Q1 2024 Broadridge Financial Solutions Inc Earnings Call
Good morning, and welcome to the Broadridge financial solution first quarter and fiscal year 2024 earnings Conference call.
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After today's presentation, there will be an opportunity to ask questions.
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Relations. Please go ahead.
Thank you and good morning, everybody.
Wow.
First quarter of fiscal year 2024 earnings call.
Our earnings release and flags that accompany with this call may be found on the Investor Relations section of Broadridge.
Dot com.
Joining me on the call. This morning, 10, gokey or C E O.
C F O.
Before I turn the call over to.
To your standard reminders, one we will be making forward looking statements on today's call regarding brokerage that involve risks Hungary.
Can be found on the second page of the slide in a more complete description on our annual report on Form 10-K.
We'll also be referring to several non-GAAP measures, which we believed provide investors with a more complete understanding abroad digits underlying operating results and explanation of these non-GAAP measures and reconciliation comparable GAAP measures can be found in the earnings release.
Let me now turn the call over to Tim Tim.
Thank you and good morning.
I'm pleased to be here to discuss our strong start to fiscal 24.
Clearly the economy and our world remain in a volatile and difficult place.
Despite the I'm certain economic environment, our business continues to perform well in the first quarter.
Which speaks to the long term trends in need driving our growth.
As well as the strength of our business model and the execution of argument.
I'll start with the headlines.
First drive that's reported strong financial results.
Recurring revenue grew 8% all organic we're strong growth across governance capital markets and well.
Adjusted EPS Rose 30 per cent driven by strong with growing revenue growth.
[noise] timing every banker and fees.
Continued expats discipline.
After a slower finished the last fiscal year.
Close sales rose $19 million to a first quarter record of $48 million.
Second what market to remain uneven.
When you go out in the bathroom participation go equity and fun traditional graph of 8% and three per cent respectively.
Third.
We continue to execute our strategy.
Our clients.
[noise] and bashing.
[noise] and innovate training.
Modernized wealth management.
[noise] that execution is driving our results in the form of strong sales and a government solutions.
Strong performance of B T C S and a growing pipeline and our wealth management business among many examples.
Fourth.
A balanced capital allocation has always been a key part of our value creation strategy.
In recent years, we've invested heavily to build out our wealth and capital markets platform capabilities.
That investment is moderating in a physical twenty-three repaid a portion of the debt from our B T. C S acquisition.
Ended the year at our target leverage.
Now returning to our more historical mix of investment and capital allocation.
Type of asthma declined significantly from last year's level, and we we purchased $150 million of our shares in queue, what our first share repurchase testicle 2020.
Finally, with a strong start to the year, we are reaffirming our full year fiscal twenty-four guidance.
We expect withdrawing revenue growth of 69 per cent.
Continued margin expansion and.
And another year of 8% to 12% I E. P S growth.
Quite a sale of 280 $320 million.
Those are the headlines for the corner.
Now, let's turn to slide for to review, how we drove the strong results starting with our government's franchise.
R. I C. S. Bickering revenue grew 6% driven by a combination of revenue from sale.
Increase investor participation.
And higher interest income.
Looking across our product lines.
Solid growth in our regulatory solutions was complemented by strong results.
Sure solutions.
Gotcha communications double digit growth in our digital communications revenues more than offset a temporary slowly and print growth.
The biggest driver of our growth.
<unk> revenue from new sales as we develop any solutions like our digital products and enhance our existing products.
Where where do you like those new clients and expanding our relationships with existing clients.
[noise] increase investor participation also remains a positive driver for a regulatory business despite headwinds choppy market advisor interest rates.
And what is the smallest quarter of the year equity where I can go out to the main strong at 8%.
<unk> managed accounts remained in bitcoins more than offsetting low single digit growth and south drafted accounts.
<unk> N E T F. Additional growth was three per cent.
Underlying trends remain salad with double digit growth and pass it on physicians offsetting weaker trends and actively manage vehicles.
Our foreign testing continues to indicate a mid to high single digit outlet for equity positions in mid single digit growth for fun positions.
Equity driven activity also picked up in the corner.
Event, driven activity also picked up in the corner.
I'm, especially proud of the work done by our issue of business as part of a recent large cap spinoff.
Not only did we seamlessly process critical communications for more than 5 million beneficial.
Shareholders.
We also provided the digital composition and print work for the required filings.
It's a great example, how bloggers can bring the full power of its network together to help public companies.
Execute critical transactions.
We also pointed new leadership for Ics business, elevating dug to shatter and Mike K to the wall of co presidents as part of a long planned to transition.
Mike and Doug are proven leaders and they bring a long track record of execution to their new roles.
Our government's business isn't strong hands.
Turning to capital markets are satisfied clients are seeking to expand their agency in principle trading capabilities and they're trying to garbage for our help.
Capital markets revenues rose, 9% 249 million driven by strong growth M. P. T C S and higher trading volumes.
We also help our clients simplify their back office operations.
And during the quarter, we completed rolled out of our global post straight platform for a large bubble bank.
Step by step we've worked for that client over the past few years to transition away from seven different disparate platforms covering 75 separate markets around the world each of us aren't operations support in the settlement structure.
Under a single unified God, which platform.
This is a strong example of how we are helping our clients simplify their operations reduce expenses and optimize capital utilization by modernizing their infrastructure.
[laughter] wealth management revenues grew 14% to $154 million.
As we highlighted on our last call we began recognizing revenue from UBS at the beginning of the first quarter.
For some time, we've been discussing or move to a component based approach, which we're calling transformation on your terms.
I'm pleased that we are seeing success with this approach.
Pipeline continues to grow.
I know of no salt, one or more components to seven additional clients beyond UBS an R V C.
These components sales give us confidence in our progress and the opportunity to expand these clients overtime.
Finally, we reported strong close sales in the first quarter driven by a combination of underlying demand.
Sales it moved from physical twenty-three.
I was especially pleased to see sales go across all of our franchise, including higher wealth sales.
<unk> with the B T C S.
And an uncertain market classroom and willing to invest in new capabilities, especially those that can deliver near term benefits or then enhance their go to market strategies.
Including governance tools.
[noise] trading capabilities and advisor productivity tools.
As a result, what time to close it sometimes it's longer our conversations with clients remains strong in our pipeline continues to grow.
Let's move to slide five for some closing thoughts in the quarter.
First Rogers is off to a strong start to physical 24.
We reported strong first quarter results, including eight per cent recurring revenue growth 30 per cent adjust EPS growth.
We're executing against our strategy to enable the democratization of investing.
Simplify in in a trading and modernized wealth management.
Second our growth is being driven by long term trends and strong execution.
Continue to benefit from increasing investor participation and clients investing in new regulatory solutions faster and more efficient trading and the modernization of wealth management.
We have invested to ensure that we can help our clients benefit from these trends.
That combination of longterm drivers match.
Matched with a clear investment and growth strategy is.
Driving real value for clients.
Strong results for our shareholders.
Third.
We remain committed to balance capital allocation.
With our core priorities are retaining our investment grade credit rating.
Funding internal investment.
Growing a dividend in line with earnings.
Completing tucking M&A.
And returning excess capital shareholders.
With our wealth platform investment now complete and target never do cheap.
We are confident that we will be able to return additional capital to shareholders going forward and returned to mid to high teens are Oh I see.
The $150 million share buyback, we've completed in the first quarter highlights that confidence.
Fourth and last we are reaffirming our guidance for fiscal 24, and we remain well positioned for longterm growth.
Our business has a long track record of delivering consistent top and bottom line growth and strong shareholder returns.
Today, we are better positioned than ever to continue delivering even more value to our clients.
And we're looking forward to sharing our newest after your objectives at our upcoming Investor Day. This December in New York.
Normally I close my remarks with a thank you to Broadridge associates around the world.
Is it acknowledgement of their work and focus on driving positive client outcomes.
But today I first want to think and remember one associate in particular.
Obviously, if let he passed away in September after a brief illness, while in the process of a long planned transition away from as well as president or Ics business.
He joined our government's business almost 40 years ago.
And he was a principal architect building the strong governance franchise, we know today.
He was a passionate advocate for our clients.
A champion of our culture.
And most of all a good friend and manager to me and so many others at Broadridge.
So I Wanna, Thank and I remember Bob for his work in building a company.
And I want to thank all of our associates.
For the work they do everyday.
To serve our clients.
Drive the transformation of our industry.
And enable better financial life's vermilions.
Edmund over to you. Thank you Tim and thank you in particular for those comments on Bob.
There is no doubt that he will be missed.
Good morning, everyone.
I'm really pleased to be here to discuss the results from another strong quarter and.
And the strong start to fiscal 2024.
Before reviewing this quarter's results, let me share a few key points.
First.
Broadridge delivered strong top line growth.
Led by strong recurring revenue in line with our expectations and hire a vet driven revenue.
Second and as a result, we expect to generate approximately 25% of adjusted EPS in the first half of fiscal 24.
Third we are reaffirming our fiscal twenty-four guidance.
And finally, we resumed share repurchases in Q1 is.
We're confident in our ability to drive 100 per cent free cashflow conversion and returned more capital to shareholders.
As you can see from the financial summary on slide six recurring revenues rose the 871 million.
Eight per cent on a constant currency basis all organic.
Adjusted operating income increased 33 per cent in a wide margin expanded 220 basis points the 13.9 per cent.
Adjusted EPS was up 30 per cent to one dollar nine says.
I'll remind you that while higher interest expense, partially offsets operating income growth.
The interest rate impact at the Broadridge level, it's fully offset my higher flows income and our icf's segments.
Continuing with the results, we delivered close sales of 48 million.
19 million over Q1 23.
And finally I will note again that we repurchased the hundred 50 million of Broadridge chairs as part of our balance capital allocation model.
Let's get into the details of these results starting with recurring revenue on slide seven.
Current revenues grew 8% to 871 million, then Q1 24 and was that the higher end of our full year guidance range of 6% to 9%.
A recurring revenue growth was driven by a combination of converting our backlog to revenue and double digit trade volume growth.
Turned out slide eight to look at the growth Crosser, Ics and G T O segments.
We continued to see growth in both I C. S. A N G T O.
I C S recurring revenue grew 6% to 469 million.
Regulatory revenue grew 5% it was led by fund an equity position growth.
More importantly, <unk>.
Physician growth remains in line with our expectations is all detail in a moment.
David driven funds solutions revenue increased by 9%.
Primarily do the higher float revenue and our mutual friend trade processing unit, which we have rebranded to be broadridge retirement and workplace.
Issue of revenue was up 19% driven by growth and a registered shareholder solutions.
Or communications recurring revenue was up two per cent propelled by continued double digit growth and our higher margin digital business, which more than offset lower growth and our lower margin print revenues.
And while we do expect print volumes to pick up over the balance of fiscal twenty-four.
We continue to expect print revenues to decline over time and be replaced with higher margin digital revenue.
As a result.
Over the long term, we expect our customer communications business that have low single digit top line growth with.
With expanding margins and continues low double digit earnings growth as an execute.
Oh, that's print to digital strategy.
Turning the GTO recurring revenues route 11% to 402 million.
Capital markets revenue increased 9% led by continued strong performance in B G. C S.
Elevated equity and fixed income trading volume growth.
Wilson investment management revenue grew 14%.
Powered by the onset of revenue recognition related to the U B S contract.
Partially offset by the successful transition of each right to the Morgan Stanley platform, which occurred at the beginning of September.
Looking ahead, we continue to have high confidence in full year GTO growth being in line with our historical five to seven per cent growth objective.
They're always trying to slide nine for a closer look at volume trends.
As you can see by our results investor participation in financial markets has continued to increase despite the market volatility.
Equity position growth was 8% driven by continued double digit growth and managed accounts.
Are testing a position growth continues to prove reliable is Q1 was in line with our expectations.
We have now extended our testing into Q2 and Q3.
Those results support our outlook forbid the high single digit growth for the full year.
Mutual fund position growth moderated from Q4, twenty-three, but grew 3% driven.
Driven by strong growth and passive funds.
Based on our testing we continue to expect mid single digit growth for the full year.
Turning now the trade volumes on the bottom of the slide.
Trade volumes rose, 15% on the blended basis led by double digit volume growth in both equities and fixed income, which benefited our capital markets business.
[laughter] listen they all moved to slide 10 for the drivers recurring revenue growth.
Recurring revenue growth of 8% was all organic and grew above are five to seven per cent gross objected for six consecutive quarter.
Revenue from net new business contributed five points of growth.
Internal growth, primarily trading volumes experiencing client relationships and float income contributed three points.
Foreign exchange, how the non material 15 basis points positive impact on recurring revenue growth.
Based on current rates, we expect a similar benefits and full year recurring revenue growth relative to fiscal twenty-three.
I'll finish the discussion on revenue on slide 11.
Total revenue grew 12% to 1.4 billion of which recurring revenue was the largest contributor with five points of growth.
Event, driven revenue was 87 million and added two points to growth.
As expected the <unk>.
Driven drive a new increase sequentially and was above our seven year average.
Event driven activity in the quarter was particularly strong and benefited from the timing of mutual fund proxy activity and significant corporate actions.
We continue to expect more normalised event, driven revenue for the remainder of the year and for the full year to be 230 250 million in line with recent years.
Loaded no margin distribution revenues contributed five points the total revenue growth.
Distribution revenue was elevated and reached 14% with half of that growth coming from postal rate increases, which have a dilutive impact on our adjusted operating income margin.
We continue to expect distribution revenue to grow in the high single to low double digit range driven by further postal rate increases.
[noise] turning down the margins on slide 12.
Adjusted operating income margin was 13.9%.
220 basis point improvement over the prior year period.
Powered by a combination of operating leverage on our higher recurring an event driven revenue.
Higher flowed income and continued discipline expense management.
Excluding the net impact of higher distribution revenue with higher float income, which was accreted the margins in Q1, we delivered over 100 basis points of margin expansion <unk>.
After absorbing the amortization from our Wolf platform.
This performance gives us confidence in our ability to both fund longterm growth investments and still meet our earnings growth objectives.
We continue to expect adjusted operating income margin to increase year over year to approximately 20 per cent as we overcome the dilutive impact of higher distribution revenue.
Let's move ahead to close sales on slide 13.
Close sales were 48 million 90, 19 million higher than Q1 23.
We were encouraged by our strong start to the year was higher sales across all three of our franchises.
We saw strong B T C S sales and G T O N.
Strong customer communications and regulatory sales and Ics.
Tim noted our pipeline remain strong as we continue to see strong interest from clients and our technology solutions.
I'll turn now the cash flow on slide 14.
So I'll start with the reminder.
That broadridge as cash flow generation is typically negative in the fiscal first quarter and strengthens throughout the year.
She won 24 free cash flow was negative 76 million 142 million better than last year.
Driven by a reduction in client platform spin, which I'll discuss in a moment.
Free cash flow conversion calculated this trailing 12 month free cash flow over adjusted net earnings was hundred and three per cent in Q1 24.
This is consistent with our expectations of free cash flow conversion of approximately 100% for full year 24.
On slide 15, you'll see that we remain committed to a balance capital allocation policy that prioritizes are investment grade credit rating.
Internal investment a.
A strong and growing dividend and strategic tucking emanate that meets our financial criteria.
With excess capital being returned to shareholders to share repurchases.
Our total capital investment for Q1, 24 was 34 million, including platform investment of 20 million.
Down significantly from the prior year's $163 million.
We returned 86 million to shareholders through the dividend.
With no M&A activity in the quarter, we return an additional 150 million to shareholders through share repurchases are.
[noise] first share repurchase activity since fiscal year 20.
Turning the Guy that's on page 16.
As I said in the beginning of my remarks, the strong sorts of physical twenty-four gives us the confidence to reaffirm our full year guidance on all of our T financial metrics.
We continue to expect six to nine per cent recurring revenue growth constant currency adjusted.
Adjusted operating income margin of 20 per cent.
Adjusted EPS growth of 8% to 12%.
Close sales of between 280 to 320 million.
Additionally, we expect approximately 75 per cent of our earnings to be generated in the second half of the year with 25 per cent in the first half in line with our performance over the last 10 years.
Finally, let me summarize my team messages.
Broadridge delivered strong Q1 financial results.
The demand and secular trends driving our growth remains strong and our testing showing continued equity and fund position growth into the second half of the fiscal year.
We expect free cashflow conversion of approximately 100% in fiscal 24.
Allowing us to invest for growth.
In return capital to shareholders in line with our balance capital allocation model.
We are reaffirming our fiscal year 2000 for guidance.
Highlighting the strength of our business and financial model.
And with that let's take your questions operator back to you.
We will now begin the question and answer session.
Alright, then one on your Touchtone if you are.
Using a speaker phone please pick up your handset before pressing the keys.
<unk> from your question can you please.
Two.
The first question is David <unk>.
Or ISI. Please go ahead.
Thank you good morning, good to see the strong start to physical 24, it looks like you're running at about three times. The E. P. S growth targeted for the year as a whole 30% versus eight to 12 granted one Q as your smallest quarter of the year in fourth quarter is the most important.
Can you unpack.
The drivers about performance between recurring elements, which seemed to be expense discipline recurring revenue growth and some that are non-recurring like event driven fees and obviously he trade was on your system, perhaps a little longer than anticipated, but it looks like you're on track to outperform versus your annual guide.
<unk> you know, what's what's keeping you a little more conservative.
David you are good morning to you. Thanks for joining you ask the question then been answered it within your own questions. You did a very good job of that and and you said that exact I'll start with one of the points. You made that Q1 is really a small quarter for us and you know well that our focus is on driving medium to long term.
Growth and in the short term meeting our commitments in the short term, we're focused on annual Ah growth and we run the company has an annual growth company and over the last 10 years, you've seen as I said in my remarks that roughly about 25 per cent of our earnings happened in the first half of the year that's giving.
The strong proxy season in the back half of the year and I think 24 will be no different into the question that you asked it is some of the non-recurring items, that's driving that type of performance, specifically and cute too.
You'll see more normalised event, driven revenue as we talked about you know we said in queue for that we expected some of the pent up demand from twenty-three coming into 24, and that's exactly what we saw it will be more normalizes. We go through the rest of the year, you'll see the full impact another non-recurring items of converting E trade over.
To the Morgan Stanley platform and within your question you made the final point that I think it's important to point out here is that the more recurring drivers of growth are stable. Both for this year and both for the long term and I'll call those out as converting a backlog to revenue.
That's very stable that drove is that you saw it my remarks over five points of growth here the position growth in our testing for that remains in line with our expectations both for equities and funds into your the another point you made the continued discipline on expense management to be able to get the operating leverage.
The scale on our business to be able to execute on the actions that we've taken as we evaluate our cost basis. Those things continue to help us have the kind of growth I would not get too hung up the final point you made on the growth in this particular quarter, but on a full year basis. We continue nothing unusual here and we can see.
<unk> feel very strong confident about the full year guidance.
I appreciate that just as a quick follow up a good to see the improve bookings performance in Q1. After some what's secondhand. So that's why twenty-three despite the pipelines being strong last year was there anything that changed in particular in the first quarter that gives you a better line of sight your full year.
Bookings target or is it just somebody sales cycles, just got over the goal line.
Yeah, It's it's Tim and and thank you for that question like we were really pleased with with record sales in Q1.
I think as you have heard from others at sales cycles are Arlington English you did try some slippage from Q4 into Q1.
But I think as we look forward one of the one of the advantages that we feel is really the breath of our products at which enables us for our next perspective to benefit from a wide range of market conditions and so you know we have many chances to ensure that works there part of the solution to the problems that our clients are facing at any given time so right.
Now, we're seeing more demand for components and solutions that are dressing cost or are driving near term revenue less a transformational solutions at this time.
But we're saying good demand across all three of our franchises.
Our pipeline has never been higher and Ah and so you know that's.
Why we confirmed the 280 320 for this year.
Understood. Thanks, so much and condolences on Bob's passing I remember him well from your Investor Analyst days.
Thanks Terry.
The next question is from Peter Heckman Davidson. Please go ahead.
Yeah, just to follow up to him and your address and you answered. The last question you're talking about some of the components.
Components of the wealth management system at least I think you refer to that when you said that the components that are more designed for cost efficiencies are cost savings or reveal a bit more popular but could you just dig into that a little bit but in more detail talk about some of the components in and.
In terms of relative demand and and then the implementation cycles. If you're just here are some of the components go live fairly quickly.
Lastly, I didn't hear you say it but I I think in the last quarter call you talked about perhaps $20 million to $30 million of new clothes sales related to wealthy edric components do you think that's still a good estimate.
Yeah, good Peter good morning.
I would say at and we can talk about components across all of our all of our franchise, but I think you were specifically asked me a little bit more on the wealth side and and we really are are remain quite pleased with our progress on on wealth and and obviously began Ah recognising revenue from you B S. In July.
And the unlike components you know we really.
Started that marketing the components last spring with a a really significant kick off at the Securities industry Conference does it have a conference in May you know downloading life software aren't really being able to show at a show clients.
Working components, and so we're sort of fully into selling mode I'm that our.
Pipeline has a has built nicely and is is quite a bit where it was a year ago and you know we're seeing I think in the near term, we're seeing demand around around things that can help drive advisor productivity Ah, we're seeing demand in incorporating class actions.
We're seeing demand around helping people process alternatives. So lots of things that are meeting.
Meeting some some important need that that our clients have and so as I said, we are we now have our clients multiple clients lie with at least one component and others in the implementation I think that shows that that component approach is working.
You said, we are targeting $20 million to $30 million in incremental sales and and I think we're we're on track to achieve that at torchy that overtime. So I think you know when you look at at Howard looking about our our wealth strategy at where we're really assuming mostly these component of sales within every few years at you know something a little bit larger.
That will boost sales in that year, but I think you know right now we're focused on the component that.
Okay, Okay that makes sense and it just I didn't hear your records. It certainly historically broadridge reactive on M&A, but now with with leverage back down below 2.5% that you. How do you how do you view the M&A pipeline and you. Thank you.
We could still see it.
Or to have it is difficult 44.
Yeah. It is I think if you look at the market. There's still a disconnect between buyers and sellers in terms of what the values are so the the the landscape in terms of what is available is you know it's a little light I would say there are some interesting.
Things that we are looking at Ah, So I wouldn't be I wouldn't be surprised if we're able to transact something in 24, but it's you know the the degree of pipeline and activity is definitely way below where it was a few years ago I think one of the things theater is that with the investments that we've made we are.
We're feeling.
Really good about our ability to drive organic growth to organic investment and so that that balance between organic growth and M&A you know that may be a little bit different over the next few years than it was Ah then it wasn't past, but but we will continue to look for the right opportunities that meet our criteria.
Alright, that's helpful tip I appreciate it.
The next question is from Darren pillar of Wolf Research. Please go ahead.
Hey, guys you know.
Maybe we could jump in a little more to the components of of.
Of the business with maybe just touching first on the communication side. It I just wanted to make sure. We understand I know, we saw strong broken digital upset by swelling <unk>.
<unk>, if you could just give us a little bit of an update on some of the additional color French friends sustainability of it and just broadly speaking that's a segment that is.
You know one that's showing of some sort out some element of improving obviously since you really since you close the deal, but it took a little while and <unk>. So just give us a little more color what you're seeing their birth. Please.
Sure Darren. Thank thank you very much. Thank you for that question you know, we really liked this quarter Ah because we're now beginning to see that conversion of Trent to digital that we've been talking about so this quarter. We had a significant client that went live on our next generation digital solution and and move.
A lot of communications from print to digital so they saved a ton of money.
And their end clients and advisors are really happy with a new solution and are are very engaged with it and seeing seeing real upticks in in satisfaction. So you know in the base that we saw at lower print volumes and that client that that overall, we saw a double digit increase.
And our digital revenues and a double digit increase in profitability. So that really shows how this transition can work for us. So so I do think just stepping back a little bit you know our main story is that containment flow towards digital Ah, but I do have to put an asterisk on it which is that we are we arkan him to see a lot of demand from companies that are.
Seeking to rationalize their print facilities.
And so Ah there still is an opportunity sort of in that midterm to be the consolidation point for pregnant, which will do and they're happy to do as long as the digital comes with it as we get the transition over time. So it's a longer term, we expect to see you know lower growth in France with strong growth in digital and and and strong profitability graph, which is exactly what we saw.
And in the first quarter, but yeah, there will be some bumps along the way where we have stronger print volume and then the means and I was just out there and you made a point in your question that is worth highlighting but since the acquisition. We've continued to see margins expanding and low double digit earnings growth as we execute on this strategy or credit to digital at times.
Just talked about so we feel very good about that.
Great to hear thanks, guys.
Quick quick follow up with some of the dismal Brookside.
Typically at a mutual fund, but maybe <unk> first more just more broadly what you're seeing and what you were expecting on trends you guys had to have a lot of really good data is you always say in terms of at least the next six months or just to remind us your conviction, what you're saying now that <unk>, but then specifically mutual fund.
Three per cent I think you said you have a bypasses them. So we can just add color on active mutual fund decision transfer your broadly and just you know a.
Couple that into the first question are corrupted.
[noise], yeah here and sad.
I think that the the underlying trends on both numbers, both the equity side and they are and they and the fun side are are positive and and as we talked about you know that includes girl and managed accounts and then overtime things like direct indexing and pass through it really.
And and we were certainly happy with the 8% bracket Gulf, which I know wasn't even what your question about what it was but I just have to have to have to repeat it I that was really driven by the managed account side.
On the front side, where it was three per cent you know, we have seen that be a little bit nosey or quarter to quarter based on timing and that is really what we think was going on at this quarter.
Sort of Ah Ah looking inside that Ah. It's Ah you know, there's there's good growth in money market funds and not surprisingly given the Ah the sort of the volatility that is out there and Ah Ah, but then as we look forward I think the thing that really is giving us a confidence is is the four of testing, which again is showing that.
The mid height for equities in the mid single for Ah for font, but really the long term trends we.
You know, we haven't really seen any any change in that so we're.
That's why we're confirming where we are.
Okay.
[noise]. The next question is Matthew Roswell.
R. B C capital markets. Please go ahead.
Matthew is your line needed.
Hello, hopefully you can hear me now.
Yep excellent sorry about that it's met Roswell on for damn perlin, congratulations on a nice quarter. Just a couple of quick questions. Hopefully the what was the F X impact in the quarter and how should we think about it for the rest of the year.
[laughter], Yeah man, that's I'll just be quick on that one and a quarter on a recurring or it was not material in a recurring revenue 15 basis points benefit to us what we said when we gave guy. That's in Q4 is that we expected a modest half point benefit to earnings and that's not us trying to do our own estimates of.
F X, but just looking at what current rates sit up today and I think we're still largely in that range you look at our 10-K and you'll see that a change in the U S dollar of 10% against the currencies that matter to our economics, primarily the pound the Canadian dollar and increasingly with <unk>.
Zero in the Swedish Corona is about a 15 million dollar impact on earnings. So that gives you some sense about what the overall impact can be but we've been specific about what we think for fiscal 24.
Okay, and then on the margin expansion remainder of your ears or anything we should look out for in terms of user seasonality or rollover compared to last year.
And that's a great one to point out that because I think looking at the margins in any particular quarter is not you know you should certainly be looking at that on a full year basis, given the timing of our investments and the timing of some things that are recurring versus non-recurring. The short answer of what you should expect is that approximately 20 per.
Which is more than that space and then there's a couple of things going on there right. There is setting aside the float income that we see in our Ics business, which is a benefit to the overall report that reported margin expansion, but has no impact our earnings cause we have the interest expensive offsets that.
The second component that you see impacting the reported rate is the distribution revenue, particularly with no margin postal rate increase creases in it that has no impact her earnings the impact of those two things together for the full year, we estimate to be diluted by about 50.
[noise] basis points and what we said is we'd be able to overcome that and continue to deliver margin expansion in the <unk>.
50 basis points range.
Absorbing the amortization associated with the wealth management platform. So you put those two things together does it a loot of impact from the items that I mentioned, our ability to be able to drive more than an expansion after absorbing the Wolf man management platform and you get to this approximately 20 per cent of I think the first quarter is a strong.
Just admit to that I put those two things aside we drove 100 basis points with the amortization at our overall you know in in our overall results. So we continue to feel very good about that guy that's and finally finally I think it's just important.
That it's important for us to drive that margin expansion because of allows us the both hit the earnings objectives that we have and fund.
Hello.
We're still here Matt Okay. Just lost you for a second there.
And then like I said.
The final question I have is just what's the repurchase assumptions and the guidance.
Well look I think you have seen over the as Tim said in his earlier remarks, our focus has been on paying down the debt and Ah you know building out the Wolf management and.
And in our capital markets platforms, now that we're past that elevated investment phase and with the expectation of approximately 100 per cent of free cashflow conversion. When you think about that you know we have a dividend we pay $3.20 a share at our shares you can expect.
Just under $400 million of that going towards a dividend the rest of that capacity will either be devoted to M&A. If we find the right opportunities as Tim just said that meet our strategic and financial criteria or returned back to investors in the form of share repurchases. So I think those are the components you'd need to think.
[noise] about what that range of share repurchases is 100, approximately 100 per cent free cashflow conversion the dividend and the rest of that capacity towards M&A and share repurchases and I think the only thing I would add to that is.
We.
Yeah, we we tend to wait on that until we really have high confidence on how the year is coming out so that some you know it it is really more almost more of a 25 question because Ah Ah any share repurchases. We do would tend to be later in the year and not not affect our weighted average share count for this year.
Okay, great. Thank you.
Thank you for all the teller.
The next question is from Jane of Morgan Stanley. Please go ahead.
[noise] great.
Thank you I wanted to ask a couple of questions here first on the announcement of the UBS go live on the D. L. P platform does that incremental to the 75 million a contribution aligned previously or was that <unk>.
Project already contemplated in in that number.
Yeah Ah great to clarify that is that's part of the 75.
Okay. Thank you for that and then wanted to ask a more broad reaching question all around competition I think we all know about the competitive dynamics at play within the proxy space, but there were have been one or two announcements a more a I focus players there seems to be pretty well funded they're looking to get into the space anything.
To call out in terms of changes and competitive dynamics or you know where there may be some incremental investment needed from from your perspective.
They are I don't think there's anything anything significant that is that is incremental to what it has been out there I I think that you know we always say that competition has always been significant in this area and and even though you know people like to talk about us.
[noise] utility you know the we've always had in house coverage from in house and from other players and you know we think that we win that on the merits by being a safer for our clients and more resilient less I've a risk smarter in terms of better all in economics and.
Take into account all the things we can provide our clients based on our our unique network. So.
So.
You know, we don't really see a change in we we are we are certainly and we've already talked about on the AI side that we are going to be a leader in AI in our spaces and and we have products in market AI different products and market a band G. P. T on the bond side. It's one of the earliest parts of we've got.
Quite a bit of attention and reviews on that and we're certainly certainly investing to apply a I also on the government side. So I think to the extent, there's something interesting in applying AI and the governance space you know will be a leader in that.
And I also James I, just wanted to comment back to your first question.
Overall across both UBS and across the success that we've been seeing with D L or with our digital ledger repo system right now the economics to broadridge or not material at all for any of our clients. We've had great success really exciting so I need to add up but the economics are still not.
Not you know not having a a significant material impact on our guidance for fiscal 24.
Great really appreciate the color on both of those things.
This concludes our question and answer session I would like to turn the conference back over to management for closing remarks.
Oh, Thank you very much for joining us today to talk about our strong first quarter results.
We look forward to seeing you and talking to you at our Investor Day in New York on December 7th when will be talking about our outlook over the next three years at which we think we think will be a pretty pretty productive day and we have we're pretty excited to share our R. R. For review thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.