I think we had a mix of different kind of performance we certainly had choppy markets and funds that didn’t fare as well and then we had winners right. And we don't really have a assumption for what future performance is going to be when we guide towards 2019 because once again we don't really view that as being extremely material to how we’re going to do. Patrick maybe you can talk about client retention.

Yes, so we on client retention we ended the full year so if we look at client retention for the last 12 months at 95% for the full year.

Your next question comes from Brian Essex with Morgan Stanley. Your line is open.

Bill just a quick one maybe for you I think you mentioned some you’ll be ramping up sales force and I guess I just like to know kind of what are the changes been post DST as Intralinks. What kind of how is that ramping and I guess what is your outlook for productivity into 2019?

Well as we pointed in our remarks earlier we brought in Bernie O'Connor in the Domestic Financial Services business of DST and we brought in Danny DelMastro in the Healthcare Business and [indiscernible]. We have some great people in our sales organization already and so we’re adding to that group and we are building pipelines. And were pretty excited about what our opportunities are and I will hopefully to report to you as we begin to close those opportunities.

Any meaningful changes do you know in that business versus maybe what you had in terms of better productivity once side of the house versus the other?

Well obviously as is a big OMS provider and we think that you they have a brand new product coming out called the Clips, that’s gotten some pretty traction. As with all of our acquisitions we’re in a hurry, and Owen and I think Jeff Shoreman and Mike are quite aware of that and they are doing a good job as our Head of Europe Mr. Quinlan. So this way we operate let’s see if we can go faster and at the same time pay attention to our customers in a way that maybe improve our opportunities because it improves our reference.

And then may be one quick follow-up for Patrick, I think alternatives organic growth was mentioned in the quarter, but overall organic growth can you just if you could take that off?

In the fourth quarter?

Right.

At 3.3% was overall organic growth in the fourth quarter and 4.3% for the full year of 2018.

Your next question comes from Jackson Ader with JPMorgan. Your line is open.

Bill first for you, I know it’s only been about a year that you had DST and we’re already to 33% margins. But is there anything structurally as you look at that business that may - that would keep it from getting to that kind of 40% target you've always talked about for SS&C?

Well, I don't think - I think the key to our ability to generate our margins is to make sure that the first job is customer satisfaction. Right, so we're - the 40% margin really means that we hire talented people, we train them very well and generally we can use one person versus a lot of places use two or three people. So we also run our foreign operations with foreigners. Right, so in general we don't use - hardly any ex-pat. Not that we don't think that they're talented but they're expensive. So we just as well will not do that, we also don't tend to break leases. We stay in those places until the lease has expired, then we move the people. And other people they jam them all together because it's easier to do Kumbaya. We do remote Kumbaya and try to get people to realize that breaking out lease is going to hit that bonus pool and people are generally pretty agreeable to that.

And then a follow-up question for either Rahul or Patrick. Any particular geographical pockets of strength to call out within the alternatives business kind of around that 5.9% growth?

I think Asia-Pac has been going pretty fast for us. Right, still a smaller part of the business, so that obviously gets mitigated a little but we expect that to continue to be very strong in 2019.

Your next question comes from Alex Kramm with UBS. Your line is open.

My follow-up was actually asked already but just while I'm here real quick, any bigger picture comments on kind of DST's end markets and what you expect in there? I think when we talk to I guess executives there, it sounds like they're still in expectation for a lot of spending, are you hearing the same thing and then I think in that market we've also seen a little bit more M&A, so maybe just talk about how that may impact you? I mean, Invesco, Oppenheimer, for example, is an example that I think may actually benefit you. I don't know how specifically you can talk about that but any bigger picture thought on that end market and what's happening there?

Well, as you know I said that those end markets are - they're great end markets. The world is getting wealthier, there's lot of money to manage, and of course there's some headwinds of passive to active. But it is not dooms day scenario that some people paint. We have a lot of new products and services that are coming out to those groups of clients of ours and we're getting very close to them about really delivering technology more rapidly. Our advanced workstation - our advanced work distributor, which is a workflow product, is highly, highly, functional. And we're really building out a whole new generation and in a hurry. Our WalletShare product which was going to be rolled out in the first quarter of 2020, we rolled that in Europe, we rolled out in the fourth quarter of 2018. So if you start to accelerate the technological advances for your clients, it's going to help them accelerate their businesses and it's both going to accelerate their businesses on a revenue standpoint but also in their ability to manage their cost.

Your next question comes from Ken Hill with Rosenblatt Securities. Your line is open.

I think you might have just touched on this a couple questions back with DST, but kind of on overall margins you've seen nice progress here over the past couple of quarters to 37%. How are you thinking about the trajectory throughout the rest of this year as you get 40% and kind of what things would you know maybe on the revenue side or expense side that could push that higher or little bit lower for guys?

I think - we have teams of people working at all kinds of things. Obviously we have data processing centers that are used by DST, the data processing centers are used by Intralinks, we have data processing centers that are used by Eze, and obviously we have historic data processing centers. So I think Anthony Caiafa who's our new Chief Technology Officer has probably been with us 10 months, very talented, very capable, came out of Bloomberg and he's doing a great job for us. That's a lot of expense, and so understanding how to really make that redundant and highly performance and very cost effective are three objectives he has. And so far he's done a great job and he has number of very talented people working with him.

I guess just one modeling one from interest expense question. Just given all the debt issued and the aggressive pay down you guys have, any guidance you can provide for the next couple of quarters as far as interest expense coming up?

Well, we use all free cash flow to pay down debt. Typically our first quarter is a little slower because that's when we pay our employee annual bonuses but then it'll pick back up the second, third, and fourth quarter. We're currently in our plan expecting interest rates to stay fairly stable from where they are today at about 4.75%, 4.8%. We're at LIBOR plus 2.25. So we're currently assuming that interest rate stay pretty stable for the year and then other than first - first quarter will be the slowest debt pay down quarter and then it'll pick up in the next three quarters.

There are no further questions at this time. I will now turn the call back over to Bill Stone.

Again thanks everybody for listening to our call and we look forward to talking to you some of you in person and then the rest of you on the call next quarter. Thanks.

This concludes today's conference call. You may now disconnect.