The paragraph is from the Broadridge Fiscal First Quarter 2025 Earnings Conference Call. It introduces the participants and agenda of the call, highlighting that the earnings release and accompanying slides are available on Broadridge's Investor Relations website. Edings Thibault, the Head of Investor Relations, presents the call, followed by CEO Tim Gokey, and Interim CFO Ashima Ghei. The call will include forward-looking statements involving risks, which are detailed in the slides and the company's annual report. It will also cover non-GAAP measures for a better understanding of Broadridge's operating results. Tim Gokey then discusses the company's first-quarter results, mentioning the strong global financial markets and ongoing demand for Broadridge's services, driven by factors like the democratization of investing, digitization, trading acceleration, AI, data, and regulatory changes.

The paragraph discusses Broadridge's strong performance amid high uncertainty due to U.S. elections and geopolitical events. The company reports solid first-quarter results, with a 4% growth in recurring revenue despite the E-Trade deconversion. Broadridge is executing its strategy to innovate and modernize investing and wealth management, evident in product innovation and a growing sales pipeline. The acquisition of SIS is expected to boost its Canadian business. The company is on track to achieve strong full-year results, including a raised fiscal ‘25 revenue guidance and reaffirmed EPS growth, while meeting three-year financial objectives.

In the fiscal first quarter, ICS experienced a 5% increase in recurring revenues, primarily driven by strong sales, growing investor participation, and significant growth in data-driven fund solutions and issuer solutions. Despite being the smallest seasonal quarter, positive trends included robust growth in managed accounts and moderate growth in equity records due to fewer large cap meetings. Fund and ETF positions grew by 6%, with notable increases in passive and money market funds. Governance revenue was boosted by new sales and the introduction of a tailored shareholder reporting solution, enhancing client communications. Additionally, a new governance client experience was launched to streamline communication monitoring for broker clients.

The paragraph discusses the success and advancements of Broadridge's cloud-based wealth platform and governance and communications business. It emphasizes the digitization of investor and customer communications, leading to higher engagement rates. In capital markets, recurring revenues have grown due to increased trading volumes amid market volatility. The company is leveraging data management investments to enhance trading solutions, introducing the Tradeverse solution to harmonize multi-asset class trade data, improve data quality, reduce errors, and simplify operations across the trade lifecycle.

The paragraph outlines efforts to help clients adapt to regulatory changes in the EU and U.S. by enhancing a global post-trade platform and distributed ledger capabilities for centralized clearing. In the Wealth and Investment Management sector, despite a 4% decline in recurring revenue due to E-Trade's deconversion, there is a 6% underlying growth driven by new sales in the U.S. and Canada. The acquisition of Kyndryl’s SIS business for $185 million aims to bolster the wealth business in Canada by expanding core back-office functions and component solutions, enhancing advisor and investor experiences, and streamlining operations. An example includes a transformation for a large Canadian bank to integrate its wealth and retail banking services.

The paragraph highlights Broadridge's recent successful transition of over a million accounts, resulting in an improved user experience and more efficient processes. The company achieved a record $57 million in closed sales for the first quarter, driven by strong demand in customer communications, class action services, and capital markets solutions. Broadridge’s innovation, such as their distributed ledger repo solution, is contributing to sales growth. The company remains focused on its long-term growth plan, addressing industry trends like digitization, regulatory adaptation, and AI, solidifying its role as a transformative partner in the financial services industry.

The paragraph discusses Broadridge's financial performance and future outlook. It highlights that the company has consistently achieved its financial goals through various market conditions and political administrations. For fiscal year 2025, Broadridge expects to deliver 6% to 8% recurring revenue growth and 8% to 12% adjusted EPS growth. Tim thanks the Broadridge team for their contributions. Ashima then presents four key points: strong first-quarter results, with recurring revenue growth of 4% despite the E-Trade deconversion; sustained strength in key revenue drivers, with a 21% rise in closed sales; an increase in the recurring revenue growth outlook for the year to 6%-8%, boosted by the SIS acquisition and improved organic growth.

The paragraph outlines financial expectations and performance results for a company, focusing on organic recurring revenue growth of 6-7% in the next three quarters due to a sales backlog and other factors. The company anticipates strong fiscal year '25 results with core margin expansion and adjusted EPS growth, despite a current 7% decline in adjusted operating income due to reduced event-driven revenue and an E-Trade deconversion. Recurring revenue rose 4% to $900 million, with the ICS segment showing a 5% increase driven by fund position growth and regulatory revenue, while closed sales increased by 21% from the previous year. Various segments, like Data Driven Fund Solutions and shareholder engagement solutions, also contributed positively.

The paragraph discusses the company's financial performance and outlook for various segments. ICS's recurring revenues are expected to grow between 6% and 8% due to new sales and position growth. GTO revenues increased by 2% to $407 million, with Capital Markets growing by 5% thanks to global post-trade capabilities and higher fixed income trading volumes. Wealth and Investment Management revenues declined by 4% due to the E-Trade deconversion, but would have grown by 6% without this impact, which will lessen in future quarters. The SIS acquisition is expected to enhance revenues in the Wealth and Investment Management line. Overall GTO revenue growth is now anticipated to be on the higher end of the 6% to 8% range due to SIS. Equity position growth was 3% in the first quarter but was affected by seasonal variations in proxy processing.

The paragraph discusses the company's financial performance, highlighting mid to high single-digit growth in position counts, particularly in mutual funds and ETFs. Trade volumes increased by 10%, driven by strong fixed income volume. Recurring revenue growth, primarily from closed sales, was mentioned at 6 points, with a net 3% organic revenue growth after adjusting for losses, such as the E-Trade deconversion. Internal growth and acquisitions also contributed to revenue, while changes in foreign exchange reduced reported growth slightly. Total revenue remained flat at $1.4 billion, with growth in recurring revenue offset by declines in event-driven and distribution revenues. Event-driven revenues were consistent with historical averages but lower than a previous high quarter.

The paragraph discusses Broadridge's financial outlook and performance for fiscal year 2025. The company expects its full-year event-driven revenue to be at the higher end due to a major mutual fund proxy campaign. Distribution revenues dropped by 3%, mainly due to reduced mail volumes, but distribution revenue growth is still expected to hit mid to high single digits due to higher postal rates and increased print volumes. Adjusted operating income margin decreased to 13%, affected by lower event-driven revenues, the E-Trade deconversion, and reinvestment efforts, though there was some operating leverage from increased recurring revenues and restructuring benefits. Closed sales rose by $10 million to $57 million, indicating strong demand for governance solutions, crucial for long-term growth. Cash flow was negative $158 million in Q1 '25, down from negative $76 million in Q1 '24, which is typical for the first fiscal quarter but is expected to improve throughout the year.

The decline in performance was attributed to higher cash taxes, severance payments from a restructuring initiative, and decreased net income. Despite this, the company anticipates a strong free cash flow conversion in fiscal 2025. In capital allocation, $32 million was spent on capital and software, and $93 million was returned to shareholders. Two acquisitions were completed, including the SIS acquisition for $185 million, with a combined expected cash absorption of $600 million from dividends and the acquisition. The fiscal 2025 outlook is positive, with increased revenue guidance, stable operating income margins, and projected EPS growth. The performance expectations align with previous trends, and the company remains on track for strong results in fiscal 2025.

The company announced an increase in their recurring revenue growth guidance due to the acquisition of SIS and reaffirmed their adjusted EPS and sales guidance, showcasing their business strength. Despite raising top-line revenue, they did not raise the EPS forecast as the margin benefits from the new acquisition and E-Trades improvements are not immediately contributing to EPS growth. They expect EPS growth of 8% to 12% and plan to reinvest for further growth. The SIS acquisition is expected to be neutral to EPS in the first year.

The paragraph discusses the company's approach to mergers and acquisitions (M&A) amidst a favorable market environment. Despite being primarily focused on organic growth due to a significant addressable market, the company finds M&A an attractive way to meet client needs, expecting it to contribute 1-2 points to recurring revenue over three years. They've successfully made acquisitions like SIS and observe a strong pipeline of opportunities, especially from private equity. The company seeks deals that align with their financial criteria and strategic fit, balancing capital allocation with returns on invested capital (ROIC) in the mid to high teens. They are open to executing compelling deals but are also comfortable with repurchasing shares if suitable opportunities don't arise.

In the conversation, James Faucette from Morgan Stanley asks about the growth and future potential of digital revenue and customer communications. Tim Gokey responds by expressing confidence in increasing BRCC revenues, driven by new sales and digital growth. He notes a significant sale, involving the full implementation of print and digital capabilities for a financial services provider, which will positively impact revenues for the year. Gokey mentions confidence in achieving mid to high single-digit growth in BRCC due to the onboarding of recent sales wins and the positive feedback from their Investor Day.

In the paragraph, Tim Gokey discusses the implementation of the T+1 settlement cycle, which has been successful in the U.S., leading to improved sale rates and processing. However, Europe has not adopted T+1 yet, which is causing challenges, particularly concerning brokers' costs related to securities lending and FX. Gokey notes the disparity between the U.S. and Europe timing could be problematic but is currently managed through existing services. Broadridge assists clients through its managed services and business process outsourcing (BPO) to mitigate issues, and may develop new technology if there is a significant timing gap in Europe’s T+1 adoption.

Tim Gokey discusses the current business environment for their company, noting a positive outlook for the financial services sector, especially among large banks and capital market clients. He mentions that they have not experienced the slowdown in project execution that others have reported, attributing this to their focus on regulatory and cost-related projects that clients prioritize. They are pleased with their sales closures, which have been strong in areas like governance, communication solutions, and select capital markets. Gokey highlights the strength of their pipeline and backlog, with $450 million as of August, providing confidence in their recurring revenue and three-year outlook.

The paragraph discusses the focus on improving sales to revenue conversion and the observed improvements over the previous year. Puneet Jain inquires about the growth prospects of the ICS side within the regulatory business, specifically regarding stock record growth, which was 3% in Q1. Ashima Ghei explains that this growth rate was anticipated due to the mix of companies involved and mentions expectations for high single-digit growth in Q2 and mid to high single-digit growth across the first half of the year. She emphasizes confidence in their predictive testing for equity, which has proven reliable. Tim Gokey adds that the overall market environment and momentum in managed accounts remain positive, contributing to a strong full-year outlook.

The paragraph discusses positive trends in a company's wealth and investment management business, particularly in Canada. The company is seeing significant revenue contributions from SIS, projected to be just under $60 million for the year, which is contributing to their increased confidence in organic growth. While the revenue guide increase is mostly attributed to SIS, the company emphasizes its commitment to leveraging its wealth platform and technology in the Canadian market to serve both leading institutions and smaller clients.

The paragraph discusses Broadridge's expectations for growth and financial performance. Ashima Ghei provides specifics on the $185 million purchase of SIS, which is expected to enhance Broadridge's growth by over 1 percentage point but slightly dilute margins without affecting earnings. The acquisition is anticipated to contribute to low double-digit growth in the wealth sector and high-end growth in the GTO sector. Patrick O'Shaughnessy inquires about the unexpectedly high core sales in the first fiscal quarter, suggesting no significant pull forward but indicating a strong start to the year. Tim Gokey clarifies that while there was no unusual pull forward, the fluctuation in medium-sized deals could impact quarterly results. Overall, Broadridge feels positive about its start to the year and its full-year outlook.

In the paragraph, the operator ends the question-and-answer session of a conference call and hands it back to management for closing remarks. Tim Gokey offers thanks to the participants, particularly acknowledging their interest in Broadridge on Election Day, and wishes them a good morning. The operator then announces the conclusion of the conference.

This summary was generated with AI and may contain some inaccuracies.