DST Systems provides information processing software and
services to the mutual fund, insurance, retirement, and healthcare
industries, among others, primarily in North America. Its two top
segments (customer communications and financial services) together
contribute most of sales. Its financial services segment offers
software and systems used to handle a wide range of tasks including
shareowner recordkeeping, investment management, and business
process management; the customer communications division includes
integrated print and electronic billing and statement products. DST
generates most of its sales in the US.
Excluding intersegment revenues, the financial services segment
accounts for nearly half of sales, with customer communications
contributing a third. In 2013 DST created a healthcare services
segment that provides medical and pharmacy claims administration;
excluding intersegment revenues, it generates about 15% of
The company is also involved in real estate and equity
investments in various companies.
The US is DST's largest market, accounting for more than 80% of
sales. Its largest international market is the UK (about 10% of
The company has locations in the US, as well as in Australia,
Canada, India, Thailand, and the UK.
Sales and Marketing
DST markets its products directly, as well as through
subsidiaries, joint venture affiliates, and strategic
DST's revenue of $2.7 billion for 2013, up 3% from the prior year,
marks the company's fourth consecutive year of growth. Sales for
all three segments grew that year. Net income rose nearly 10% to
$353 million, primarily on lower depreciation and amortization, and
cash flow from operations returned to more typical levels ($395
million in 2013) after dipping in 2012 as a result of income taxes
paid on investment gains.
Mergers and Acquisitions
The company has historically been very active on the acquisition
front to complement its product line and expand into new geographic
areas. DST has balanced its acquisition strategy by purchasing both
complementary software and technology providers as well as service
providers, with a particular emphasis on buying business process
outsourcing (BPO) and consulting firms.
Much of the company's acquisition dollars in 2011 were spent on
the expansion of its financial services segment. DST paid $251.9
million that year for ALPS Holdings, a company that performed
technology and back-office functions for financial services firms,
and it acquired the assets of IntelliSource Healthcare Solutions, a
developer of software for health insurance providers. Also in 2011
it bought Subserveo, a Canadian provider of compliance and
surveillance services to broker-dealers. Additionally, DST acquired
consultancy Finix Business Strategies and enterprise social
networking software developer Finix Converge.
To boost its customer communications segment in 2011 DST acquired
Newkirk Products, a company that performed communications services
-- writing statements and reports -- for financial service firms,
and Lateral Group Limited, a provider of marketing services such as
database marketing, digital media. campaign management, print
management, and online trading facilitation.