Broadridge (BR) Trascrizione degli utili del Q3 2026

Image source: The Motley Fool.

DATE

Thursday, April 30, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

- Chief Executive Officer — Timothy C. Gokey

- Chief Financial Officer — Ashima Ghei

Full Conference Call Transcript

Timothy Gokey: Thank you, Edings, and good morning. Broadridge delivered strong third quarter financial results. And we're on track to deliver a strong fiscal 2026. The market backdrop remains positive. Equity markets have been resilient in the face of geopolitical uncertainty. And capital markets remain active, driving strong position growth, higher trading volumes and elevated event-driven activity, all of which are benefiting Broadridge. At the same time, we've always been focused on driving steady and sustainable growth by aligning our business with the long-term trends that are shaping the financial services industry. And so I'm pleased to report they're also squarely on track to deliver on our 3-year financial targets for the fifth consecutive cycle.

Looking ahead, we're already investing in the next wave of industry innovation. Broadridge is transforming shareholder engagement, leading in tokenization, driving digitization and scaling our AI capabilities. And we're using our strong free cash flow to return capital to shareholders even as we make tuck-in acquisitions that strengthen and extend our value proposition. The bottom line is that Broadridge is well positioned to drive steady and sustainable growth for a long time to come. As we close out fiscal 2026, we're delivering strong results today, including double-digit earnings growth, and we're putting in place the building blocks for long-term growth tomorrow and beyond. To see how all this plays out, let's go to the headlines on Slide 3.

First, Broadridge delivered strong third quarter results, including 6% recurring revenue growth constant currency and 11% adjusted EPS growth. Second, our growth is being driven by the execution of our strategy to democratize and digitize governance, simplify and innovate capital markets and modernize wealth management. Third, as I just said, we are taking active steps to address future growth opportunities by leading in tokenization, driving the digitization of communications and scaling AI. Fourth, we are leveraging our strong free cash flow to make growth accretive acquisitions like Acolin and CQG while returning capital to shareholders with share buybacks at attractive levels, as Ashima will touch on.

Fifth and last, based on our strong performance, we are raising our fiscal '26 guidance for recurring revenue and adjusted EPS growth to at or above 7% for recurring revenue growth constant currency and 10% to 12% for adjusted EPS. These results demonstrate the power of our strategy and proven ability to execute. So let's turn to Slide 4 to look at the key drivers of that execution, starting with our governance business. Governance recurring revenues rose 8% constant currency, driven by new sales and continued growth in investor participation. Investor participation trends remained very strong with total equity position growth at 15% and equity revenue position growth of 11%.

We continue to benefit from strong growth in managed accounts and steady mid-single-digit growth in self-directed accounts. Mutual fund and ETF position growth was also healthy at 6%, driven by demand for passive funds. Beyond position growth, our innovations to power shareholder engagement are building momentum. Our pass-through voting solution is now enabling voting choice for shareholders of 900 funds with assets under management of more than $8 trillion. Our new standing voting instruction solution, which enables retail shareholders to set their default voting instructions, is also off to a strong start.

Our pilot clients are benefiting from exceptional response rates nearly 10% of Exxon's retail shareholder base enrolled in just 1 year, and 30% of responders had not voted at the prior meeting, highlighting the power of this program to engage new voters. We're also now live and supporting proxy voting for institutional asset managers looking to enhance their voting processes and reduce their reliance on proxy advisers. Beyond voting, our data-driven fund solutions business reported strong growth, driven in part by Acolin acquisition. We're seeing a lot of early interest from our U.S. fund clients on how they can use the Acolin capabilities to accelerate their growth in Europe.

In our Capital Markets business, healthy 6% underlying growth was offset by lower license revenues compared to the prior year. We are seeing good growth in our post-trade solutions, where our global platform capability is enabling clients to simplify their back-office technology stack across multiple geographies and asset classes. We also continue to see robust demand for our front-office solutions. Earlier this morning, we closed the acquisition of CQG, a leading provider of futures and options trading, execution management and market connectivity. This acquisition accelerates our expansion into futures and options, where we are well advanced in building a next-generation order management solution with a Tier 1 global bank.

CQG will add highly complementary execution management, algorithmic trading and analytics capabilities. Our goal is to create an institutional-grade, end-to-end trading suite for global futures and options, and CQG is a nice accelerator of that strategy. Turning to wealth management, recurring revenue rose 8% constant currency, powered by strong growth in Canada. We acquired SIS last year to deepen our relationships with key clients and accelerate the rollout of our platform. Now that strategy is paying off with attractive organic growth. We strengthened our core technology platforms, build connectivity to our wealth components, and I'm proud to announce just gone live with the first phase of our wealth platform solution for a leading Canadian wealth manager.

And as the market continues to evolve, we're leading that change. Two weeks ago, we announced the launch of our next-generation digital asset platform, building on a unified suite of solutions. The platform will enable Canadian wealth managers to accelerate their offering of digital assets, including crypto and tokenized equities, funds and alternatives. I'll close my review of our results with sales. Year-to-date closed sales were $147 million, 16% below last year, even as deal origination and pipeline were substantially up. While we like the demand and pipeline we're seeing, based on our progress toward closing, we are updating our sales guidance for the year to $240 million to $290 million.

We are seeing robust demand that's taking longer to close than we expected due in part to a mix of bigger, larger, more complex deals this year. Some examples include wealth platform sales in GTO and on the ICS side, larger digital transformation sales and customer communications. Those $5 million-plus deals are powering a very strong pipeline and also take longer to close. While we're lowering our outlook for fiscal '26, we feel good about the future. The pipeline I just mentioned is higher than it ever has been, well north of $1 billion. And we're seeing our product focus driving new demand. We're enhancing our trading solutions and driving the suite of shareholder engagement solutions I highlighted earlier.

We're also building a track record of successful wealth platform and digital communication transformations, while linking more of our solutions to our data platform layer, all of which are driving active client discussions. Now let's turn from the execution behind today's results to what we're doing to drive long-term growth on Slide 5. The financial services market is evolving rapidly, driven by the accelerating pace of technology and an innovation-friendly regulatory environment. Change has always been good for Broadridge as we help our clients adapt with a mutualized approach. We see the current set of changes as a significant opportunity, and we're leaning into them. First, we're leading in tokenization.

Broadridge is building on our industry-leading role in tokenizing more than $350 billion per day on our Distributed Ledger Repo platform. In governance, we're now powering on-chain voting and disclosure. In wealth management, we're creating an end-to-end solution for crypto and tokenized equities, funds and alternatives. And in the capital markets, we're scaling our market-leading digital asset capabilities in multiple directions. In a few weeks, we will be the first to power on-chain proxy voting for natively issued tokenized securities for a U.S. public company.

As part of that process, we're consolidating and recording voting for beneficial shares, registered shares and tokenized shares to create a unified view for issuers to see all of their votes in one place, take the friction out of managing multiple ownership [ basis ]. In addition, we announced an agreement earlier this week with a leading global marketplace for tokenized real assets, including U.S. equities to provide proxy voting and other governance activities for their clients. And we're just getting started where the shares are tokenized by an issuer or a third party, Broadridge is stepping up to power the governance capabilities for issuers and investors and make tokenized equities real.

And investors will be able to express their voting preferences across their holdings, including tokenized holdings, through Broadridge's institutional-grade proxy vote platform. We're also working with our wealth management clients to accelerate the launch of crypto and other tokenized assets to their clients. Our Canadian asset -- Canadian digital asset suite will support the governance and trading of digital assets in a seamless and integrated environment that includes our own capabilities as well as a growing ecosystem of digital asset partners. And on the capital market side, we're extending the capabilities of our market-leading DLR platform to new trade types, geographies and asset classes.

And our worldwide trade routing network is transmitting crypto order flow for a growing number of clients. Second, we're driving the digitization of communications. The time is coming to shift the default delivery method for investor communications, and we're helping to drive the change. The SEC has indicated is taking a fresh look at moving to a digital default option for investors who do not request paper delivery. We've been working with the industry and our clients to move this forward. And while the timing is uncertain, we anticipate a proposal in this area over the coming months. We believe this evolution will be positive for Broadridge and our clients.

We've already digitized nearly 90% of proxy and mutual fund communications, savings funds and public companies hundreds and millions of dollars per year. Now as we look forward to increasing electronic delivery for other communications, including statements and prospectuses, we're helping our clients prepare as they think about how to take advantage of such a change while also maintaining and improving experience for clients. We expect the implementation process of any action would occur over a few years and primarily affect our low to no margin distribution revenue. We expect the impact on recurring revenue and earnings will be broadly neutral.

On one hand, migration to digital default could have an impact on our recurring revenue of a few percent, mostly in our customer communications business. On the other hand, we believe this evolution will create demand for new services, such as their wealth and focused solution, which is already enabling omnichannel communications to millions of investors. Like tailored shareholder reports, we expect these new opportunities to more than offset lost recurring revenue. The end result will be a more valuable Broadridge, which is growing faster with higher margins. Finally, we're scaling AI by building on top of our common data ontology, shared API architecture and the operating workflows we already run at scale.

Our AI capabilities are powering new products, accelerating our software development cycle and driving productivity gains. Let me give you three examples. Our new custom policy engine, which is fully AI native, is able to read and analyze source materials and apply clients voting policies across thousands of companies. Today, that capability is already enabling asset managers with more than $800 billion AUM to implement their own voting policies without a proxy adviser. Now we're building on that progress to modernize the entire front-to-back workflow supporting institutional voting by leveraging agentic AI to enhance our core institutional voting platform.

One of our fastest-growing products is our AI-powered global demand model, which tracks $120 trillion in global assets and is assisting products and marketing decisions for nearly 2 dozen and growing leading asset managers. And on the productivity side, our managed services business has already seen a 25% increase in productivity with line of sight to 50%. Going forward, we're extending our Broadridge platform to a growing number of core applications. This platform with its common data and APIs positions Broadridge to create agentic layer our clients can use directly or can leverage to create their own solutions using our embedded services.

In sum, AI is enabling Broadridge to deliver new services, become more embedded in our clients' agentic workflows and drive our own productivity. Stepping back, we believe that each of tokenization, digitization and AI are growth drivers for Broadridge as we help our clients in our industry take advantage of the next wave of transformation in financial services. And we're building that tomorrow while continuing to deliver today with another year of strong and steady growth in fiscal '26. Before I turn the call over to Ashima, I want to thank our Broadridge associates.

They're delivering superior service to our clients today while building the products and capabilities that will power the exciting future of governance, capital markets and wealth for a long time to come. And on that note, let me turn it over to Ashima. Ashima?

Ashima Ghei: Thanks, Tim. Good morning. I'm pleased to be here today. Broadridge reported strong third quarter results with 6% recurring revenue growth constant currency and 11% adjusted EPS growth, and we remain well positioned to deliver another year of strong growth in fiscal '26. Before I dive into my discussion of those results and our guidance, I want to make four callouts. First, we now have records for 93% of full year proxy positions, which, combined with our recurring revenue backlog, gives us high visibility into our recurring revenue and adjusted EPS forecast. Second, our strong year-to-date results are enabling us to increase our investments in long-term growth initiatives whil