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Broadridge Financial Solutions, Inc. is a global leader in financial technology, offering investor communications and technology-driven solutions to a diverse clientele, including banks, broker-dealers, asset and wealth managers, public companies, investors, and mutual funds . The company operates primarily through two segments: Investor Communication Solutions (ICS) and Global Technology and Operations (GTO), providing essential infrastructure and data solutions that enhance business performance and operational efficiency . Broadridge's offerings include processing and distributing proxy materials, facilitating vote processing, and delivering technology solutions for capital markets and wealth management .
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Investor Communication Solutions (ICS) - Processes and distributes proxy materials, facilitates vote processing, and provides data-driven solutions for asset managers and retirement service providers. This segment includes:
- Regulatory Solutions - Offers compliance and regulatory communication services.
- Data-Driven Fund Solutions - Provides analytics and insights for fund management.
- Corporate Issuer Solutions - Delivers services for corporate governance and shareholder engagement.
- Customer Communications Solutions - Manages customer communication strategies and execution.
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Global Technology and Operations (GTO) - Delivers technology solutions for capital markets and wealth and investment management, including securities processing and data and analytics solutions .
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Given that your adjusted operating income margin declined by 90 basis points in Q1 '25 due to factors like the E-Trade deconversion and ongoing reinvestment, how do you plan to offset these pressures and achieve your goal of 50 basis points of underlying core margin expansion for the full year?
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The acquisition of SIS is expected to be slightly dilutive to Broadridge's margins and have no material impact on earnings this year; how do you justify this acquisition in terms of shareholder value, and when do you anticipate it becoming accretive to both margins and earnings?
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You mentioned a lengthening of the sales pipeline with deals taking longer to close; with this uncertainty in client decision-making, how confident are you in achieving your closed sales guidance of $290 million to $330 million for fiscal '25, and what strategies are you employing to mitigate potential delays?
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With the challenges arising from T+1 settlement discrepancies between the U.S. and Europe increasing costs for brokers, what specific solutions is Broadridge developing to help clients navigate these issues, and how does this situation present an opportunity to drive growth in your capital markets franchise?
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Customer communications growth remained consistent with fiscal Q4 rather than accelerating; given your focus on digitization and the importance of digital revenues, why haven't we seen stronger growth in this area, and what concrete steps are you taking to achieve mid- to high single-digit growth in your customer communications business this fiscal year?
Competitors mentioned in the company's latest 10K filing.
- Independent proxy distribution service providers
- Transfer agents
- Proxy advisory firms
- Proxy solicitation firms
- Firms that process proxy votes
- Financial printers
- Vendors that provide trade processing, back-office record keeping, and sell-side order and execution management systems
- Service providers that deliver data, technology solutions, and marketing services to wealth advisors
- Firms that provide portfolio management, compliance, and operational support solutions for asset managers and hedge funds .
Recent developments and announcements about BR.
Financial Reporting
- Revenue Growth: Recurring revenues grew by 9%, driven by 7% organic growth and 2% from the SIS acquisition. Total revenue increased by 13% to $1.6 billion, with event-driven revenues reaching a record $125 million, surpassing the previous high of $97 million in fiscal 2018.
- Earnings Growth: Adjusted EPS rose by 70% to $1.56, supported by strong recurring revenue growth and record event-driven revenues. Adjusted operating income margins increased by 420 basis points to 16.6%.
- Cash Flow: Free cash flow for Q2 was $214 million, up $46 million year-over-year, with a year-to-date free cash flow of $56 million.
- Fiscal Year 2025 Outlook: Broadridge reaffirmed its guidance for 6%-8% recurring revenue growth, 8%-12% adjusted EPS growth, and closed sales of $290 million to $330 million. Free cash flow conversion is expected to remain between 95%-105%.
- Event-Driven Revenues: Management anticipates event-driven revenues to normalize to $55-$60 million per quarter for the remainder of the fiscal year.
- Equity Position Growth: Testing indicates low double-digit equity position growth for the second half of the year, driven by increased investor participation and managed accounts.
- AI and Innovation: Broadridge is investing in AI-enabled solutions, including Bond GPT and Ops GPT, to enhance trading and operational efficiencies. These initiatives are expected to drive long-term growth but are not yet materially impacting revenue.
- Wealth Management Expansion: The acquisition of SIS has bolstered Broadridge’s Canadian wealth management business, with early success in upselling solutions to existing clients. The company is also focusing on modular solutions for advisor productivity and digitizing operations.
- Capital Markets: New AI-enabled trading solutions and distributed ledger repo products are simplifying trading and post-trade operations, contributing to mid- to high single-digit growth in this segment.
- Digital Transformation: Broadridge continues to drive digitization across its governance and customer communication businesses, with digital revenues growing at double-digit rates.
- Revenue and Guidance: Analysts questioned the lack of upward revision in guidance despite strong year-to-date performance. Management cited balanced growth drivers and ongoing investments as reasons for maintaining the current outlook.
- AI Monetization: Management highlighted ongoing efforts to integrate AI into existing products and launch new AI-driven solutions, though significant revenue contributions are expected in the longer term.
- M&A and Capital Allocation: Broadridge remains committed to balanced capital allocation, prioritizing high-return M&A opportunities and share buybacks while maintaining a strong dividend policy.
- Investor Participation: Equity position growth has accelerated, driven by increased trading volumes and Main Street investor engagement. Fund position growth remains stable at mid-single digits.
- Regulatory Environment: Management is monitoring potential regulatory changes under the new administration, including opportunities in digital assets and shareholder engagement.
- Total Revenues: Increased by 13% to $1,589 million from $1,405 million in the prior year period.
- Recurring Revenues: Grew by 9% to $980 million, driven by net new business in Investor Communication Solutions (ICS) and internal growth and acquisitions in Global Technology and Operations (GTO).
- Event-Driven Revenues: Surged by 126% to $125 million, primarily due to higher volumes of mutual fund communications.
- Distribution Revenues: Increased by 7% to $484 million, largely attributed to a postage rate increase of approximately $30 million.
- Operating Income: Rose by 69% to $211 million, with an operating margin of 13.3%, up from 8.9% in the prior year period.
- Adjusted Operating Income (Non-GAAP): Increased by 51% to $263 million, with an adjusted operating margin of 16.6%, up from 12.4%.
- Diluted EPS: Grew by 103% to $1.20, compared to $0.59 in the prior year period.
- Adjusted EPS (Non-GAAP): Increased by 70% to $1.56, compared to $0.92.
- Total Revenues: Increased by 15% to $1,149 million.
- Recurring Revenues: Grew by 9% to $540 million, driven by:
- Regulatory: Up 8%, supported by equity position growth of 11% and mutual fund/ETF position growth of 5%.
- Issuer: Increased by 18%, driven by shareholder engagement and disclosure solutions.
- Customer Communications: Rose by 10%, supported by growth in print and digital communications.
- Recurring Revenues: Increased by 9% to $440 million, driven by:
- Capital Markets: Up 6%, supported by new sales and higher trading volumes.
- Wealth and Investment Management: Grew by 12%, with contributions from organic growth and the acquisition of SIS.
- Recurring Revenue Growth (Constant Currency): 6-8%.
- Adjusted EPS Growth (Non-GAAP): 8-12%.
- Closed Sales: Expected between $290 million and $330 million.
Earnings Call
Broadridge Financial Solutions (BR) recently released its second-quarter fiscal year 2025 earnings call transcript, providing key updates on its financial performance, strategic initiatives, and market outlook. Below is a summary of the key points:
Financial Performance
Management’s Forward Guidance
Strategic Initiatives and Market Conditions
Analyst Questions and Management Responses
Market Conditions
Key Takeaways
Broadridge delivered a strong quarter, supported by robust recurring revenue growth, record event-driven revenues, and strategic investments in AI and wealth management. The company remains well-positioned to achieve its fiscal 2025 financial objectives while continuing to invest in innovation and market expansion.
For further details, the full earnings release and accompanying slides are available on Broadridge’s Investor Relations website.
Earnings Report
Broadridge Financial Solutions (BR) Second Quarter Fiscal 2025 Earnings Results
Broadridge Financial Solutions has released its financial results for the second quarter of fiscal year 2025, ending December 31, 2024. Below are the key highlights:
Financial Performance
Profitability
Segment Highlights
Investor Communication Solutions (ICS)
Global Technology and Operations (GTO)
Fiscal Year 2025 Guidance (Reaffirmed)
CEO Commentary
Tim Gokey, CEO of Broadridge, stated:
“Broadridge delivered strong second-quarter results, including 9% recurring revenue growth constant currency and 70% adjusted EPS growth. Our performance reflects the execution of our long-term strategy to democratize and digitize investing, simplify and innovate trading, and modernize wealth management”.
Conference Call Details
A conference call discussing these results was held on January 31, 2025, at 8:30 a.m. ET. A replay is available on Broadridge’s Investor Relations website until February 7, 2025.
For more details, visit Broadridge’s Investor Relations website.
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Corporate Leadership
Leadership Change
Ashima Ghei has been appointed as the new Chief Financial Officer of Broadridge Financial Solutions, effective immediately. She has been serving as the Interim CFO since July 1, 2024, and has played a crucial role in advancing the company's financial strategy. Ghei joined Broadridge in January 2022 and has a strong background, including an 18-year career at American Express .