Q2 2025 Broadridge Financial Solutions Inc Earnings Call
Operator: Good day and welcome to the Broadridge Fiscal Second Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Good day and welcome to the Broadridge fiscal second quarter 2025 earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero after today's presentation there.
Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star and then two. Please note, this event is being recorded.
Speaker Change: It'll be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to adding Tebow head of Investor Relations. Please go ahead.
Eddings Thibault: I would now like to turn the conference over to Eddings Thibault, Head of Investor Relations. Please go ahead. Thank you. Good morning, everybody. And welcome to Broadridge's second quarter fiscal year 2025 earnings call. Our earnings release and the slides of the company this call may be found on the investor relations section of Broadridge.com. Joining me on the call this morning are Tim Gokey, our CEO, and our Chief Financial Officer, Ashima Ghei.
Addie Tebow: Thank you good morning, everybody and welcome to Broadridge is second quarter fiscal year 2025 earnings call our earnings release and the slides that accompany this call may be found on the Investor Relations section of Broadridge Dot com.
Speaker Change: Turning me on the call. This morning are Tim Gokey, our CEO and our Chief Financial Officer, Oscar Mcgee before I turn the call over to Tim I do want to make a few standard reminders, one we will be making forward looking statements on today's call regarding broadridge that involve risks a summary of these risks can be found on the second page of the slides in our work.
Eddings Thibault: Before I turn the call over to Tim, I do want to make a few standard reminders. One, we will be making forward-looking statements on today's call regarding broadridge that involve risks. A summary of these risks can be found on the second page of the slides and a more complete description on our annual report on Form 10-K. Two, we'll also be referring to several non-GAAP measures, which we believe provide investors with a more complete understanding of broadridge's underlying operating results. An explanation of these non-GAAP measures and reconciliations to the comparable GAAP measures can be found in the earnings release and presentation.
Speaker Change: Week description on our annual report on Form 10-K, two well also be referring to several non-GAAP measures, which we believe provide investors a more complete understanding of the underlying operating results.
Speaker Change: One nation of these non-GAAP measures and reconciliations to the comparable GAAP measures can be found in the earnings release and presentation.
Timothy Gokey: Let me now turn the call over to Tim Gokey. Thank you, Eddings, and good morning. I'd like to start this morning by congratulating our new Chief Financial Officer. As you know, Ashima was named our permanent CFO last month after serving as our interim CFO since the summer. She's had a very positive impact since joining Broadridge three years ago, and I'm looking forward to partnering with her even more closely as we continue to grow and transform our company and our industry.
Speaker Change: Let me now turn the call over to Tim Gokey Tim.
Tim Gokey: Thank you <unk> and good morning.
Speaker Change: I'd like to start this morning by congratulating, our new Chief Financial Officer.
Speaker Change: Now I shall I was named our permanent CFO last month after serving as our interim CFO since the <unk>.
Speaker Change: Summer.
Speaker Change: He had a very positive impact since joining broadridge three years ago.
Speaker Change: And looking forward to partnering with her even more closely as we continue to grow and transform our company and our industry.
Timothy Gokey: Before I go to my review of our results, I want to share some thoughts on the market back. Financial markets remain strong, even as we continue to see heightened global uncertainty. Our clients, especially in the United States, are benefiting from a combination of a healthy economy increased trading, and growing optimism about a recovery in capital markets activity and M&A. that is driving an uptick in position growth and other activity is positive for broadband. Keeping us on track to deliver another year of strong top and bottom line growth while funding important investors.
Speaker Change: Before I go to my review of our results I want to share some thoughts on the market backdrop.
Speaker Change: Financial markets remained strong even as we continue to see heightened global uncertainty.
Speaker Change: Our clients, especially in United States are benefiting from a combination of a healthy economy.
Speaker Change: Strong markets.
Speaker Change: We used to trading.
Speaker Change: Growing optimism about a recovery in capital markets activity and M&A.
Speaker Change: That is driving an uptick in position growth and other activity is positive for broadridge.
Speaker Change: On track to deliver another year of strong top and bottom line growth while funding important investments for the future.
Timothy Gokey: With that, let's go to the headlines. First, Broadridge delivers strong second quarter. Recurring revenues rose 9%, giving organic growth of 7% and the impact of our SIS acquisition. and we set a new quarterly record for event. Adjusted EPS grew 70%, grew $1. Second, that growth is being driven by long term trends and by the execution of our strategy as we continue to democratize and digitize investing. Simplify and Innovate Capital Markets and Modernize Wealth. Third, we are now entering the seasonally more significant second half of our fiscal well-positioned to deliver another strong set of full-year results.
Speaker Change: With that let's go to the headlines.
Roger: First Roger delivered strong second quarter results.
Roger: Revenues rose 9%.
Roger: Organic growth of 7% and the impact of our SaaS acquisition.
Roger: And we set a new quarterly record for event driven revenues.
Roger: Adjusted EPS grew 70% to $1 56.
Roger: Second that growth is being driven by long term trends and by the execution of our strategy as we continue to democratize and digitize investing.
Roger: Simplify and innovate capital markets and modernize wealth management.
Roger: Third we are now entering the seasonally more significant second half of our fiscal year well positioned to deliver another strong set of full year results.
Timothy Gokey: And finally, our outlook for a strong fiscal 25 keeps us on pace to deliver on the three-year financial objectives we laid out at our Investor Day in December of 2021.
Roger: And finally, our outlook for a strong fiscal 'twenty five keeps us on pace to deliver on the three year financial objectives, we laid out at our Investor day on December three.
Timothy Gokey: It was a strong quarter.
Roger: It was a strong quarter.
Timothy Gokey: So let's move to review of what drove those results on slide four. I'll start with our governor. where we're driving democratization and digitization by delivering innovation and by helping our clients adapt to change. ICS recurring revenues rose 9% driven by strong revenue from sales and continued growth in investor participation with strong growth across all our four product lines. Investor participation continues to be an important growth driver for our governance business. Equity position growth strengthened to 11% in the second quarter, the highest quarterly growth rate since the end of fiscal 22. Equity position growth, which had been trending around 7% since the summer, began to pick up in October.
Roger: Move to review of what drove those results on slide four.
Yeah.
I'll start with our governance business, where we're driving democratization and digitization by delivering innovation and by helping our clients adapt to change.
Roger: Ics recurring revenues rose, 9% constant currency.
Roger: Driven by strong revenue from sales and continued growth in investor participation with strong growth across all our four product lines.
Roger: Investor participation continues to be an important growth driver for our governance business.
Roger: Equity position growth strengthened to 11% in the second quarter, the highest quarterly growth rate since the end of fiscal 'twenty two.
Roger: Equity position growth, which had been trending around 7% since the summer.
Roger: We began to pick up in October and we now expect low double digit growth in a seasonally more meaningful second half of the year is actual share in a few minutes.
Timothy Gokey: And we now expect low double-digit growth in the seasonally more meaningful second half of the year. is Ashima will share in a few minutes. Managed accounts continue to be the biggest driver of equity position. Notably, positions in self-directed accounts also grew in mid-single digits, an acceleration from fiscal 24 when growth was essentially flat. That increased level of engagement from mainstream investors was a key driver of the acceleration in overall equity position growth. fund position growth remains stable at 5% in driven by balanced growth across both fixed income and equity. While fund position growth has picked up from the 3% rate we saw in Fiscal 24, it remains at the lower end of its historic mid-to-high season.
Roger: Managed accounts continued to be the biggest driver of equity position growth.
Roger: Notably physicians and self directed accounts also grew in mid single digits and acceleration in fiscal 'twenty three 'twenty four excuse me when growth was essentially flat.
Roger: That increased level of engagement from main street investors was a key driver of the acceleration in overall equity position growth.
Roger: Fund position growth remains stable at 5% in the second quarter.
Roger: Driven by balanced growth across both fixed income and equity funds.
Roger: While fund position growth has picked up from the 30% rate we saw in fiscal 'twenty four.
Roger: It means at the lower end of its historic mid to high single digit range.
Timothy Gokey: across our government. Our revenue growth is grounded. and our focus on delivering innovative solutions to our clients. two quarters in our tailored shareholder reporting solution continues to perform very well. and as we prepare for the upcoming process. More than 400 funds will be using our pass-through voting to give their shareholders a greater voice on governance and other issues. up from 100 funds at the end of Fiscal 20. We are adding new governance clients in Europe. And our data and analytics business is benefiting from strong demand for AI enabled global demand. and Custom Communications, our wealth-in-focus solution is powering digital growth.
Roger: Across our governance business, our revenue growth is grounded.
Roger: Our focus on delivering innovative solutions to our clients.
Roger: Two quarters in our <unk>.
Roger: Alien shareholder reporting solution continues to perform very well.
Roger: And as we prepare for the upcoming proxy season more than 400 funds will be using our pass through voting solutions to give their shareholders, a greater voice and governance and other issues.
Roger: From 100 funds at the end of fiscal 'twenty four.
Roger: We are adding new governance clients in Europe.
Roger: Our data and analytics business is benefiting from strong demand for our AI enabled global demand model.
And customer communications, our wealth in focused solution is powering digital growth.
Timothy Gokey: beyond a recurring We saw a new quarterly record from Event Driven. driven in significant part by our work facilitating board elections at a leading global mutual fund. Working closely with our fund client, we seamlessly process more than 100 million beneficial positions in over 400... held at more than 1,000. Thanks to the investment. 90% of these communications were fully digital, which means that our efforts to enable digital alternatives save that fund complex and its shareholders tens of millions of dollars in print and mail-a-thons. Boards of Directors of elections like these highlight the critical role we play behind In ensuring that funds can communicate with their investors and get the approvals they need on key governance matters securely and on demand.
Roger: Beyond our recurring revenues, we saw a new quarterly record for event driven revenues.
Roger: Driven in significant part by our work facilitating board elections at a leading global mutual fund complex.
Roger: Working closely with our fund client, we seamlessly processed more than 100 million beneficial positions and over.
Roger: 400 funds held up more than 1000 brokers.
Roger: Thanks to the investments we have made 90% of these communications for fully digital.
Roger: Which means that our efforts to enable digital alternatives stays that fund complex.
Roger: Shareholders tens of millions of dollars and print and mail expenses.
Roger: [laughter] boards of directors elections like these highlight the critical role we play behind the scenes and ensuring that funds can communicate with our investors and get the approvals they need on key governance matters securely and on demand.
Timothy Gokey: Let's turn to capital. which reported 6% recurring revenue. Capital Markets, we're simplifying and innovating trading across the front and back office. front office, we continue to roll out new solutions for speed trading and reduce the cost of trade execution with a new AI-enabled trading solution that uses real-time liquidity mapping to help our clients optimize trade execution for algorithmic trading strategies. We also introduced new trading capabilities that simplify and improve trading for structured business. In the back office, our post rate platforms. We also introduced new gen AI enhancements for operations GPT post-trade platform. And with three new clients added in Q2, our cutting-edge distributed ledger repo product is enabling a growing number of institutions to more easily adapt to the new treasury clearing requirements.
Roger: Let's turn to capital markets, which reported 6% recurring revenue growth.
Roger: In capital markets, we're simplifying and innovating trading across the front and back office.
Roger: And the front office, we continue to roll out new solutions for the trading and reduce the cost of trade execution with a new AI enabled trading solution that uses real time liquidity mapping to help our clients optimize trade execution algorithmic trading strategies.
Roger: We also introduced new trading capabilities, and simplify and improve trading for structured products.
Roger: In the back office I postpaid platforms continue to support strong trading volumes across both equity and fixed income markets.
Roger: We also introduced new Gen AI enhancements her operations GPT post trade platform.
Roger: And with three new clients added in Q2.
Roger: Our cutting edge distributed ledger repo product is enabling a growing number of institutions to more easily adapt to the new treasury clearing requirements.
Timothy Gokey: and Wealth and Investment Management. Revenues grew 12%. largely driven by the acquisition of FDIC. As we discussed last quarter, the SIS acquisition extends our Canadian wealth business by adding new clients and creating a greater opportunity for us to upsell our broader set of services. We saw an early indication of our strategy bearing fruit as a leading Canadian bank and current back-office client selected our advisor marketing solutions to address their goal of making it easier for investors to connect with their advisors. More broadly, our Broadridge Wealth Management Platform continues to be recognized for its leading-edge capabilities, winning awards in the quarter from both Chartist and the Everest Group.
Roger: In wealth and investment management revenues grew 12% largely driven by the acquisition of SaaS.
Roger: As we discussed last quarter.
Roger: The acquisition extends our Canadian wealth business by adding new clients and creating a greater opportunity for us to upsell our broader set of solutions.
Roger: We saw an early indication of our strategy bearing fruit as a leading Canadian bank and current back office client selected our advisory and marketing solutions to address their goal of making it easier for investors to connect with your advisors.
Roger: More broadly our Broadridge wealth management platform continues to be recognized for its leading edge capabilities winning awards in the quarter from both the charters and the Everest group.
Timothy Gokey: That recognition is helping to drive a record pipeline for our Speaking of pipeline, I'll turn to closed sales. We ended December with year-to-date closed sales of $103 million, essentially flat with Fiscal 24. After a strong start to fiscal 25, our sales were modestly lower in the second quarter with a handful of large deals slipping into the third quarter. Some of those deals have already closed, and we expect to close the remainder over the coming Our pipeline remains healthy, and we are on track to achieve our outlook for closed sales of $290 to $330 million.
Roger: That recognition is helping to drive our record pipeline for our wealth business.
Roger: Speaking of pipeline I'll turn to close sale.
Roger: We ended December with year to date closed sales of $103 million essentially flat with fiscal 'twenty four.
Roger: After a strong start to fiscal 'twenty five our sales were modestly lower in the second quarter with a handful of large deals slipping into the third quarter.
Roger: Some of those deals have already closed and we expect to close the remainder over the coming weeks.
Roger: Our pipeline remains healthy and we are on track to achieve our outlook for closed sales of $290 million to $330 million for the full year.
Timothy Gokey: I'll close my remarks with a few summary comments on slide 5. First, Broadridge delivered strong second quarter results. Second, those strong results are being driven by the execution of our long-term strategy. We're driving the democratization of investing by helping tens of millions of mutual fund investors get the information they need to weigh in and govern. while our investments in digitization are helping to drive down the cost of serving We're delivering innovation to our capital markets clients that will simplify their trading infrastructure and reduce trading costs. And we're extending our wealth business in Canada and the U.S.
Roger: I'll close my remarks, with a few summary comments on slide five.
Roger: Okay.
Tim Gokey: First broadridge delivered strong second quarter results.
Roger: Yep.
Roger: Strong results are being driven by the execution of our long term strategy.
Roger: Driving the democratization of investing by helping tens of millions of mutual fund investors get the information they need to win and governance.
Roger: While our investments in Digitization and helping to drive down the cost of serving those investors.
Roger: We're delivering innovation through our capital markets clients.
Roger: It will simplify their trading infrastructure and reduce trading costs.
Roger: And we are extending our wealth business in Canada, and the U S demand increased innovation to the wealth market.
Timothy Gokey: to bring increased innovation to the wealth market. Third, as a result, we are well positioned to achieve another year of strong recurring revenue and adjusted EPS growth in fiscal 25. That outlook also keeps us on track to deliver again on our three financial objectives while continuing to invest for the future.
Roger: Third as a result, we are well positioned to achieve another year of strong recurring revenue and adjusted EPS growth.
Roger: Growth in fiscal 'twenty five.
Roger: Outlook also keeps us on track to deliver again on our three year financial objectives.
Roger: To invest for the future.
Timothy Gokey: Finally, Broadridge is well-positioned for long-term investment. In this era of technology transformation. The gap between digital leaders and laggards in financial services is set to grow even wider. firms who have traded in their fragmented legacy. in exchange for cohesive platform-based strategies will continue to set themselves apart. Our position at the Center of Financial Services and our investments in our business. have positioned Broadridge to be the trusted and transformative partner of choice for our clients if they make that transition. That is driving a strong pipeline that includes a significant across each of our.
Roger: Finally, broadridge is well positioned for long term growth.
Roger: In this era of technology transformation.
Roger: The gap between digital leaders and Laggards and financial services is set to grow even wider.
Roger: Firms, who have traded in their fragmented legacy system.
Roger: In exchange for a cohesive platform based strategies will continue to set themselves apart.
Roger: Our position at the center of financial services.
Roger: And our investments in our business have positioned broadridge to be the trusted and transformative partner of choice for our clients if they make that transition.
Roger: That is driving a strong pipeline that includes a significant number of large opportunities across each of our businesses.
Timothy Gokey: And that's a great.
Roger: And that's a great place to be.
Timothy Gokey: Before I turn it over to Ashima, I want to thank my 15,000 fellow Broadridge Associates around the world. Earlier this week, Broadridge was named as one of the world's most admired companies for the 11th It's a tremendous testament to the work and client focus of everyone here at Broadridge. Thank you.
Speaker Change: Before I turn it over to <unk>.
Speaker Change: Want to thank my 15000 fellow Broadridge associates around the world.
Speaker Change: Earlier this week Broadridge was named as one of the world's most admired companies for the 11th year.
Speaker Change: It's a tremendous testament to the work and client focus.
Speaker Change: Everyone here at Broadridge.
Speaker Change: Yeah.
Ashima Ghei: And now, turn it over to Ashima. Ashima? Thanks. Thanks, Jim. Good morning. It's great to be here with you today. I'll begin my discussion this morning with five key call-outs. First... Broadridge delivered strong second quarter results. including 9% recurring revenue growth and 70% adjusted EPS. Our key revenue growth drivers remain strong. Revenue from sales continues to be the biggest driver of our growth as we tap into our $450 million year-end backlog. In addition, our equity position growth testing is now showing low double-digit growth, which supports our outlook for internal growth. We reported record event-driven revenue.
Speaker Change: And now ill turn it over to Ashburn Ashburn.
Ashburn: Thanks, Tim Good morning, it's great to be here with you today.
Speaker Change: I'll begin my discussion this morning with five key callouts.
Speaker Change: First.
Speaker Change: Broadridge delivered strong second quarter results.
Speaker Change: Including 9% recurring revenue growth and 70% adjusted EPS.
Speaker Change: Second.
Speaker Change: Our key revenue growth drivers remain shrunk.
Speaker Change: Revenue from sales continue to be the biggest driver of hot rolled as we tapped into a $450 million you had in backlog.
Speaker Change: In addition, our equity position grow testing is now showing low double digit growth, which supports our outlook for internal growth.
Speaker Change: But we.
Speaker Change: We reported record event driven revenues modestly ahead of our expectations.
Ashima Ghei: modestly ahead of our expectations and surpassing our prior quarterly record from fiscal 2018. Our strong performance continues to support our ongoing growth investments in product innovation, AI, and in our tech capabilities. Fifth and last, we are on track to deliver strong Fiscal 25 results, and we are reaffirming our guidance on all metrics. We also expect to generate free cash flow conversion of 95 to 105%, giving us ample cash flow to repurchase shares or pursue incremental M&A.
Speaker Change: Surpassing our prior quarterly record from fiscal 2018.
Speaker Change: For.
Speaker Change: Our strong performance continues to support our ongoing growth investments in product innovation, AI and data capabilities.
Speaker Change: And last we are on track to deliver strong fiscal 'twenty five results.
Speaker Change: We are reaffirming our guidance on all metrics.
Speaker Change: We also expect to generate free cash flow conversion of 95, 205%, giving us ample cash flow to repurchase shares or pursue incremental M&A.
Ashima Ghei: With that, Let's go to the numbers on slide 6. Recruiting revenues rose 9% on a constant currency basis. driven by 7% organic growth and 2 points from our acquisition of SIS. Adjusted operating income increased 51%. Driven by strong organic recurring revenue growth and record event-driven revenue. AOI margins rose 420 basis points to 16.6%, and adjusted EPS increased 70% to $1.56. as strong recurring revenue growth and higher event-driven revenues more than offset the impact of investment. Finally, we delivered closed sales of $46 million. Year-to-date sales were $103 million, compared to $106 million last year.
Speaker Change: With that.
Speaker Change: Let's go to the numbers on slide six.
Speaker Change: Recurring revenues rose, 9% on a constant currency basis, driven by 7% organic growth and two points from our acquisition of S. I S.
Speaker Change: Adjusted operating income increased 51%.
Speaker Change: Driven by strong organic recurring revenue growth and record event driven revenues.
Speaker Change: NOI margins rose 420 basis points to 16, 6% and adjusted EPS increased 70% to $1 56.
Speaker Change: Strong recurring revenue growth and higher event, driven revenues more than offset the impact of investments.
Speaker Change: Finally, we delivered closed sales of 46 million year to date sales were $103 million compared 206 million last year.
Ashima Ghei: Let's move to slide seven. Recurring revenue grew 9% to $980 million. Our growth was driven by a strong contribution from new sales, highlighting the importance of innovation. Internal growth from higher positions and increased trading volumes also contributed to recurring revenue growth.
Speaker Change: Let's move to slide seven.
Speaker Change: Bickering revenue grew 9% to $980 million.
Speaker Change: Our growth was driven by a strong contribution from new sales highlighting the importance of innovation.
Speaker Change: Internal growth from higher positions and increased trading volume also contributed to recurring revenue growth.
Ashima Ghei: Let's turn to slide 8 to look at the growth across our ICF and GTO segments. ICS recurring revenues rose 9% to $540 million. Regulatory revenues rose 8%, reflecting low double-digit equity position growth and mid-single-digit fund position growth. Data-driven fund solutions revenue increased 8%, driven by growth in our data and analytics products. M&A contributed half a point to fund solutions. Issuer revenue grew 18%, led by growth in our disclosure solutions and a short-term bump in our transfer agency revenue. Customer communications revenue rose 10% led by double digit growth in digital revenues driven by new client onboarding and a higher mix of value added print jobs.
Speaker Change: Let's turn to slide eight to look at the growth across our Ics and GTO segments.
Speaker Change: Ics recurring revenues rose, 9% to $540 million.
Speaker Change: Regulatory revenues rose 8%.
Speaker Change: Reflecting low double digit equity position growth and mid single digit fund position correct.
Speaker Change: Data driven fund solutions revenue increased 8% driven by growth in our data and analytics products M&A.
Speaker Change: M&A contributed half of like defined solutions growth.
Issuer revenue grew 18% led by growth in our disclosure solution and a shutdown bump in our transfer agency revenue.
Speaker Change: Customer communications revenue rose, 10% led by double digit growth in digital revenues, driven by new client Onboarding and a higher mix of value added fringe ups.
Ashima Ghei: Looking ahead to the second half. We expect total ICS recurring revenue growth to be in line with our 6-8% full year recurring revenue growth outlook. By product, we expect high single-digit growth in regulatory revenues, driven by equity and fund position growth, and mid-single-digit growth across the balance of our ICS businesses, including customer communications.
Speaker Change: Looking ahead to the second half, we expect total Ics recurring revenue growth to be in line with our 6% to 8% full year recurring revenue growth outlook.
Speaker Change: My product, we expect high single digit growth in regulatory revenue.
Speaker Change: Given by equity and fund position growth and mid single digit growth across the balance of our Ics businesses, including customer communications.
Ashima Ghei: Turning to GTO, revenues rose 8% to $440 million. Capital markets revenue grew 6%, all organic, driven by the growth of our global post-trade capabilities, which benefited from higher fixed income and equity trading volumes. as well as our BTCF front office solution. Lower license revenues were a three-point headwind to capital markets growth. Wealth and investment management revenues rose 12%, driven by a combination of 2% organic growth and the addition of two months of revenues from the SIS acquisition. Excluding the impact of E-Trade deconversion, organic growth was 6%. As a reminder, this was the last quarter in which we have any grow over impact from E-Trade.
Speaker Change: Turning to GTO.
Revenues rose, 8% to $440 million.
Speaker Change: Capital markets revenue grew 6% all organic driven by the growth of our global both trade capabilities, which benefited from higher fixed income and equity trading volumes.
Speaker Change: As well as our Bdcs front office solutions.
Speaker Change: Lower license revenue, what a three point headwind to capital markets growth.
Speaker Change: Wealth and investment management revenues rose, 12% driven by a combination of 2% organic growth.
Speaker Change: And the addition of two months of revenue from the S. I S acquisition.
Speaker Change: Excluding the impact of E trade deconversion organic growth was 6%.
As a reminder, this was the last quarter in which we have any grow over impact from E trade.
Ashima Ghei: Looking ahead, we expect GTO revenue growth to be in the low double digits for the second half of the year, driven by high teens growth in wealth management and mid to high single digit growth in capital markets.
Speaker Change: Looking ahead, we expect GTO revenue growth to be in the low double digits for the second half of the year driven by high teens growth in wealth management and mid to high single digit growth in capital markets.
Ashima Ghei: Now let's move to slide 9 to review our key volume indicator. Broadridge continues to benefit from the secular growth in investor participation across both equities and funds. Equity position growth was 11%, driven by managed accounts, and modestly ahead of our testing at the end of the first quarter. Relative to first quarter equity position growth of 3%, we benefited from both an improved mix of companies hosting annual meetings and from an overall uptick in position growth. Looking ahead to the more meaningful second half of the year, when we process more than 80% of equity proxy positions, our forward testing is now showing low double-digit growth.
Speaker Change: Now, let's move to slide nine to review our key volume indicators.
Speaker Change: Broadridge continues to benefit from the secular growth in investor participation across both equities and funds.
Speaker Change: Equity position growth was 11% driven by managed accounts and modestly ahead of our testing at the end of the first quarter.
Speaker Change: Relative to first quarter equity position growth of 3%, we benefited from both an improved mix of companies hosting annual meeting.
Speaker Change: And from an overall uptick in position growth.
Looking ahead to the more meaningful second half of the year, when we process more than 80% of equity proxy positions are forward testing is now showing low double digit growth.
Ashima Ghei: The outlook reflects the underlying growth we typically see throughout the year and the additional increase that began in October, as Tim noted. Mutual fund and ETF position growth was more muted at 5% and our current testing is indicating continued mid single digit fund position growth. On the bottom of the slide, trade volumes rose 13% on a blended basis, led by strong growth in both fixed income and equity volumes.
Speaker Change: The outlook reflects the underlying growth, we typically see throughout the year.
Tim Gokey: And the additional increase that began in October as Tim noted.
Speaker Change: Mutual fund and ETF position growth was more muted at 5% and I've got and testing is indicating continued mid single digit fund position growth.
Speaker Change: On the bottom of the slide trade volumes rose, 13% on a blended basis led by strong growth in both fixed income and equity volume.
Ashima Ghei: I'll wrap up my discussion of recurring revenue growth on slide 10. Revenue from closed sales remains the biggest driver of our recurring revenue growth at seven points as we onboard revenues from our $450 million year-end backlog. That growth was partially offset by three points of loss. including the deconversion of E-Trade. Internal growth contributed three points, primarily driven by fund and equity position growth and higher trading volumes, which more than offset lower 30E3 regulatory fee revenues. As a result, organic revenue growth was 7%. Acquisitions contributed 2 points. primarily driven by two months of revenue from SIS, which closed at the beginning of November.
Speaker Change: I'll wrap up my discussion of recurring revenue growth on slide 10.
Speaker Change: Revenue from closed sales remains the biggest driver of our recurring revenue growth at seven points as we onboard revenues from our $450 million year end backlog.
That growth was partially offset by three points of losses, including the deconversion of E trade.
Speaker Change: Internal growth contributed three points, primarily driven by fund and equity position growth and higher trading volumes, which more than offset lower 33 regulatory feed happening.
Speaker Change: As a result organic revenue growth was 7%.
Speaker Change: Acquisitions contributed two points, primarily driven by two months of revenue from SaaS, which closed at the beginning of November.
Ashima Ghei: Finally, changes in FX had an immaterial impact on our growth in the second quarter. With the recent strengthening of the dollar, we now expect changes in FX to be a 50 basis points headwind to recurring revenue and adjusted EPS growth for the balance of the fiscal year.
Speaker Change: Finally.
Speaker Change: <unk> and FX had an immaterial impact on our growth in the second quarter.
Speaker Change: With the recent strengthening of the dollar we now expect changes in FX to be a 50 basis points headwind to recurring revenue and adjusted EPS growth for the balance of the fiscal year.
Ashima Ghei: Let's close our discussion of revenues on slide 11. Total revenue increased 13% to $1.6 billion, driven by six points of growth from recurring revenue. Event Driven Revenues rose $69 million to $125 million and contributed 5 points to total revenue growth. This was a quarterly record for event-driven revenues. surpassing the prior high of $97 million set in fiscal 2018. It's an important reminder that while event-driven revenues tend to be variable on a quarterly or annual basis, their long-term growth is tied to position growth, which has grown to mid-to-high single-digit rates over time. Looking ahead, we expect event-driven revenues to be more in line with the $55 to $60 million quarterly average over the balance of the year.
Speaker Change: Let's close our discussion of revenues on slide 11.
Speaker Change: Total revenue increased 13% to $1 6 billion.
Speaker Change: Driven by six points of growth from recurring revenue.
Speaker Change: Event, driven revenues Rose 16, 9 million 225 million and contributed five points to total revenue growth.
Speaker Change: This was a quarterly record for event driven revenues.
Speaker Change: Surpassing the prior high of 97 million set in fiscal 2018.
Speaker Change: It's an important reminder, that while event driven revenues tend to be variable on a quarterly or annual basis. Their long term growth is tied to position growth, which is growing to mid to high single digit rates over time.
Speaker Change: Looking ahead, we expect event driven revenues to be more in line with the 55 to 60 million.
Speaker Change: Hardly average over the balance of the year.
Ashima Ghei: I will remind you that last quarter, we benefited from the Disney Proxy Contest in the third quarter, which presents a headwind to growth in the third quarter this year. Low to no margin distribution revenues grew 7%, contributing 2 points to total revenue growth. Higher postage rates represented approximately 90% of the growth. We now expect distribution revenue to grow in the mid-single-digit range for Fiscal 25. Driven primarily by higher postage rates.
Speaker Change: I would remind you that last quarter, we benefited from the Disney proxy contest in the third quarter, which presents a headwind to growth in the third quarter. This year.
Low to no margin distribution revenues grew 7%.
Contributing two points to total revenue growth higher.
Speaker Change: Higher postage rates represented approximately 90% of the drought.
Speaker Change: We now expect distribution revenue to grow in the mid single digit range for fiscal 'twenty five.
Speaker Change: Driven primarily by higher postage rates.
Ashima Ghei: Turning now to margins on slide 12. Adjusted operating income margin was 16.6%. An increase of 420 basis points from Q2-24. As our operating leverage from higher recurring and event-driven revenues more than offset the impact of ongoing ongoing growth reinvestment and higher distribution revenue. The net impact of changes in float income and distribution revenues had virtually no impact on AOI margins in the quarter. For the year, we remain on track to generate 50 basis points plus of underlying core margin expansion.
Turning now to margins on slide 12.
Speaker Change: Adjusted operating income margin was 16, 6%.
Speaker Change: Increase of 420 basis points from Q2 24.
Speaker Change: As our operating leverage from higher recurring and event driven revenues more than offset the impact of ongoing.
Speaker Change: Ongoing growth reinvestment and higher distribution revenues.
Speaker Change: The net impact of changes in float income and distribution revenues had virtually no impact on NOI margins in the quarter.
Speaker Change: For the year.
Speaker Change: We remain on track to generate 50 basis points plus of underlying core margin expansion.
Ashima Ghei: Let's move on to sales. Closed sales were $46 million, $12 million lower than the Q2-24 sales, as higher sales of our GTO products were offset by lower governance sales. Year-to-date sales are $103 million.
Speaker Change: Let's move on to sales.
Speaker Change: Closed sales were $46 million 12 million lower.
Speaker Change: Then the Q2 24.
Speaker Change: <unk> as higher sales of our GTR product were offset by lower government sales.
Speaker Change: Year to date sales of $103 million.
Ashima Ghei: Turning to our cash flow. I'll start with a reminder that Broadridge's cash flow generation is typically lower in the first half of the year and strengthens over the second half. Q225 free cash flow was $214 million. An increase of $46 million from Q220 driven by higher earnings. Year-to-date, free cash flow was $56 million versus $91 million for the first six months of fiscal 24. The first half change was driven by an increase in cash taxes and severance payments in the first quarter, as well as changes in working capital, which offset the benefit of higher income.
Speaker Change: Turning to our cash flows.
Speaker Change: I'll start with a reminder, that Broadridge is cash flow generation is typically lower in the first half of the year and strengthens over the second half.
Speaker Change: Q2, 'twenty five free cash flow was $214 million.
Speaker Change: An increase of 46 million from Q2 24, driven by higher earnings.
Speaker Change: Year to date free cash flow was 56 million versus 91 million for the first six months of fiscal 'twenty for the first half change was driven by an increase in cash taxes and severance severance payments in the first quarter.
Speaker Change: As well as changes in working capital which benefited.
Speaker Change: After the benefit of higher income.
Ashima Ghei: We continue to expect free cash flow conversion of 95 to 105% in fiscal 25.
Speaker Change: We continue to expect free cash flow conversion of 95, 205% in fiscal 'twenty five.
Ashima Ghei: Turning next to capital allocation on slide 15. Year to date, we have deployed $55 million in capital spending. and Software and returned just under $200 million to shareholders via Arduino. Platform investments, which in the past have represented a significant source of investment, absorbed only $4 million, in part because of our focus on getting clients to share most of the upfront cost of onboarding. We also invested $193 million in M&A, primarily the acquisition of SIS on November 1, for $185 million USD. We remain committed to balanced capital allocation as part of our long term growth strategy.
Speaker Change: Turning next to capital allocation on slide 15.
Speaker Change: Year to date, we have deployed 55 million in capital spending.
Speaker Change: And software and returned just under 200 million to shareholders why I dividend.
Speaker Change: From investments, which in the past have represented a significant source of investment absorbed only $4 million in part because of our focus on getting clients to share most of the upfront cost of on boarding.
Speaker Change: We also invested $193 million in M&A, primarily the acquisition of S. I S on November 1st $485 million.
Speaker Change: USD.
Speaker Change: We remain committed to balanced capital allocation as part of our long term growth strategy.
Ashima Ghei: After taking into account our strong and growing dividend, Broadridge is well positioned to return capital to shareholders in the form of share repurchases or fund additional tuck-in M&A.
Speaker Change: After taking into account, our strong and growing dividend Broadridge is well positioned to return capital to shareholders in the form of share repurchases or fund additional tuck in M&A.
Ashima Ghei: Let's conclude by reviewing our outlook for Fiscal 25 on page 16, followed by closing key messages. We are reaffirming our guidance on all key metrics, including 6-8% recurring revenue growth constant currency. 8 to 12% adjusted EPS growth and close sales of $290 to $330 million. With respect to the third quarter, a couple of modeling callouts. We expect Q3 EPS growth to be in the mid to high single-digit range. In addition, changes in license revenue will have an impact on the composition of GTO revenue. Contributing to low double-digit growth in capital markets and low single-digit organic growth in wealth management.
Speaker Change: Let's conclude by reviewing our outlook for fiscal 'twenty five on page 16, followed by clothing key messages.
Speaker Change: We are reaffirming our guidance on all key metrics, including 6% to 8% recurring revenue growth constant currency.
Speaker Change: <unk> to 12% adjusted EPS growth.
Speaker Change: Closed sales of $2 $90 million to $330 million.
Speaker Change: With respect to the third quarter, a couple of modeling callouts.
Speaker Change: We expect Q3 EPS growth to be in the mid to high single digit range.
Speaker Change: In addition changes in license revenue will have an impact on the composition of GTO revenues contributing to low double digit growth in capital markets and low single digit organic growth in wealth management.
Ashima Ghei: Turning now to my closing messages. Broadridge delivered strong Q2 financial results, including 9% recurring revenue growth. The demand and secular trends driving our growth remain strong. For the balance of the year, our testing is showing low double-digit equity position growth and mid-single-digit fund position growth. The combination of higher equity position growth and strong second quarter event-driven revenue. positions us to deliver on our four-year guidance. while funding our ongoing investments in new products and technology. Fourth and last, we are on track to deliver strong fiscal year 25 results and are reaffirming our guidance with strong cash flow that has Broadridge well positioned to repurchase shares or fund additional tuck-in M&A.
Turning now to my clothing messages.
Speaker Change: Broadridge delivered strong Q2 financial results, including 9% recurring revenue growth.
Speaker Change: The demand and secular trends driving our growth remains chalk for.
Speaker Change: For the balance of the year, our testing is showing low double digit equity position growth.
Speaker Change: And mid single digit fund position growth.
Speaker Change: Uh huh.
Speaker Change: The combination of higher equity position growth and strong second quarter event, driven revenues positions us to deliver on our full year guidance.
Speaker Change: While funding our ongoing investments in new products and technology.
Speaker Change: Fourth and last we are on track to deliver strong fiscal year 'twenty five results and are reaffirming our guidance with strong cash so that has broadridge well positioned to repurchase shares or fund additional tuck in M&A.
Operator: With that, let's take your questions.
Speaker Change: With that let's take your questions.
Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing.
Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone, if you're using a speaker phone.
Speaker Change: Please pickup your handset before pressing the keys.
Alex Graham: If at any time your question has been addressed and you would like to withdraw your question, please press start and then Our first question comes from Alex Graham with UBS, please go ahead. Yes, hey, good morning, everyone. Maybe just starting off on the guidance here where you ended. Obviously, the tone and the year-to-date performance really, really strong. But then, you know, no real change in the outlook. And I know you mentioned FX at the end there being a headwind. So excluding that, do you feel like underlying results are running better than you expected? Or is there anything else that you would call out?
Speaker Change: If at any time. Your question has been addressed and we would like to withdraw your question. Please press Star and then two.
Speaker Change: Our first question comes from Alex Kramm with UBS. Please go ahead.
Alex Kramm: Yes, Hey, good morning, everyone, maybe just starting off on the guidance here, where you where you ended obviously the tone at the year to date performance really really strong but then.
Alex Kramm: No no real change in the outlook and I know you mentioned FX at the at the end there being a headwind. So excluding that do you feel like underlying results are running better than you expected or is there anything else that you would call out.
Ashima Ghei: Thanks, Alex.
Alex Kramm: Thanks, Alex Great question, So I'll start with the like you said, we're very pleased with our results halfway through the year biggest driver of our revenue growth continues to be revenue from new sales, it's coming in essentially in line with our expectations.
Ashima Ghei: Great question. So I'll start with, like you said, we're very pleased with our results halfway through the year. Biggest driver of our revenue growth continues to be revenue from new sales. It's coming in essentially in line with our expectations. And like you said, we're tracking right in line with our guidance for both 6-8% recurring revenue growth and 8-12% earnings growth. As we think about where we are, clearly there are some puts and takes that keep us right in that range.
Alex Kramm: And like you said, we are tracking right in line with our guidance for both 6% to 8% recurring revenue growth and 8% to 12% earnings growth.
Alex Kramm: As we think about where we are clearly there are some puts and takes that keep us right in that range. So let me break them out on the positive side.
Ashima Ghei: So let me break them out. On the positive side, like you heard, we're seeing strong equity position growth. The market momentum since October has led to our outlook improving to low double digits now. And we have seen strong event-driven revenues in the first half of the year. On the other hand, we do expect event to be lower in the second half of the year, given that we saw some activity come in earlier than expected. Fund position growth remains at the low end of historic trends. And the dollar strengthening is modestly impacting our non-U.S. earnings. Most importantly, though, we continue to use some of the event upside that we saw in the first half of the year to invest in our business.
Alex Kramm: Like you heard we're seeing strong equity position growth them.
Alex Kramm: Market momentum since October has led to our outlook improving.
Alex Kramm: Low double digits now.
Alex Kramm: And we have seen strong event driven revenues in the first half of the year.
Alex Kramm: On the other hand, we do expect event to be lower in the second half of the year given that we saw some activity come in earlier than expected.
Alex Kramm: Fund position growth remains at the low end of historic trends.
Alex Kramm: And the dollar strengthening is modestly impacting our non U S earnings.
Most importantly, though we continue to use some of the event upside that we saw in the first half of the year to invest in our business. So overall, we're tracking right around the midpoint of five target range and the first half growth gives us confidence in that guidance range.
Timothy Gokey: So overall, we're tracking right around the midpoint of our target range, and the first half growth gives us confidence in that guidance range.
Timothy Gokey: And Alex, it's Tim. I just want to reinforce that last part. We just continue to see really strong future opportunities across our business and multiple areas where we think we're going to get a really good return on investment. So that's our focus right now.
Alex Kramm: And Alex it's Tim I, just want to reinforce that last part which is.
Speaker Change: Yeah, we just continue to see really strong future opportunities across our business and multiple areas, where our where we think we're going to get a really good return on investment. So that's that's our focus right now.
Alex Graham: Okay, great.
Speaker Change: Okay, Great and then maybe just shifting gears quickly sale.
Alex Graham: And then maybe just shifting gears quickly. Sales pretty much in line with last year and, you know, the year-over-year decline in the second quarter, I think you explained some slippage. Obviously, a lot of things going on in the last quarter, but just wondering, post-election, a lot of enthusiasm around the financial services industry. So just wondering if you see a pickup in conversations, if you're feeling more optimistic around end markets, yeah, anything you would note as, you know, again, like the financial services industry seems to be more bullish these days.
Speaker Change: Sales pretty much in line with last year and the.
Speaker Change: Year over year decline in the second quarter I think you explained some some slippage obviously lot of things going on in the last quarter, but just wondering post election, a lot of enthusiasm around the financial services industry.
Speaker Change: So just wondering if you see a pickup in conversations if.
Speaker Change: You are feeling more optimistic around end markets anything you would you would note as you know again like the financial services industry seems to be more bullish on these days.
Timothy Gokey: Yeah, Alex, I'll take that as Tim. And I would point out that that in the first half, excluding the tailored shareholder report sales from last year, we grew sales 8%. So so we feel good about about the first half. And, and, and as I said, you know, we did see some deals slip too early to say why don't see a common denominator, expect those to close. and that's why we're reaffirming the 290 to 330. You know, when you think about the increased optimism in the market and how that's influencing us, I'd say it's just too early to tell.
Tim Gokey: Yeah, Alex I'll take that as Tim.
Tim Gokey: And I would point out that in the first half excluding the tailored shareholder reports sales from last year. We grew sales 8%. So so we feel good about about the first half and and and as I said, we did see some deals slip too early to say why don't see a common denominator expect those to close.
Tim Gokey: And that's why we're reaffirming the $2 90 to 330.
So when you think about that the increased optimism in the market and how that's influencing us I'd say, it's just too early to tell how are sales cycles tend to be tend to be pretty long.
Timothy Gokey: You know, our sales cycles tend to be pretty long. And so, even if there is increased optimism, increased conversations, it probably wouldn't have that much impact on this year.
Tim Gokey: And so even.
Tim Gokey: Even if there is increased optimism these conversations it probably wouldn't have that much impact on this year, but.
Timothy Gokey: But what I do really like and want to call attention to is that when we look at our pipeline, which is at a record, the momentum that we have is in the areas where we've been investing. Omnichannel communications with wealth and focus, data analytics and fund solution, front and back office simplification, digital ledger repo and capital markets, and on the wealth side, advisor solutions, private debt and back office modernization. So, we're seeing really good conversations in all those areas. As always, there's a lot to do between now and year end, but we feel good.
Tim Gokey: But what I would do really like and wanted to call attention to is that when we look at our pipeline, which is at a record.
Tim Gokey: The momentum that we have is in the areas, where we've been investing omnichannel communications with wealth and focused data analytics and fund solution.
Tim Gokey: Back office simplification digital edge of repo and capital markets and on the wealth side advisor solutions private debt and and back office modernization. So we're seeing really good conversations and all of those areas.
Tim Gokey: As always there's a lot to do between now and you're in but we feel good.
Alex Graham: Thank you very much.
Tim Gokey: Well, it's reasonable thank you very much.
Scott Wurzel: And the next question comes from Scott Wurzel with Wolf Research. Please go ahead. Hey, good morning, guys. Thank you for taking my question. I just wanted to follow up on a point you made in the answer to Alex there just in terms of investing and with the event driven upside. Can you maybe highlight some of the areas that you are deploying those incremental investment dollars into?
Speaker Change: And the next question comes from Scott Wurtzel with Wolfe Research. Please go ahead.
Scott Wurtzel: Hey, good morning, guys. Thank you for taking my question I just wanted to follow up on a point you made in the answer to Alex there just in terms of investing in would be event driven upside can you maybe highlight some of the areas that you are deploying those incremental investment dollars into thanks.
Timothy Gokey: Yeah, it is. Thanks. Thanks for that. Because it is, it is something we think a lot about. And, you know, just as background, Scott, as you know, we're an organic or an organic growth company. You know, we are always thinking about what's next. And how do we get in front of that and put that in place for our clients, our associates, our shareholders. And so, you know, reinvesting for that organic growth is, is what has helped us deliver consistently over the past 10 years and beyond.
Speaker Change: Yeah. It is thanks for thanks for that because it is a it is something we think a lot about and you know just as background Scott as you know we're in a granite or an organic growth company. We are always thinking about what's next and how do we get in front of that and put that in place for our clients are.
Speaker Change: That's our shareholders and so you know reinvesting for that organic growth is is what has helped us deliver consistently over the past 10 years and beyond and I just highlight some of the areas are the same ones that that where we're seeing the sales momentum a lot of focus on digital and Omnichannel communications with our wealth and focused product.
Timothy Gokey: And I just highlight some of the areas that are the same ones that that we're seeing the sales momentum, a lot of focus on digital and omnichannel communications with our wealth and focus product, which which we demoed at our investor day in December 2023. Lots of good conversations on that, continuing to invest in in data and analytics. And, and, you know, as part of that, you know, AI, lots of stuff in AI across our portfolio, front and back office simplification and digital ledger repo and capital markets. And then continuing on the on the wealth side, you know, now with what we're doing in Canada, with the SAS platform, a lot of opportunity to bring that platform to life across the Canadian market.
Speaker Change: Which which we demo it at our Investor Day in December 2023 lots of good conversations on that continuing.
Speaker Change: Continuing to invest in and data and analytics.
Speaker Change: And and you know as part of that AI, a lots of stuff and AI across our portfolio.
Speaker Change: Front end back office simplification and digital that your repo in capital markets.
Speaker Change: Then continuing on the on the wealth side.
Speaker Change: Now with what we're doing in Canada with the SaaS platform, a lot of opportunity to bring that platform to life across the Canadian market and to bring the module solutions that we have.
Timothy Gokey: And to bring the modular solutions that we have been successful with in the US, bringing those to Canada, that takes investment as well. So it's, it's, it's exciting time.
Speaker Change: Been successful with in the U S, bringing those to Canada that takes investment as well. So it's it's a it's an exciting time and then I'd be remiss, if I Didnt mentioned resiliency cyber Ah the activity around the door in Europe, helping clients with solutions for that are helping clients with the solution around data.
Timothy Gokey: And then I'd be remiss if I didn't mention resiliency, cyber, the activity around Dora in Europe, helping clients with solutions for that, helping clients with a solution around data immutability, a lot of uptake for that, and a lot of belief in our clients and the importance of that. So it's all part of that, you know, our view of being our clients trusted and transformative partner.
Speaker Change: Data mutability, a lot of uptake for that and a lot of belief in our clients and the importance of that so it's all part of that.
Our view of being our clients' trusted and transformative partner, Yeah, and I'll just add right. While many of these are ongoing investments we have the ability to flex them up and down as we see things like event activity and that's what's baked into our guidance as we think about the year.
Timothy Gokey: And I'll just add, right, while many of these are ongoing investments, we have the ability to flex them up and down as we see things like event activity.
Scott Wurzel: And that's what's baked into our guidance as we think about the year. Got it, got it.
Speaker Change: Got it got it that's helpful. And then just as a follow up on on the wealth side I mean, it seems like with the <unk> acquisition you how things are trending well post close was wondering if you can maybe share if you've had any incremental learnings now that you've had the asset under control for a few months and just broadly how you're viewing that that opportunity. Thanks.
Scott Wurzel: That's helpful. And then just as a follow up on, on the wealth side, I mean, it seems like with the SIS acquisition, you know, things are trending well post-close. Wondering if you can maybe share if you've had any, you know, incremental learnings now that you've had the asset under control for a few months and just broadly how you're viewing that, that opportunity.
Timothy Gokey: Yeah, Scott, you know, we are very pleased. When you think about it from the dimensions of clients, associates and the underlying technology, all of those are, are really tracking nicely. Obviously, we had lots of client discussions before we took on the acquisition. And then it's always different once you have the asset and you're talking to the clients, but those those conversations about our plans for how we'll support them have continued to be continued to be very warm. It's been very gratifying to onboard the SIS associates to see their knowledge and passion for what they're doing, but also their excitement about now working with Broadridge associates who have passion on the same topics because they were a bit isolated before as part of as part of Kindral.
Scott Wurtzel: Yes, Scott you know we are very pleased when you think about it from the dimensions of clients associates and the underlying technology. All of those are I really tracking nicely. Obviously, we have lots of client discussions before we took on the acquisition.
Scott Wurtzel: And then it's always different once you have the asset and you're talking to the clients, but those those conversations about our plans for how we'll support them has continued to be continued to be very warm.
Scott Wurtzel: It's been very gratifying to onboard the S. I S associates to see their knowledge and passion for what they're doing but also their excitement about are now working with Broadridge associates, who have passion around the same topics because they were a bit isolated before.
Scott Wurtzel: As part of our as part of I can draw.
Timothy Gokey: And, and then the plans that we've talked about on technology to bring the the open APIs and integration layer and ability to bring the different modules that we have into the client that are served by the FIS back office and that's going well. So we are happy, it really fits into the broader strategy of modernizing wealth management with that modular suite of solutions around advisory productivity, including client experience and digitizing operations and so we think that's going to really play out well in Canada and we're feeling very good about it.
Scott Wurtzel: And and then the plans that we've talked about on technology to bring the.
Scott Wurtzel: The open AP is an integration layer and the ability to.
Scott Wurtzel: Bring the different modules that we have into the clients that are served by the Fas back office and that's that's going well so.
Scott Wurtzel: You know we are a we're happy it really fits into the broader strategy of modernizing wealth management with that modular suite suite of solutions around advisor productivity inclusion criteria client experience and digitizing operations and and so we think that's going to really play out well in in Canada.
Scott Wurtzel: And we're feeling very good about it.
Scott Wurzel: All right. Thanks, guys.
Speaker Change: Great. Thanks, guys.
James Faucette: And the next question comes from James Faucette with Morgan Stanley. Please go ahead. Great. Thank you very much. I wanted to ask a couple of questions. First, on monetization AI-related product improvements. You know, previously, you talked about the fact that over time, you thought you might be able to charge incrementally for AI-related product improvements. How do you think about that among the key factors or what the key factors are that would drive that transition as well as when we can expect some contribution there? Yeah, James. And, you know, we've talked about being an AI leader in our space.
Speaker Change: And the next question comes from James Fawcett with Morgan Stanley. Please go ahead.
Speaker Change: Great. Thank you very much.
Speaker Change: Wanted to ask a couple of questions first on monetization related product improvements you know previously you talked about the fact that over time, you thought you might be able to charge.
Speaker Change: From Emily for AI related plus improvements how are you thinking about that.
Speaker Change: The key factors there or what the key factors are that would drive that transition as well as when we can expect some contribution there.
James Fawcett: Yeah James.
James Fawcett: And you know we've talked about being an AI leader in our space that doesn't mean that we're gonna be inventing the next generation of.
Timothy Gokey: That doesn't mean that we're going to be inventing the next generation of, of gen AI models, although, you know, with all the recent news, maybe makes you think about that. But it's really about how do we apply that in sort of the arcane areas that we're in. And, you know, we are, we are at the center of a unique network. And, and over time, we think the power of the late large data set that, that we still steward is, is a potential differentiator for us. But getting more directly to your question around monetization, you know, we think about AI really across four areas.
James Fawcett: Of Gen AI models, although you know with all the recent news maybe [laughter] makes you think about that but it's really about how do we apply that in sort of the arcane areas that we're in and you know we are a we are at the center of unique network.
James Fawcett: And over time, we think the power of the late large datasets that are that we steward is as a potential differentiator for us.
James Fawcett: But getting more directly to your question around around monetization, we think about AI really across four areas. There is a we believe in the future that AI will be part of every product. So there's really work around bringing AI to our current products and platforms and I'm not sure if there's a specific monetization.
Timothy Gokey: There is, you know, we believe in the future that AI will be part of every product.
Timothy Gokey: So there's really work around bringing AI to our current products and platforms. And I'm not sure if there's a specific monetization opportunity there. That's really just, it is, I think it's going to be a client expectation, and it's going to be part of making sure that we're on the cutting edge with all those platforms in the future. The second part, though, is launching new AI products where there's new functionality that is enabled by AI. And we've seen that with Bond GPT, with Ops GPT, with our global demand model, with Investor Insights. So we have live products out there.
James Fawcett: Entity. There that's really just it is a I think it's going to be a client expectation and it's going to be part of making sure that we're on the cutting edge with all those platforms in the future.
James Fawcett: The second part, though is launching a new AI products, where there's new functionality that is enabled by AI and we've seen that with bond GPT with ops G. P. T with a global demand model with Investor insight. So we have life products out there and you also get real learnings from those because when people are beginning to pay incremental.
Timothy Gokey: And you also get real learnings from those because when people are beginning to pay incremental money for it, they ask a lot of questions, and you learn a lot about what does it really mean to have this be ready. So we're excited to have real clients signed up for those and have those in production and being used. There is revenue attached to that. It is not material enough at this point to be really showing up in our aggregate sales numbers as something that is a material driver, but over time we would expect it to be more important.
James Fawcett: Money for it they ask a lot of questions and you you learn a lot about what does it really mean to have this had this be ready. So we're we're excited to have real clients signed up for those and have those in production and being used.
James Fawcett: And there are there is revenue attached to that it is not material enough at this point to be really showing up in our aggregate sales numbers is something that is a material driver.
James Fawcett: But but overtime, we would expect it to be to be a more important are the <unk>.
Timothy Gokey: The third piece is productivity. We have 50 plus AI projects going on across Broadridge, about half of those on the revenue side, half are on the productivity side. We are seeing some nice pick-ups in coding. We are seeing some nice pick-ups in, when you think about bringing all the events together globally for some of the things that we do and how we source that. But again, too small to be really notably impinging on our margins or other sort of broad cost metrics. It is still pretty early days.
James Fawcett: Third piece is productivity and you know we have 50, plus AI projects going on across Broadridge about half those on the revenue side half on the productivity side.
We are seeing some some nice pickups in coding we're seeing some nice pickups in when you think about bringing all of the events together globally for some of the things that we do and how we source that AR, but again too small to be really.
James Fawcett: Notably impinging on our on our margins or <unk> or other sort of broad cross metrics, it's still pretty early days so.
Timothy Gokey: I wouldn't You know, I'm not seeing really a measurable impact, probably, you know, this call is not about FY26, but, you know, we're thinking about FY26, I wouldn't look for a measurable impact in 26, but I'd look for us to do a lot of things that could begin to help after that.
James Fawcett: So I wouldn't.
Speaker Change: No I'm not seeing really a measurable impact probably wouldn't.
Speaker Change: This call is not about FY 'twenty six but you know what we're thinking about FY 'twenty six I wouldnt look for a measurable impact in 'twenty six but I.
Speaker Change: For us to do a lot of things that could begin to help help after that and I'd be very remiss if I didn't talk about the governance that we have.
Timothy Gokey: And I'd be very remiss if I didn't talk about the governance that we have around all of this. A very important thing for our client, everyone wants to know where their data is, that it's being used in the right way, and so that's, you know, also a key focus for us.
Speaker Change: [noise] around all of this a very important thing for our client everyone wants to know where their data is that it's being used in the right way and and so that's that's a you know also a key focus for us.
James Faucette: Great, appreciate that.
Speaker Change: Great appreciate that and then.
James Faucette: And then on the wealth segment, just wondering if you can give us an update on where you are for your targets to add incremental module sales within wealth and how that's tracked. Yeah, you know, James, we talked about wanting to have relative to the sort of baseline of a couple of years ago, an incremental 20 to $30 million of wealth sales. And, you know, when we look at our pipeline right now, it is, you know, quite a bit up since since six months ago, and a nice increase since 12 months ago. And so we feel we're on track for that 20 to $30 million this year.
Speaker Change: The wealth segment, just wondering if you can give us.
Speaker Change: It on where you are for your targets to add incremental module sales within wealth and how about trucking.
Speaker Change: Yeah, you know.
Speaker Change: James we talked about wanting to.
Speaker Change: Have relative to the sort of a baseline of a couple of years ago, an incremental $20 million to $30 million of wealth sales and you.
Speaker Change: When we look at our pipeline right now it is.
Speaker Change: Quite a bit up since since six months ago, and and a nice increase since 12 months ago.
Speaker Change: And so we feel we're on track for that $20 million to $30 million. This year, it's across lots of different things couple of Chunkier things inside there, but it's across a lot of different areas. Both in the U S and Canada.
James Faucette: It's across lots of different things, a couple of chunkier things inside there, but it's across a lot of different areas, both in the US and Canada. That's great.
Speaker Change: That's great. Thank you very much.
James Faucette: Thank you very much.
Dan Erland: The next question comes from Dan Erland with RBC Capital Markets. Please go ahead. Thanks. Good morning, everyone. I just wanted to clarify a couple things on I think you called out in GTO that there were lower license sales revenues, and that was the three point headwind in the quarter. But then I think actually you called out in the third quarter guidance that there's going to be some changes in license sales that can impact capital markets. I thought you said low double digits. So would you mind just maybe helping me reconcile kind of the flip flop there?
Speaker Change: The next question comes from Dan Perlin with RBC capital markets. Please go ahead.
Dan Perlin: Thanks, Good morning, everyone.
Dan Perlin: I just wanted to clarify a couple of things on I think you called out I think GTO that there were lower license sales revenues and that was a three point headwind in the quarter, but then I think actually you get called out in the third quarter.
Dan Perlin: The guidance that there's going to be some some changes in license sales, it's going to impact capital markets. Mike I thought you said low double digits. So would you mind, just maybe help me reconcile kind of flip flop there.
Ashima Ghei: Absolutely. Yeah, just for context, Dan, you know, licensed revenues on a full year basis are not as impactful for us. They're about 5% of GTOs total recurring revenue.
Dan Perlin: Absolutely Yeah, just for context done you know license revenues on a full year basis are not as impactful for us at about 5% of G. D O total recurring revenue.
Ashima Ghei: But you're right, they do cause some quarterly noise. And that's what I was aiming to clarify in my notes. The, for this quarter specifically, we did see a three-point drag due to licensed revenue growth, specifically in capital markets. and we do expect it to have an impact on the third quarter. Because of the noise, we will see strong growth in the third quarter in capital markets. We're expecting low double-digit growth, and we will see low single-digit organic growth on the wealth management side, just specifically for the third quarter. But again, across the year, it all evens out.
Dan Perlin: You're right they do cause some quarterly noise and that's what I was aiming to try to find my notes.
Dan Perlin: The for this quarter, specifically, we did see a three point drag due to license revenue growth specifically in capital markets.
Dan Perlin: And we do expect it to have an impact on the third quarter.
Dan Perlin: Because of the noise, we will see strong growth in the third quarter in capital markets would expecting low double digit growth.
Dan Perlin: And we will see low single digit organic growth on the wealth management side, just specifically for the third quarter, but again across the year. It all evens out it's not a material driver just some quarterly noise.
Ashima Ghei: It's not a material driver, just some quarterly noise.
Dan Erland: Yeah, no, I just wanted to clarify that, because historically, I don't feel like it has maybe that much of a swing on the specific side, but okay, yeah, yeah, okay, that's great.
Dan Perlin: Yeah, No I just wanted to clarify that because it historically I didn't feel like it has made it that much of a swing on them.
Dan Perlin: Okay, Yeah, yeah, yeah, Okay, that's great.
Dan Erland: And then Tim, I just had a question for you. You know, again, you talked a lot about the market backdrop and the strength.
Dan Perlin: And then Tim I just had a question for you again, you talked a lot about the market backdrop and the strength but.
Timothy Gokey: What I'm wondering specifically, though, is, as we think about maybe two things, one kind of a potentially more robust M&A backdrop, how does that flow into the business, you know, all else equal, if these deals start to flow in over the next six to nine months, you see a bunch of this stuff happening, can you just remind us how that impacts your business and where it would show up kind of in the P&L? And then the other piece is just on the regulatory horizon, are there any things that we need to be mindful of that could be, you know, changes with this new administration that could potentially impact your business, both good or bad, as a whole?
Dan Perlin: But I'm wondering specifically, though is as we think about maybe two things one kind of a potentially more robust M&A backdrop.
Dan Perlin: How does that flow into the business you know all else equal if these deals start to flow in over the next six to nine months you see a bunch of this stuff happening can you just remind us how that impacts your business and where it would show up kind of in the P&L and then the other piece is just on the regulatory horizon.
Dan Perlin: Are there any things that we need to be mindful of that could be.
Dan Perlin: No changes with this new administration.
Dan Perlin: That could potentially impact your business, both good or bad as a whole. Thank you.
Timothy Gokey: Thanks.
Timothy Gokey: Yeah, Dan, just first of all, on how increased capital markets activity, you know, where it specifically flows into Broadridge. M&A really doesn't affect things that much. If there's a public company that goes away, I guess that could reduce positions a little bit, but so much of this is private companies, as you know. IPOs is a nice sort of incremental positive that creates more positions. We do have a, not a large business, but in serving corporate issuers, we do help them with the prospectuses and sort of things around the specific disclosure. You know, the other place is really on the event-driven side, where sometimes with M&A, if it needs to come to a shareholder vote, then we'd see activity there, and that can be a pickup, but it doesn't tend to be hugely material.
Dan Perlin: Yeah, Dan just first of all on how our increased capital markets activity, where it's specifically at flows into Broadridge.
Dan Perlin: M&A.
Dan Perlin: It really doesn't affect things that much if there was a public company that goes away I guess that could reduce positions a little bit but so much of this is private companies. As you know ipos is a nice sort of incremental positives that creates creates more positions and we do have a it's not a large business but in service.
Dan Perlin: Corporate issuers, we do help them with the prospectuses and and and sort of things around the around the specific a specific disclosure.
Dan Perlin: You know the other place is really I'm the event driven side, where sometimes it does M&A if it needs to come to a shareholder vote. Then then we'd see a activity there and that can be that can be a pick up but it doesn't tend to be.
Dan Perlin: Usually a hugely material piece.
Timothy Gokey: on the regulatory side. I think it is. You know, obviously there's a lot going on with the new administration. I think all of us are looking at that and trying to understand the full impact. There is sort of the positive market sentiment we just talked about, which, you know, for the reasons we just discussed, is a positive. When we look at the administration's biggest priorities around taxes, tariffs, immigration, cultural issues, and those things are broadly neutral to our business. And, you know, they know they have a window to get things done, so they're very, very focused on those core issues.
Dan Perlin: On the regulatory side.
Dan Perlin: I think it is.
Dan Perlin: You know obviously, there's a lot going on with the new with the New administration I think all of US are I was looking at that and trying to understand the full impact.
Dan Perlin: There is sort of the positive market sentiment, we just talked about which you know for the reasons. We just discussed is a positive.
Dan Perlin: When we look at the administration's biggest priorities around taxes tariffs immigration cultural issues and those things are broadly neutral to our business and.
Dan Perlin: They know they have a window to get things done so they're very very focused on those those core issues.
Timothy Gokey: When you look at the things that are in our space, they're not really the primary issues for the administration. However, you know, it's going to be a broadly deregulatory environment. It will be a new environment, so I think we should anticipate change. Some of the topic areas that we're certainly tracking, digital assets, you know, there are definitely, you know, probably will be action on digital assets. That's an opportunity to make crypto more accessible to mainstream investors, and that could create an opportunity for disclosure over time, so we're certainly tracking that. Likely, probably, action around reform with proxy advisory firms. We saw that in the previous Trump administration.
Dan Perlin: When you look at the things that are in our space, they're not really the primary issues administration. However, you know, it's gonna be a broadly deregulatory environment.
Dan Perlin: It will be a new environment. So so I think we should anticipate change.
Dan Perlin: Some of the topic areas that we're certainly tracking digital assets there are definitely a.
Dan Perlin: Probably will be action on digital assets.
Dan Perlin: That's an opportunity to make crypto more accessible to mainstream main street investors and that could create an opportunity for for disclosure overtime. So we're certainly tracking that.
Dan Perlin: Likely probably accident around Oh reform with proxy advisory firms, we saw that in the previous a Trump administration.
Timothy Gokey: Certainly, we're making clear to everyone that we're not a proxy advisory firm, but also that sort of leads to opportunities around shareholder engagement, around, you know, a lot of inquiries around our shareholder voting platform and pass-through voting. So, you know, those things could be some nice things. And the last one is just continued progress on digitization, which, as you know, we've invested in. So, obviously, a lot going on. We'll know a lot more, you know, in coming quarters as the new SEC commissioner is approved. We do think that Paul Atkins is a strong choice to lead the SEC.
Dan Perlin: Certainly we're making may include everyone that we're not a proxy advisory firm, but also that's what leads to at least the opportunities around shareholder engagement around a you know a lot of inquiries around our our shareholder voting platform.
Dan Perlin: And and password voting. So you know those things could be some some nice some nice things and and the last one is just continued progress on Digitization, which as you know we've invested in so.
Dan Perlin: Obviously, a lot going on we'll know a lot more in coming quarters as the new FCC Commissioner is approved we.
Dan Perlin: We do think that's Paul Atkins is a strong choice to lead the SEC. He has been a commissioner before very knowledgeable very trusted by markets and then I'll just remind you that historically, we've worked with both sides of the aisles are really providing technical assistance and that you know when there's change our clients' need to adapt to it and we help them with that.
Timothy Gokey: He's been a commissioner before. Very knowledgeable, very trusted by markets. And then I'll just remind you that, you know, historically, we've worked with both sides of the aisles, really providing technical assistance, and that, you know, when there's change, our clients need to adapt to it, and we help them with it.
Peter Heckmann: That's great. Thank you both very much. And the next question comes from Peter Heckmann with D.A. Davidson. Please go ahead. Hey, good morning. Most of my questions have been answered, but just a few little more housekeeping items. So event driven, event driven proxy revenue for the year is that tracking towards the low 300 million range? Is that right? And then any reason why it wouldn't kind of revert back to a more normalized range in fiscal 2020? Yeah, I think your math's right. Add up the 55 to 60, a quarter over the next couple of quarters, that's kind of where we are.
Speaker Change: That's great. Thank you both very much.
Speaker Change: And the next question comes from Peter Heckmann with D. A Davidson. Please go ahead.
Good morning, most of my questions have been answered, but just a few little.
Speaker Change: Housekeeping item, so event driven event driven proxy revenue for the year is that tracking towards the low $300 million range is that right and then any reason why it wouldn't kind of revert back to a more normalized range in fiscal 2026.
Speaker Change: Yeah, I think your math is right add up to 55 to 60 a quarter over the next couple of quarters, that's kind of where we are.
Ashima Ghei: The thing with event-driven is it's choppy, right? It's hard to predict exactly what it's going to be in any quarter or in any year. We typically have more visibility about event within the next three to four months. But beyond that, I would expect 26 events to be in line with our average for the long-term average. Okay, that's helpful.
Speaker Change: The thing with event driven is a it's it's choppy right, it's hard to predict exactly what it's going to be in any quarter in any year. We typically have more visibility about event within the next three to four months, but beyond that I would expect twenty-six event to be in line with that average.
Speaker Change: For the.
Speaker Change: Long term averages.
Ashima Ghei: And then just in terms of the postage increase, just trying to get a better feel of how that affects margins, you know, when do you lap that that postage rate increase? And, and are there others that are already planned that would drive? I guess, X postage increase, would you expect distribution to kind of grow in the...
Speaker Change: Okay. That's helpful. And then just in terms of the postage increase I'm just trying to get a better feel of how that affects margins. You went when do you lap that that postage rate increase.
Speaker Change: Are there others that are already planned that would drive distribution you hired I guess ex distribute ex postage increase would you expect distribution to kind of grow in that.
Ashima Ghei: Unknown Attendee, Puneet Jain, William Vu, Ashima Ghei, Broadridge Financial Solutions Yeah, so this time, for the quarter, like we shared, most of the distribution increase was driven by postage rate changes. The postage rate change came into effect in July, so we have been seeing it for a few months now. It's hard to predict exactly what the postage rate changes would be. There was some discussion about something else maybe coming through. It's hard for me to plan for. What I will say is, yes, if you exclude the impact of postage rate changes, we're looking at low single digit growth in distribution as we continue to see more and more digitization, both on the regulatory side and on our customer communication side.
Speaker Change: 3% to 5% range a year.
Speaker Change: Ah yes at this time.
Speaker Change: For the quarter like we shut most of the distribution increase was driven by postage rate changes the postage rate change came into effect in July.
Speaker Change: So we did we have been seeing it for a few months now it's hard to predict exactly what the postage rate changes would be there was some discussion about something else maybe coming through it's hard for me to.
Speaker Change: One five.
Speaker Change: What I will say is yes, if you exclude the impact of postage rate changes, we're looking at low single digit growth in distribution as we continue to see more and more digitization both on the regulatory side and on our customer communications side, we're seeing more digital growth than trend.
Timothy Gokey: We're seeing more digital growth than print. You know, and Peter, we've been I think we've been sort of thinking about for probably a decade as to when will distribution growth, you know, text and postage turn negative. And I think the print-to-digital strategy of helping clients think about their future communications platform and what they want to do with that, so as they lose volume, the opportunity to take that over, rationalize it, bring it to a new cloud-based platform that can do the remaining print as it runs off but provide a much better digital experience than they've had before.
Speaker Change: You know and Peter we've been.
Speaker Change: I think we've been sort of.
Speaker Change: Thinking about for.
Speaker Change: Probably a decade has dwindled distribution growth.
Speaker Change: Postage turned negative and and I think the printed digital strategy of helping clients think about their future communications platform and what they want to do with that so as they as they lose.
Speaker Change: If they lose volume the opportunity to take.
Speaker Change: Take that over rationalize it bring it to a new cloud based platform that can do the remaining print as it runs off but provide a much better digital experience than they've had before that that combination is one of the things driving our digital business. So you've heard us talk a lot about wealth and focus but the other sort of big theme is working with clients to help them.
Timothy Gokey: That combination is one of the things driving our digital business. So you've heard us talk a lot about wealth and focus, but the other sort of big theme is working with clients sort of to help them with that transition. And that does end up feeding more print volume into our platform at the initial stages of that. And so, you know, despite, you know, what we thought would happen, the distribution piece has continued to remain positive.
Speaker Change: With that transition and that does end up feeding more print volume into our into our platform at the initial stages of that and so.
Speaker Change: Despite what we thought would happen the distribution piece has continued to remain continue to remain positive.
Ashima Ghei: And I'll just close off because you mentioned margins, right? The expected impact of distribution is baked into our margin guidance, both as we think about the 20% margins on average, as well as if we exclude the impact of it when we talk about the core margin expansion of 50 basis points.
Speaker Change: And I'll just close off because you mentioned margins right. The expected impact of distribution is baked into our margin guidance. Both as we think about the 20% margins on average as well as if you exclude the impact of it when we talk about the core margin expansion of 50 basis points to us.
Puneet Jain: All right, thank you both.
Speaker Change: Got it alright, thank you both.
Puneet Jain: The next question comes from Puneet Jain with J.P. Morgan. Please go ahead. Hey, thanks for taking my question. I wanted to quickly follow up on the earlier question about the new administration's priorities. Like, have you seen any change in your client behavior from potential deregulation specifically in your GTO segment? And if you can remind us, like, how, like, Reduced level of regulations, how's that impacted client behavior and your GTO bookings?
Puneet Jain: The next question comes from Puneet Jain with Jpmorgan. Please go ahead.
Puneet Jain: Hey, Thanks for taking my question I wanted to quickly follow up on the earlier question about the new administration's priorities like.
Puneet Jain: Have you seen any change in your client behavior from potential deregulation, specifically in your GTO segment.
Puneet Jain: And if you can remind us like how like huh.
Puneet Jain: The reduced level of regulations, how's that impacted client behavior.
Jay do bookings.
Timothy Gokey: Yeah, Puneet and Tim, thank you for that question. It's, I think it's too early to tell. I think our clients themselves are, are sorting things out. I think they are Happy, you know, first happy with maybe some things that won't happen that were that were scheduled to happen, obviously, I think, you know, the clients have been very concerned about upcoming capital rules. And like, you know, the next phase of Basel three and other things that would significantly increase the amount of capital that they would have to carry, and therefore be, you know, real detriment to to trading activity.
Jay: Yeah Puneet as Tim. Thank you for that question. It's I think it's too early to tell I think our clients themselves are are sorting things out.
Puneet Jain: I think they are.
Puneet Jain:
Puneet Jain: Happy you know first happy with maybe some things that won't happen that were that were scheduled to happen. Obviously I think you know they kind of been very concerned about upcoming capital rules at like at you know the next phase of Basil III and other things that would significantly increase the amount of capital that they would have to carry and therefore be.
Puneet Jain: You know real detriment to trading activity, so I think stopping or slowing down some of that is sort of at its phase one I think as you are.
Timothy Gokey: So I think stopping or slowing down some of that is is sort of is phase one. I think as you look at a more deregulatory environment, I think the other the other piece is the, you know, the environment has been so punishing for public companies over the past decade, that there's been such a move to private assets. And, and I think some of the deregulatory motion here could, could help that balance out a little bit between, you know, the advantage of being public versus being private.
Puneet Jain: As you look at a more deregulatory environment I think the other the other piece is the you know the <unk>.
Puneet Jain: Environment has been so punishing for public companies over the past decade that theres been such a move to private assets and and I think some of the Deregulatory motion here could that could help that balance out a little bit between you know the advantage of being public versus private.
Puneet Jain: So I think there are lots of threads, I think they're all things that will take a while to unfold. Thanks for that.
Puneet Jain: So I think there are lots of threats I think they were all things that will take a while to unfold.
Puneet Jain: Understood. Thanks.
Puneet Jain: And then, like, as you think about your So, let's look at the capital budgeting plans for next fiscal year. How are you thinking about, like, M&A versus investments? And for the investments, how should we think about… R.O.I. or like the payback period for of those investors.
Puneet Jain: For that.
Puneet Jain: And then like.
Puneet Jain: As you think about your.
Our capital budget didn't plans for next fiscal year.
Puneet Jain: How are you thinking about M&A.
Puneet Jain: M&A versus investment and further investments how should we think about.
Puneet Jain: Auto I was like.
Puneet Jain: Feedback these gear for those investments.
Timothy Gokey: Yeah, let me just take that and I'll let Ashima add in. You know, when you think about this, Puneet, we have to sort of segregate between There's been investments that are sort of part of our P&L and they go on our balance sheet versus M&A, which is sort of out of free cash flow and share buybacks. And so, you know, when we think about the former, it's really around what's our investment capacity to continue to invest in the future while delivering 100% free cash flow and good returns, earnings returns to shareholders. So we really sort of prioritize within that framework.
Puneet Jain: Yeah, Let me just take that and I'll, let <unk>.
Adam: Adam I think.
Puneet Jain: You know when you think about this puneet, we have to sort of segregate between.
Puneet Jain: Are there any investments that are sort of part of our P&L and they go on our balance sheet.
Puneet Jain: Versus <unk> versus M&A, which is sort of out of free cash flow and share buybacks and so you know when you think about when you think about the former is really around what's our investment capacity to continue to invest for the future, while delivering 100% free cash flow and and good returns earnings returns to shareholders. So we.
Puneet Jain: Really sort of prioritize within that within that framework.
Ashima Ghei: As we think about how we deploy our strong free cash flow, you know, I think our principles for capital allocation are similar to what you're aware of from the past, you know, our business model, strong free cash flow conversion, remain investment grade, and then really think about balanced capital allocation with a clear priority of what do we need to invest internally according to that algorithm I just spoke about, how do we continue to grow our dividend with earnings, and then what's the balance between high return M&A and the remainder in share buyback, and we're certainly seeing that play out this year, we think we'll see it play out next year.
Puneet Jain: As we think about the how we deploy our strong free cash flow you know I think our principles for capital allocation are similar to what you were you aware of from the past I you know our business model strong free cash flow conversion remain investment grade and then we really think about balanced capital allocation with a clear priority of what do we need to invest in <unk>.
Puneet Jain: According to that algorithm I just spoke about how do we continue to grow our dividend with earnings and then what's the balance between high return M&A and the remainder in share buyback and we're certainly seeing that play out. This year, we think we'll see it play out next year.
Timothy Gokey: Those principles have been constant and they have resulted in a pretty different mix at different times, but they've led over time to a nice balance between dividends, M&A, share buybacks. I think if you look at the M&A market right now, we've been excited with some of the things we've been able to do, like SIS. There are a lot of assets coming to market, but it's still very unclear what the clearing price for those will be and whether they would fit into our economic criteria. So if you do see us execute on something, it's going to be because we found something really compelling, and if we don't find something compelling, we're very comfortable buying back our share.
Puneet Jain: Those principles have been constant and they have resulted in a pretty different mix.
Puneet Jain: At different times.
Puneet Jain: But they've led you know overtime to a nice balance between dividends M&A share buybacks I think if you look at the M&A market.
Puneet Jain: Right now it is you know it's we've been excited with some of the things we've been able to do like S. I S.
Puneet Jain: Are a lot of assets coming to market.
Puneet Jain: But it's still very unclear what the clearing price for those would be and whether they would fit into our economic criteria. So.
Puneet Jain: If you do see us execute on something it's going to be because we found something really compelling.
Puneet Jain: And if we don't find something compelling we're very comfortable buying back our shares.
Timothy Gokey: Thank you.
Puneet Jain: Thank you.
Puneet Jain: Okay.
Operator: So I think that was our last question, is that right? Yes, okay.
Puneet Jain: So I think that was our last question is that right.
Yes, okay, so with that I want to just thank everyone for being with us today.
Timothy Gokey: So with that, I want to just thank everyone for, for being with us today. Thank you for your interest in Broadridge. We are excited about the strong quarter we presented. We're excited about our future momentum, how we're continuing to work with our clients, our associates, and delivering returns for our shareholders. And we look forward to talking to you again next quarter.
Puneet Jain: Thank you for your interest in Broadridge. We are excited about the strong quarter. We presented were excited about our future momentum how we're continuing to work with our clients our associates and delivering returns for our shareholders and we look forward to talking to you again next quarter.
Operator: conference is now concluded. Thank you for attending today's presentation.
Puneet Jain: Conference has now concluded thank you for attending today's presentation.
Operator: You may now disconnect.
Puneet Jain: Now disconnect.