Broadridge Financial Solutions, Inc.
CEO : Mr. Timothy C. Gokey
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q2 | 2.6% YoY | 56.6% | 22.5% | 2023-02-02 |
Edmund Reese says,
Recurring Revenue Growth
- Recurring revenue grew 8% to $840 million in Q2 ’23, all organic, keeping the company on track to exceed its 5% to 7% three year growth objective.
- ICS recurring revenues grew 10%, all organic to $467 million, with regulatory at 9% and double-digit growth across all other product lines.
- GTO recurring revenues grew to $373 million or 6%, driven by new sales and continued strength in its capital markets.
Adjusted Operating Income Margin
- Adjusted operating income margin for Q2 ’23 was 13.4%, a 220 basis points improvement over Q2 ’22.
- The company expects to deliver on its margin expansion objective of approximately 50 basis points for fiscal ’23.
Closed Sales
- Second quarter closed sales of $65 million bring the year-to-date total to $94 million, 16% off of H1 ’22.
- ICS sales were powered by the large digital wealth and focused sales, as the company has a robust pipeline, it remains on track to achieve its full year closed sales guidance of between $270 million to $310 million.
Guidance
- The company reaffirms its full year guidance on all of its key financial metrics, including 6% to 9% constant currency recurring revenue growth, approximately 50 basis points of adjusted operating income margin expansion, and adjusted EPS growth in the 7% to 11% range.
- The company expects Q3 adjusted EPS growth to be in the low to mid-single digit range and to be higher in the seasonally larger fourth quarter.
Cash Flow and Capital Allocation
- Q2 ’23 free cash flow improved to $104 million, up 276% from $28 million last year.
- The company expects its client platform spending to continue to be lower than last year, keeping it on track to deliver improved free cash flow conversion in fiscal ’23 and a return to a more historical conversion level in fiscal ’24.
Timothy Gokey says,
Strong Q2 Performance
- Recurring revenues rose 8% on a constant currency basis
- Adjusted EPS rose 11% due to strong growth and disciplined expense management
Resilient Business Model
- 93% recurring fee revenues resulted in a strong performance despite an uncertain market
- Long-term business drivers remain healthy, with a strong sales backlog and robust investor participation
- Expectations of further growth in the second half of the year
Growth Initiatives
- Innovating in governance with pass-through voting, tailored shareholder reports and digital solutions
- Continuing strong momentum in capital markets with market share gains driving growth
- Expanding demand for digital communications with a new pilot for individual investors
Full Year Guidance
- Reaffirming guidance for 6% to 9% recurring revenue growth and 7% to 11% adjusted EPS growth
- Expecting to deliver at or above the higher end of our three-year objectives
Strong Market Position
- Maintaining strong market positions across all three franchises with critical mission infrastructure
- Investing to add talent, technology, and critical solutions to bring more value to clients
- Aligning with long-term needs of clients and attacking a $60 billion market opportunity
Q & A sessions,
Wealth Management Opportunity
- UBS deal has positioned the company well for the $16 billion opportunity in Wealth Management
- Sales pipeline is building for a series of components to be offered to other clients
Stock Record Growth Expectations
- Expect mid to high-single digit growth in Q3 and Q4 based on forward testing
- Growth rate remains above historic mid-single digit norms due to fundamental lift driven by free trading, app-based investing, and younger investors in the market
Pipeline and Sales Expectations
- Pipeline for the second half is similar to previous years in terms of the coverage of deals and their stage of maturity
- Wealth side pipeline is up 25% YoY, but not yet reflected in sales numbers
- Positive conversations with CEOs and other C-suite executives lead to an all-time high pipeline, providing confidence for the rest of the year
Tailored Shareholder Reports
- Creating tailored shareholder reports specific to each investor is creating complexities for fund clients
- Broadridge is working with fund clients to help be a part of the solution and believes there is an opportunity to help the industry in this regard
Investor Participation and Demand for Digital Solutions
- Investor participation remains at very healthy levels and is expected to continue to grow in the second half
- Significant demand for digital solutions to help drive top and bottom line growth
No bad stock 