Ladies and gentlemen, thank you for standing by, and welcome to the SS&C Technologies second quarter earnings conference call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Justine Stone. Thank you. Please go ahead.

Hi, everyone. Welcome and thank you for joining us for our Q2 2020 earnings call. I'm Justine Stone, Investor Relations for SS&C. 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 purposes of the safe harbor provisions under 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, July 28, 2020. 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 for joining us today. I hope you and yours are home safe and healthy. I'll discuss our results for the quarter and then talk through our assumptions for the remainder of the year as we continue to navigate in a COVID-19 world. Our results for the second quarter were $1.1408 billion in adjusted revenue, down 1.3%; and $1.04 in adjusted diluted earnings per share, up 14.3%. Our adjusted consolidated EBITDA was $448.4 million, and adjusted consolidated EBITDA margin remained constant at 39.3%. Our Q2 adjusted organic revenue was down 1.4%. Many perpetual license software and complex outsourcing deals have been pushed as well as delayed fund launches, but firms are now adjusting to the new environment. We continue to see strength in the alternative funds administration and Eze businesses with 4.6% and 3.6% organic growth, respectively. We were encouraged by Intralinks' solid performance of 3% organic growth. DST in our perpetual license businesses saw a bit more Q2 weakness, but we are encouraged by our large deal pipeline and initial Q3 acceptances of our bids. Operating cash flow was $555.7 million for the first 6 months ended June 30, 2020, a 33.4% increase from the $416.6 million for the prior 6 months. Our secured net leverage ratio was 2.53x, and our total net leverage ratio was 3.6x. With our secured leverage levels well below 3x, we will consider other uses of free cash flow, including stock buybacks, which you have seen we have renewed and increased our authorized buyback program to $750 million. In Q2, we bought back 0.5 million shares of common stock at an average price of $58.62 per share or $27.9 million. Despite the challenges of COVID-19 and the global economic shutdown has presented us, SS&C has maintained a high level of…

Thanks, Bill. Our operations are well settled into remote working conditions as a result of COVID, and our clients have complimented us on the quality of our delivery. We have maintained revenue retention rates and continue to grow in some of our key markets. We saw growth in alternative fund services, Eze and Intralinks in Q2. Drivers included competitive takeaways in alternatives, heightened trading volumes in Eze, and a large payment protection plan win for Intralinks, offsetting a reduction in M&A volumes. As expected, we saw a slowdown in perpetual license sales in our institutional and investment management and other software license businesses. DST revenue was impacted by reduced volumes and activity in both financial services and health care as well as a reduction in interest revenues due to the interest rate decline. Our pipeline remains strong, and we are optimistic about being able to win large mandates at DST and elsewhere in our business over the next few quarters. The products and services we provide are mission-critical to our client base, and we have seen a significant increase in log-in and usage activity on our web and mobile client portals and applications. We have increased inbound interest for cloud hosting and outsourced services as firms in this remote working environment look to us to provide access to production systems and augment their staff and processing capability. We're making investments in our business to innovate and support our clients. Black Diamond's new time line feature that allows for personalized digital communication at scale was adopted by over 60 clients in Q2. In SS&C Health, we're developing dashboards that are updated in real time related to COVID-19 product utilization and trends. We're using the Vidado technology to help state and local governments scan handwritten medical documents and forms. Algorithmics continues to perform well, and we have several ongoing projects to incorporate the technology into our existing solutions. Now I will mention some key deals for Q2. A large fund administration client using Geneva upgraded to our cloud delivery solution, giving them our application and IT infrastructure in one solution. A U.S. bank bought our Black Diamond solution to help them attract registered investment advisers. An independent money manager with over $100 billion in assets bought a suite of SS&C products, including Global Wealth Platform. They needed a comprehensive end-to-end solution with scalability to handle high volumes. An existing health care client added our Drug Discount Wrap to their suite of services. A large Brazilian asset manager chose SS&C GlobeOp's fund services suite, citing our team's expertise and technology. A commercial real estate company chose Precision LM for their loan origination and servicing. A $20 billion U.K.-based investment manager looking to consolidate vendors moved an additional fund from a competitor to SS&C GlobeOp. A $28 billion alternative manager upgraded to Eze Eclipse. They were impressed with the interface and anywhere, anytime functionality. I will now turn it over to Patrick to run through the financials.

Thank you. The results for the second quarter were GAAP revenues of $1.1381 billion, GAAP net income of $169.5 million and diluted EPS of $0.64. Adjusted revenue was $1.1408 billion, excluding the impact of the adoption of revenue standard 606 and for acquired deferred revenue adjustments for the acquisition. Adjusted revenue was down 1.3%. Adjusted operating income increased 0.9%, and adjusted EPS was $1.04, a 14.3% increase over Q2 2019. Adjusted revenue decreased $15 million or 1.3% over Q2 2019. The acquisitions contributed $25.1 million. Foreign exchange had an unfavorable impact of $7.2 million or 0.6% in the quarter. An organic decline on a constant currency basis was 1.4% driven by weakness in the health care transfer agency, Advent Software products, due to the current environment. These were offset by strength in fund administration, the Eze business, Intralinks and institutional products. Adjusted operating income for the second quarter of 2020 was $430.1 million, an increase of $3.9 million or 0.9% in the second quarter of 2019. Foreign exchange had a positive impact of $8.3 million in expenses in the quarter. Adjusted operating margins improved from 36.9% in 2019 to 37.7% in the second quarter of 2020 driven by lower personnel costs, lower third-party service expenses, lower out-of-pocket expenses and lower travel expenses. Adjusted consolidated EBITDA defined in Note 3 of the earnings release was $448.4 million or 39.3% of adjusted revenue, a slight increase of $0.2 million over Q2 '19. Interest expense for the second quarter was 220 -- of 2020 was $60.5 million and includes $3.5 million of noncash amortized financing costs in OID. The average rate in the quarter for our credit facility and the senior notes was 3.19% compared to 4.96% in the second quarter of 2019 and resulted in an interest expense decrease of $43.8 million.…

Thanks, Patrick. In closing, I'd like to thank the 23,300 people for staying focused -- 23,300 people that work for SS&C for staying focused and delivering. We are blessed to have such a talented workforce. I'd also like to reiterate the confidence we have in our business model, its cash flow characteristics and resiliency. While we cannot control the macroeconomic headwinds of COVID-19, we can control the quality of our deliverables and our high-touch customer service. We have solid visibility into our earnings and cash flow generation for the remainder of the year, and we will continue to manage cost, track receivables and support our sales force in winning new businesses. Our pipeline continues to grow with specific large opportunities within SS&C Health and Retirement Solutions. We believe we will come out of this current crisis as a stronger company. With that, I'll turn it over to questions.

[Operator Instructions]. Your first question comes from the line of Surinder Thind with Jefferies.

Can you help me -- when I look at the second half for guidance, can you break that down in terms of your expectations for what you're seeing in terms of maybe the Eze growth -- or DST versus the rest of the business. If you can break that out versus -- and Intralinks as well, please.

Well, I think that overall, we think the business is, I think, looking at 1 point to 2.7%. And I would say that -- as we said on the call, that we think that the fund administration, the Eze business and Intralinks will probably grow at the low end of our expectations at the beginning of the year but still probably grow somewhere between 3% and 4.5%. We would expect DST to probably be flat to down 2%. We have several very large deals in DST, but they have to sign and they have to start generating revenue. So we're optimistic about DST in 2021. But for 2020, they will continue to be revenue challenged, but we still will generate tremendous cash flow and earnings.

And then as a follow-up, when I look at your margin guidance, obviously, versus the guidance that was provided in the last quarter, the expectation is sort of margins to be better, but it's also expected that margins will be relatively steady regardless of the revenue outcome. And so are you guys targeting margins at this point? Or how should we think about that aspect?

I think that in general, we target margins at about 40% EBITDA margins. And we haven't really changed that. And it's going to bounce between 38% and 42%. And a lot of that is going to -- at the beginning of this COVID thing, we bought a lot of equipment, shipped it out and expensed it all right in. And so there's going to be times when our expenses are a little bit higher, and there'd be other times when our revenue is a little bit higher. But I would say that in general, that's about where we target our consolidated EBITDA percentages.

Your next question comes from the line of Ken Hill with Rosenblatt.

Just wanted to ask one on kind of the capital allocation front. You guys have leverage. It seems like where you need it, you had the share repurchase authorization there. But I was hoping you could talk a little bit about M&A and how that fits into the picture and maybe what you're seeing as it relates to the ability to approach companies right now in the environment, evaluate transactions and actually start implementing on them, that would be helpful.

Well, we constantly go after acquisition candidates, and we're methodical about it, and then we're also disciplined about what we're going to pay. Even in today's world, I mean there was a company that just sold today for somewhere around 30x EBITDA. And it's very difficult for us to do that and see how we ever make money with that. But we have plenty of firepower. We have plenty of management bandwidth. So we're active. But right now, even in today's world, it's a pretty high price for good assets.

Okay. Fair enough. I just had one question then on the guidance differences between the baseline scenario, the kind of 2021 recovery piece. It looked like revenues went up by about $50 million. Is it fair to assume that Innovest is coming in there? I think that was -- you guys had a target of around $40 million-ish in revenue, growing at a high single-digit rate. And then kind of any thoughts on the impact on net income? Is that actually coming into the higher margin just given the net income uptake was greater in your most recent guidance?

I think the -- this is Rahul. The change in the scenario -- Innovest is definitely a part of it, probably about half. I think the rest of it is we did a little better in Q2, and we expect to do a little better in Q3 and Q4 from that baseline 2021 scenario. Margin on Innovest at least right now, we expect to be about 20% or so and then we've got improvement plans to get up from there.

Your next question comes from the line of Alex Kramm with UBS.

In terms of your scenarios, you obviously are saying economic recovery, but can you kind of lay out what really needs to happen for the business to reaccelerate in terms of the pandemic? I mean it seems like your business is very reliant upon going into seeing clients, doing installs or using consultants on-premise. So any flavor you can give us, like how you think that will progress from here considering that, well, on the financial services industry -- and I think we're all very conservative in terms of going back to offices and letting people back in our premises, so -- and then maybe how have you changed your business to kind of get around that? And how much of your business can do off-premise, I guess, or cloud? That makes sense?

Yes. So Alex, as you take a look at it, right, 99% of our people work from home, right? So we are either working on an individual client's account where the data reside in our data farms and the systems reside in our data farms or we're working where the systems and data reside in their data farms, often which might be a third-party data farm. So the work, even the implementation work, is pretty similar. The difference is that you're doing it from your home rather than from your desk and you're not surrounded by other people doing the same thing. You're working from home. So in some ways, you get better productivity because you get the focus and there's not the interruption of the office. And in another way, there's challenges because you don't have access as readily to expertise right around you. But in general, the business operates the same once we secure a client and begin the implementation. What's more challenging a little bit is on large-scale sales opportunity. It's a lot of Zoom meetings and a lot of relationship building from a touch point, "Hey, we know Alex Kramm at UBS," or "We know Surinder at Jefferies," or "We know somebody else," right, and trying to connect all those dots to get whoever is in the buying position to be comfortable to buy from us. And that becomes a little bit more challenging when it's done from a remote basis, and they can't look in the eye and ask you the really hard questions and see how you handle them and those kinds of things. So I would say that's the biggest difference. And Rahul, you can comment on that.

Bill, I would just add -- obviously, I agree with that. And I would just add, in particular, it's the large capital expenditures, right, so people that are buying perpetual licenses or they're going to kick off some projects that has a lengthy conversion period and they really need to get comfortable with our team and environment. That's where we've seen some slowdown so far this year. But as Bill said in his remarks, we're starting to see people get more comfortable even in this remote working environment and make some of those decisions. So coming back to these scenarios, I think the assumption is under the recovery scenario or the improvement scenario that we have, we continue to have that and we have people go back to making decisions on some of those larger deals.

Okay. Fair enough. And then you said DST is still going to be fairly challenged this year but maybe more positive next year. So do you think it can actually grow next year? And any sort of ranges where you think next year can already be for that business?

Well, we've gotten some solid acceptances of our bids in Q3. I mean we haven't signed the contracts yet, but we're in the midst of contract negotiations on those and we've been selected. And that totals upwards $50 million, $60 million, and we have a full pipeline of other deals. And so we're getting some traction. And so we think that there's an opportunity that DST in 2021 could be positive in the 1% to 2% range.

Your next question comes from the line of Brad Zelnick with Crédit Suisse.

Congrats to everybody on the great quarter and especially with the performance on Intralinks. Can you talk about the puts and takes between M&A activity and corporate use cases? And how should we calibrate our expectations going forward for Intralinks coming off of this large PPP-related win and just the overall strength in the quarter?

Well, first, I think Ken Bisconti and Bob Petrocchi, who we put in charge of that business, I guess, about 8 or 9 months ago, have really done a great job, right? They're on top of it. They know their customers. They know their markets and they're aggressive. And Intralinks also has a very good development organization, and they've been bringing out new products and services. And I think that even though M&A has been down, I think, 7% so far in the first 6 months, they've been able to use their data room capability for other things such as tracking this PPP program for one of the largest banks in the country and also for other things. And so I would just say that it's a pretty flexible business. It's a really bright workforce, and Ken and Bob are good leaders. Rahul may say something else.

Well, I would add that secure document exchange, right, is obviously a lot broader than just M&A. So we found some good use cases for it with the Payment Protection Program, but there's plenty other use cases that I think Bob and Ken and their sales teams and development teams are working on.

Can I just follow up one for Patrick? Appreciate the very thorough disclosure, and I might have missed it, but can you just help to reconcile the really strong first half cash flow generation and the scenario guidance that actually ticks down on cash flow? Is that just the acquisitions or I'm missing something else?

Well, the main difference is that we were able to defer about $50 million, $60 million of cash tax payments from Q2 to Q3 as per the legislation that Congress passed. So we have to make a tax payment of about $60 million in July 15. So essentially, we moved tax payments from Q2 to Q3. So that helped Q2 cash flow a little bit, but we also had strong collections and good revenues for the quarter that helped cash flow.

Your next question comes from the line of Andrew Schmidt with Citi.

Question on organic growth. I was wondering if you could talk a little bit about just thoughts on how organic growth should trend sequentially into the third quarter. It seems like the outlook suggests that there's a sequential decline in organic revenue. So I'm just trying to reconcile what's going on from quarter to quarter would be helpful.

Well, we still have some runoff in the DST business. So that's a bit of a headwind. We've also had, as you know, some challenges in being able to close large perpetual license deals. And then on the large outsourcing deals we have, sometimes the revenue doesn't ramp up for a couple of quarters. So those are 3 reasons for -- or kind of a flat organic revenue picture between the second quarter and the fourth quarter. Rahul, do you have a comment on that?

No. I think that -- I think in the baseline scenario, we are assuming that sales and sales activity remains at current levels and doesn't get a lot better and doesn't get a lot worse from here, hence, kind of a flattish outlook. If that starts to come back, then we expect to be closer to our economic improvement scenario.

Got it. That's helpful. And then retention, that's a pretty bright spot, sticking with the 96% rate. That's an LTM measure. Can you just talk a little bit how it trended in the most recent quarter? And then if there are any variations by product or service, that would be helpful.

I think the LTM trended down from 96.4% to 96%. So it was a little bit of a decline on the LTM basis. And pretty much all the businesses have high retention rates in that range. There's no really outliers. They're pretty much hanging in that range, most of the businesses.

Your next question comes from the line of Ashish Sabadra with Deutsche Bank.

Congrats on the solid results. A question about the DST deals that are in the pipeline right now. I was just wondering if you could provide any flavor or color around whether those are transfer agency deals, any color on those fronts. And then also on the health care side, I understand some of the headwinds near term because some of the elective surgeries are getting -- facilities are getting pushed down, but can you just talk about the momentum in that business, ability to sign new deals on the health care front as well?

Yes. So on the deal picture, we have several large deals in both fund services business and our health care business. And so those look pretty good to us, and we have a couple very nice deals in financial services. So it's across the board in DST and it's been a lot of hard work, and a lot of people have done yeoman's work in filling out RFPs and meeting with various prospects. So that's been the kind of -- and I would say we probably have a pipeline of maybe 10 deals in the DST business that has somewhere between $10 million and $30 million in revenue attached. And then the second part of your question was about -- I'm sorry but I don't recall.

Yes. No, no. Just about health care and the deal flow on that front as well and just the near-term headwind that we are seeing on the health care side and just as you think about when do we start to see that normalize going forward.

Well, that's right. I mean in particular, right, at the beginning of the pandemic, everybody rushed out and got their prescriptions refilled, and there was a lot of value into us. But obviously, once you've done that, you don't need to continuously refill it. So with that part of the business, slowed down a little bit. And then we get a lot of business in paying claims on the -- on elective surgery in our health plan business and stuff like that. So without any elective surgeries, there's again less prescriptions for pain, less prescriptions for antibiotics and other things like that. So we're waiting for the elective surgery process to come back. And obviously, if the hospital beds are all taken up by COVID patients, then that's not going to happen. So those are the types of things that went into our thought process on our scenarios. So I think they're well thought out. I think we have opportunities in health care. And I would tell you that we're pretty optimistic that we're going to have a really good '21, and we're going to have a very solid end to '20.

That's very helpful. And maybe just a quick question on alternatives. Alternatives delivered a pretty strong growth in this quarter as well. And Rahul, you mentioned share gains there, competitive events on that front. I was just wondering if you could talk about both private equity as well as hedge funds. What are you seeing on both those fronts?

Yes. So it's been pretty much across the board there as well. In our hedge business, we've seen new funds -- clients start new funds. We've had some competitive wins. We've had organic rebound from the decline earlier in the year. And our private equity and real assets businesses are -- remain very strong both in terms of wins as well as the prospects that we have and several large deals that we're working. So across the board, alternatives has been pretty good.

Your next question comes from the line of Peter Heckmann with Davidson.

Patrick, just a minutia, but was there a onetime gain from the sale of an asset in the quarter?

There was. You can see the adjustment in the cash flow statement.

I got that far, yes.

It's mark-to-market and a gain.

Got it. Got it.

The $16.5 million.

That's the gain, and $34 million was the proceeds -- total proceeds.

Right.

Okay. And then within your scenario guidance, have you assumed any level of buybacks?

We haven't assumed any level of buybacks in the scenarios and diluted shares count.

Okay. Great. And then just -- can you give me an approximate number for just the perpetual software license fees in the quarter?

Professional services revenue in the quarter?

I'm sorry. Perpetual software license fees -- or total license fee revenue would be fine. Just trying to get a feel...

Perpetual licenses?

Yes.

It was $5.9 million.

Your next question comes from the line of Jackson Ader with JPMorgan.

First one actually is on -- is the, call it, 3.5% organic growth or so. Curious how much of that was driven by -- if you can rank order maybe the volumes that you saw in the market versus new logo wins.

Go ahead, Rahul.

Yes. So I would say probably 60% of it was market volumes and volatility, and 40% of it was new sales both on Eze as well as the new Eclipse platform. So Mike Hutner and his team have been doing a pretty good job of both accelerating the development and innovation we have on that as well as getting the prospects to buy even in this environment. So pretty pleased about that. And I'd say 60-40.

And so just a quick follow-up on that. Is that about what you guys are kind of expecting in the long term? Or is that being impacted by the economic outlook as well just in terms of logo additions and, call it, nonvolume-related growth with the Eze business?

I think we're expecting nonvolume-related growth to get -- to continue to get better from here. Obviously, when you sell a deal, in the beginning, you don't get all the revenue. You get some kind of ramped down revenue during the implementation period. I think that's kind of where we are right now on the new clients that we have sold recently. And so we expect those clients to get up to full strength, and we expect to continue to sell more run rate revenue. So we do expect it to grow over time.

That's great. And then if I could just sneak in one quick one. The DST headwinds, we've passed it out certainly pretty thoroughly tonight. But just asked a different way, is the DST exposure or maybe the perpetual mix, what -- is anything surprising you as far as maybe how relatively less resilient that business has been relative to the other businesses that you have?

I don't think so. I think that it's a big, complex business that is getting a pretty hefty overhaul. And as you go through this pretty hefty overhaul, there's all kinds of things you find, right? This is a business that when we bought it had 16,400 head count and $420 million, $430 million in EBITDA. And now it has less head count and closer to $800 million in EBITDA. And so we're trying to do things in a wise way. We think there's some great opportunities and we have some great clients, and we have to suggest to them and present to them things they want to buy. We can't be in the business of building things we want to build. We have to build things that people want to buy, and I think we're making progress in that regard. And I think that's the -- will end up being the holy grail. There's no -- nothing magic here. It's just hard work with very large clients and generally very big systems that need some innovation and some new product deliveries.

Your next question comes from the line of Chris Shutler with William Blair.

Could you talk about the reasons for the management changes at both Advent and DST Health recently?

At Advent, Rob Roley, who was running that business for the last couple of years for us and have been with Advent for 19 years, had -- got an offer to go be an operating partner at a large private equity firm and he decided to do it. And he's also from California, and he was living in New York with us, and there's a good chance he'll move back to the West Coast. So he's a great guy. We wish him well. And Karen and Leivent -- Steve had been running the Black Diamond business for a long time. And I think Karen has been the #2 person to Rob for a number of years. And so we're both excited about Karen and Steve's opportunity. And also, we wish Robert well. So not much else there. And then we've been bang around the health care business a little bit now for over 2 years and 3 months. And Danny DelMastro, who started a company called Aero-Med in Connecticut and grew that to a pretty large company and sold it to Cardinal Health and was a senior executive at Cardinal Health for 4 years, I think, and then left there, and we were fortunate enough to pick him up. And we've been impressed with his presence and sales capability and executive capabilities. So we decided to put him in charge. And we think he's done a great job for us, and he has great client relationships, and we're excited about our opportunities.

Okay, Bill. And then I guess looking at the scenarios, the baseline scenarios' revenue is, I think, a little bit lower if we normalize for Innovest, but the profit is up nicely versus your original guidance -- or the original scenarios rather. So I guess the question is, where are you taking out costs considerably more aggressively than the original scenarios?

Well, I think a couple of things. I mean obviously, we appreciate that the Federal Reserve has interest rates at 19 basis points or something. So interest costs are a lot less.

That helps.

Yes, that helps. And then obviously, we're also moving from 1,900 contractors or so. We will have, I believe, none by the end of August. And we will get a big pickup in expense savings from moving those contractors to employees. And then third, obviously, travel and entertainment is dormant, the most part. And so that saved us a tremendous amount of money. And then there's a bunch of things that go with the commute and paying for all kinds of different things for our people to get into and backhaul. So there's none of those commute expenses and stuff like that. So I think the expense, in general, will tend to be -- will be pretty moderated.

Bill, just to follow up on that, the move from contractors to employees. Like when did that process really begin in earnest? And it sounds like it's completing soon.

I think we notified Syntel about a year ago because that's what the contract said, and we started onboarding as employees probably in about March, and we were hoping to be done by the end of June, but COVID kind of bumped into that a little bit. So now we expect it to be done by the end of August. Is that pretty accurate, Rahul?

Yes. That's right, Bill.

Your next question comes from the line of James Faucette with Morgan Stanley.

This is Jonathan on for James. How has pricing held up? And is there any sort of appetite for further price increases in this environment?

Well, we certainly have appetite for it. I guess you're probably asking one of our clients' appetite for it.

That's fair.

If I could add, it's held up pretty well in the sense that deals that we are winning, we're not seeing any trends that force us to kind of revise pricing down or anything like that. And I think on the price increase process, we're pretty pleased with how that went at the end of the year. And we think most of our clients understand that we need to deliver more value. And in exchange, we would like a little bit of an uptick on a regular basis. So we do think that, that process is going to be good for us over the long term.

Understood. And it may be early days, but how are you thinking about the potential for cost takeouts for '21 versus the expense controls that you have in place for '20?

Yes. I wouldn't say that we have anything that is right on the horizon. The people that run our businesses are in charge of going through their budget and making sure that we have meaningful work for everyone. But we're a strong, profitable company, and we like our workforce and we want to support them. And our -- most of our costs are employee-related. So we're very, very circumspect about how we go about that process. And we think this move of bringing the contractors into the fold -- and most of the stuff you can do through attrition if you want to have a smaller workforce. So we're optimistic that we're going to be able to have great margins, high cash flow and really good earnings.

[Operator Instructions]. Your next question comes from the line of Alex Kramm with UBS.

Just want to come back to organic growth for a minute. I think there's still a little bit of confusion here, what changed at least there for me. So I think your old kind of range was 0 to negative 2%, and now it's negative 1% to negative 2.7%. So I think you said a lot of things on this call. But can you just kind of sum up what really changed and I -- because I think you did better than you thought in the second quarter as well.

Well, again, Alex, I think the organic revenue numbers are going to get tied to our ability to close new business and be able to drive that business into revenue in Q3 and Q4 and obviously in Q2 as well but given that the real revenue pops you get in this business are when you do large-scale perpetual licenses because they close immediately. So given that, that has slowed down. I think that's kind of the biggest issue on organic revenue growth impact between Q2 and in the second half of the year.

Okay. And then just one quick one. You raised your buyback authorization significantly, but you really haven't shown much appetite to buy back. So it's nice to have the authorization. But with the stock basically trading at the lowest relative level it has in history, I think, relative to the S&P 500, I mean what does it take for you to actually do something with the authorization?

Alex, it takes courage and it also -- it takes not having acquisitions that you're thinking about closing and deciding that the acquisitions are inferior to buying back our own stock. So we try to be judicious about not buying our stock and understanding the ramifications of buying back stock versus paying down debt. I mean -- I think a first year finance person can figure out that buying back stock from an economic standpoint is better for us than paying down debt, but there's still a perception that no leverage is better than some leverage. And so it's just a -- it's always a catch-22, but we didn't raise our authorization to just raise our authorization. If we go in, it's like most things we do. We don't go in half-hearted, right? We spent $8.4 billion in 2018 to buy companies. And over the last 10 or 12 years, I think we spent about $14 billion to buy companies. So we're not afraid to make decisions and make large decisions. It's just trying to do it at the right time. And maybe we've been a little bit too searching a perfect when we could have had excellent times, but we're not bashful about our track record. We kind of like it.

Your next question comes from the line of Patrick O'Shaughnessy with Raymond James.

Just one question from me, a follow-up on the question earlier about pricing. There were a couple of lawsuits filed this past quarter that seem at least indirectly related to your pricing initiatives. To what extent were those lawsuits and those client disagreements outliers in terms of pushback to your pricing efforts? Or is there -- or has there been some broad resistance to you guys trying to adjust your pricing?

I think they were outliers. You're not going to be able to do price increases. And I think that there -- it's also -- some of the things are contractual. There's contractual issues in both cases that have nothing to do with pricing. So I just think they're outliers, and we don't -- we have great relationships with our clients, which is evidenced by our 96.2% retention rate in that type of stuff. So I think those are both outliers. I don't know if you have a different comment, Rahul.

Bill, I'd agree with that. And like Bill said, the issues in those items are -- for the most part, the significant issues are unrelated to this pricing initiative we've had.

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

Well, again, thanks, everybody, for being on the call. We are focused on our business and excited about our opportunities, and we believe that we have great opportunities through the rest of this year and really set ourselves up for a great 2021. So thanks again, and we look forward to talking to you at the end of October. Thanks. Bye.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.