Broadridge Financial Solutions, Inc.
CEO : Mr. Timothy C. Gokey
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q4 | 6.7% YoY | 73.8% | 29.7% | 2023-08-08 |
Edmund Reese says,
Key Milestones Achieved in Fiscal 2023
- Completed investment in wealth management platform
- Reduced client platform spend and going live with anchor client in July
- Improved free cash flow conversion to 90%
- Paid down debt and reached leverage objective
- Positioned to return more capital to shareholders through higher dividend and share repurchases in fiscal 2024
Financial Summary
- Full year recurring revenue growth was at the higher end of guidance
- Adjusted EPS grew 9% to $7.01
- Recurring revenue rose to approximately $4 billion, up 9% YoY on a constant currency basis
Recurring Revenue Growth
- Q4 recurring revenue grew 8% to $1.3 billion, all organic
- Full year recurring revenue growth was 9%, exceeding organic growth objective of 5% to 7%
- Acquisition of BTCS contributed 2.6 points of growth to three-year recurring revenue CAGR
Segment Growth
- ICS recurring revenue grew 7% in Q4, driven by growth across all product lines
- GTO recurring revenue grew 9% in Q4, driven by higher licensed revenue and fixed income trading volume
Volume Trends
- Equity position growth was 6% in Q4 and 9% for the full year
- Mutual fund position growth was 8% in Q4 and for the full year
Revenue Drivers
- Recurring revenue growth of 8% in Q4 was balanced between net new business and internal growth
- Revenue from closed sales and high retention rate from existing customers provided four points of growth
- Foreign exchange impacted recurring revenue by one point
Timothy Gokey says,
Financial Performance
- Recurring revenue grew 8% in Q4 2023, with strong growth across all segments
- Earnings rose 21% in Q4 2023, driven by strong revenue growth and disciplined expense management
- Recurring revenue and adjusted EPS both rose 9% in fiscal 2023
- Free cash flow conversion improved to 90% in fiscal 2023
Guidance for Fiscal 2024
- Guidance calls for 6-9% recurring revenue growth, all organic
- Guidance calls for 8-12% adjusted EPS growth
- Expected free cash flow conversion of approximately 100%
Dividends and Capital Allocation
- Announcement of a 10% increase in annual dividend
- Expectation to resume share repurchases in fiscal 2024
- Flexibility to fund tuck-in M&A if the right opportunity arises
Governance Franchise
- ICS business delivered 9% recurring revenue growth in fiscal 2023
- Growth driven by new sales, increased investor participation, and higher interest income
- Strong growth in digital and print wins in customer communications business
- Innovations in digitization and shareholder engagement, such as omni-channel wealth and focused product
Capital Markets Franchise
- Capital Markets revenues rose 11% in fiscal 2023
- Growth driven by BTCS business and onboarding of new global post-trade clients
- Meeting demand for simplified operating models and global multi-asset solutions
- Delivering leading-edge solutions like distributed ledger repo and AI applications
Wealth and Investment Management
- Wealth and investment management revenues rose 4% in fiscal 2023
- Growth driven by revenues from new sales and demand for modular solutions
- Suite of solutions driving advisor productivity, enhancing client experience, and reducing cost and risk
- Finalized rollout plan with UBS and focused on $20-30 million of annualized wealth platform sales
Closed Sales
- Closed sales of $246 million in fiscal 2023, down 12% from fiscal 2022
- Market uncertainty and longer sales cycles impacted sales, particularly in Europe
- Believe delays are temporary and expect strong sales growth in fiscal 2024
Q & A sessions,
Backlog Conversion and Revenue Cycle
- The company expects to continue converting its backlog to revenue, with a conversion cycle of 12 to 18 months.
- Wealth management revenue is expected to come across earlier in the year from the backlog.
- Continued execution on backlog conversion is anticipated, with no significant changes expected in the revenue cycle.
Position Growth and Recurring Revenue
- The company expects mid-to-high single-digit position growth to continue, supporting its recurring revenue guidance.
- Testing suggests that the outlook for position growth remains in line with previous expectations.
- There is a 6-month window to monitor and react to any potential changes in position growth.
Margin Expansion and Earnings
- The company anticipates continued margin expansion, driven by operating leverage, digital initiatives, and operating efficiencies.
- During the past three years, the company has achieved margin expansion of 77 basis points, with a similar outlook for fiscal 2024.
- Float income and distribution have no impact on earnings but may affect reported margins.
Fiscal 2023 Results
- Full-year recurring revenue grew by 9% on a constant currency basis, exceeding the guidance range of 6% to 9%.
- Adjusted operating income increased by 12% and margin expanded by 110 basis points to 19.8%.
- Adjusted EPS rose by 9% to $7.01, while close sales reached $246 million.
Guidance for Fiscal 2024
- The company expects recurring revenue growth to be in line with its historical three-year financial objectives.
- Strong growth in both the ICS and GTO segments is anticipated.
- Equity and fund position growth is expected to support mid-to-high single-digit recurring revenue growth.
No bad stock 