The paragraph is from the Broadridge Fiscal Second Quarter 2025 Earnings Conference Call. The call is being conducted in a listen-only mode with an opportunity for questions after the presentation. Edings Thibault, Head of Investor Relations, introduces the call, noting the availability of the earnings release and slides on their website. He highlights two reminders: forward-looking statements involving risks and the use of non-GAAP measures. Tim Gokey, the CEO, then congratulates Ashima Ghei on her recent appointment as the permanent Chief Financial Officer after serving as interim CFO. He praises her positive impact and expresses his eagerness to work closely with her to further develop the company and industry.

The paragraph discusses Broadridge's performance and market conditions. Despite global uncertainty, financial markets remain strong, benefiting clients, particularly in the U.S., through a healthy economy, strong markets, increased trading, and optimism about recovery in capital markets and M&A. This has led to growth for Broadridge, which reported strong second-quarter results, including a 9% increase in recurring revenues and a 70% rise in adjusted EPS. The growth is attributed to long-term trends and strategic execution in democratizing and digitizing investing, simplifying capital markets, and modernizing wealth management. The company is well-positioned for strong full-year results and is on track to achieve its financial objectives for fiscal 2025. The paragraph also highlights the success of the Governance business in driving innovation and adapting to change, with significant growth in investor participation and recurring revenues.

In the second quarter, equity position growth reached a robust 11%, the highest since fiscal 2022, primarily driven by managed accounts and increased engagement from Main Street investors. Self-directed accounts also saw an uptick in growth. Fund position growth remained stable at 5%, though on the lower side of its historical range. The Governance business experienced growth due to innovative solutions, with a significant increase in funds using pass-through voting solutions. Additionally, the company is expanding its client base in Europe and benefiting from strong demand for AI-enabled data and analytics. Customer Communications is also seeing digital growth, and a new quarterly record was set for event-driven revenues, especially from facilitating board elections for a global mutual fund complex.

The paragraph discusses the company's successful processing of over 100 million beneficial positions in funds, emphasizing the digital shift that saves costs on print and mail expenses. It also highlights the company's role in facilitating secure communications for fund governance. In capital markets, the company reports a 6% revenue increase due to innovations in trading solutions, including AI-enabled tools and new capabilities for structured products. They continue to enhance post-trade platforms and introduce GenAI improvements, while their Distributed Ledger Repo product adapts to new treasury requirements. In Wealth and Investment Management, a 12% revenue growth is noted, driven by the SIS acquisition, which broadens their Canadian business and upsell opportunities.

The paragraph discusses the positive outcomes of Broadridge's strategic initiatives, highlighting the success of their Advisor Marketing Solutions and the recognition of their wealth management platform, which has led to a strong sales pipeline. Although sales in the fiscal second quarter were slightly lower due to some deals moving to the third quarter, the company remains on track to meet its yearly sales targets of $290 million to $330 million. Broadridge is experiencing strong second quarter results driven by its long-term strategy, focusing on democratizing investing, reducing trading costs, and fostering innovation in the wealth market. Overall, the company is well-positioned for another year of growth in fiscal 2025.

The paragraph highlights Broadridge's strong financial outlook and strategic positioning for long-term growth in the financial services sector during a time of technological transformation. The company is capitalizing on cohesive, platform-based strategies, resulting in a robust pipeline of opportunities. Broadridge has been recognized as one of the world's most admired companies, underscoring the dedication of its 15,000 associates. Ashima Ghei then reports on Broadridge's impressive second quarter results, noting 9% growth in recurring revenue, a substantial backlog of $450 million, and record event-driven revenues exceeding expectations.

The paragraph outlines strong financial performance and growth strategies, focusing on product innovation, AI, and technology capabilities. The company is on track to meet its fiscal 2025 targets with a free cash flow conversion expected between 95% and 105%, allowing for share repurchases or M&A activities. Recurring revenues increased by 9%, aided by organic growth and the acquisition of FIS. Adjusted operating income rose by 51%, with margins up 420 basis points, and adjusted EPS increased by 70%. Sales were slightly lower year-to-date compared to last year. In its ICS and GTO segments, recurring revenues grew by 9% and 8% respectively, driven by new sales, innovation, regulatory changes, data solutions, and customer communications.

In the second half of the year, the company expects total ICS recurring revenue growth to align with a 6% to 8% full-year outlook, with high single-digit growth in regulatory revenue and mid single-digit growth in other ICS areas. GTO revenues increased by 8%, driven by strong performances in capital markets and wealth management, despite some license revenue challenges. The wealth management segment grew substantially due to both organic growth and contributions from recent acquisitions. Looking ahead, GTO revenue is expected to grow in the low double-digits, with wealth management seeing high teen growth. The company is benefiting from increased investor participation and anticipates significant equity proxy position growth in the second half of the year.

The paragraph discusses the factors contributing to revenue growth. It highlights a typical underlying growth pattern with an uptick starting in October. Mutual fund and ETF growth was modest at 5%, while trade volumes increased by 13% due to strong fixed income and equity trades. Recurring revenue growth was driven by closed sales, adding 7 points, despite some losses, including the deconversion of E-Trade, and was offset by 3 points from organic growth in fund and equity positions and trading volumes. Acquisitions and foreign exchange (FX) changes also impacted growth, with FX changes expected to be a minor headwind. Total revenue rose by 13% to $1.6 billion, with event-driven revenues hitting a record quarterly high, contributing significantly to overall revenue growth.

The paragraph discusses the financial outlook and performance of a company. It predicts that event-driven revenues will average $55 million to $60 million per quarter for the rest of the year but notes a growth challenge due to the previous year's Disney proxy contest. Distribution revenues increased by 7%, mainly due to higher postage rates, and are expected to grow in the mid-single digits for fiscal 2025. Adjusted operating income margin improved to 16.6%, aided by stronger revenues despite reinvestment and distribution costs. Sales were $46 million, down $12 million from the previous quarter, with higher GTO product sales not fully compensating for lower governance sales. Year-to-date sales total $103 million. Free cash flow rose to $214 million in Q2 2025, $46 million higher than Q2 2024, despite a year-to-date figure of $56 million being lower than the previous year's first half due to increased cash taxes, severance payments, and working capital changes.

The paragraph discusses Broadridge's financial outlook and capital allocation strategy for fiscal 2025. The company expects free cash flow conversion between 95% and 105%, with significant capital already allocated towards spending, dividends, and M&A, including the acquisition of SIS. Broadridge plans a balanced approach to capital allocation, with potential for share repurchases and further acquisitions. The guidance for 2025 includes 6% to 8% growth in recurring revenue and 8% to 12% growth in adjusted EPS. The company anticipates Q3 EPS growth in the mid to high single digits, with variations in license revenue impacting the growth composition in their sectors. The paragraph concludes with a recap of strong Q2 results and positive demand trends.

The paragraph discusses the company's solid performance and outlook. Despite strong year-to-date results and positive equity position growth, there's no change in the overall guidance due to foreign exchange headwinds. The company is seeing revenue from new sales align with expectations and maintains its guidance for recurring revenue and earnings growth. Key positive factors include strong equity position growth and increased event-driven revenues in the first half of the year.

In the paragraph, the speaker discusses their financial performance and outlook. They mention that event activity is expected to be lower in the second half due to earlier-than-expected activity, with modest dollar strengthening impacting non-U.S. earnings. However, they continue to invest in their business using the first half's event upside, remaining confident around the midpoint of their target range. Tim Gokey expresses strong future opportunities across the business, while Alex Kramm notes stable sales compared to last year, acknowledging some slippage and reporting 8% sales growth excluding specific factors. They are reaffirming their financial guidance and mention that the current market optimism's impact is still uncertain, given their long sales cycles.

The paragraph discusses the company's positive outlook and their focus on investment in areas of growth. Despite increased optimism and conversations, it recognizes that there may not be significant impact within the current year. The company is prioritizing investments in omni-channel communications, data analytics, fund solutions, digital ledger repo, and modernization of back-office operations. These areas are experiencing strong sales momentum. The company emphasizes its commitment to organic growth and highlights digital and omni-channel communication as key areas of focus, supported by their Wealth InFocus product. They are confident in their strategy and progress despite challenges remaining before year end.

The paragraph discusses the company's continued investment in data, analytics, AI, and digital platforms, with a focus on expanding their Canadian market presence through the SIS platform. It highlights opportunities for implementing successful solutions from the U.S. into Canada, underscoring investment needs for this expansion. The company also emphasizes its commitment to resiliency and cybersecurity, particularly with the DORA initiative in Europe. They value adaptability of these investments based on evolving circumstances, which is reflected in their guidance. Tim Gokey expresses satisfaction with the SIS acquisition, noting positive progress in client relationships, employee engagement, and technology integration.

The paragraph discusses Broadridge's successful onboarding of SIS associates, who are now collaborating with Broadridge associates, enhancing strategies like technology integration and modernizing wealth management. The discussion pivots to AI-related product improvements, where Broadridge's CEO, Tim Gokey, notes that the company aims to be an AI leader in their sector by applying AI to their specialized areas. Although not developing new AI models themselves, they plan to leverage their extensive data networks as a potential differentiator. There's consideration for incremental monetization of these AI-related improvements, signifying a potential future revenue stream.

The paragraph discusses the strategic approach towards AI adoption in four key areas. Firstly, integrating AI into existing products is seen as essential to meet future client expectations rather than a direct revenue opportunity. Secondly, new AI products with additional functionalities, such as BondGPT and OpsGPT, are being launched, which offer learning opportunities and have generated some revenue, though not significantly impacting overall sales yet. Thirdly, AI is being applied to boost productivity, with over 50 projects underway at Broadridge focusing on both revenue and productivity. However, these initiatives are still in early stages and haven’t yet had a substantial impact on the company's financial metrics.

The paragraph involves a financial discussion primarily about future projections and current performances. Tim Gokey discusses the company's outlook for FY 2026, emphasizing long-term strategic initiatives and the importance of data governance. James Faucette inquires about the company's progress toward increasing wealth module sales, and Gokey responds that the company is on track to add $20 million to $30 million, noting an increase in their sales pipeline. Dan Perlin asks for clarification regarding revenue guidance, particularly the impact of lower license sales in GTO and anticipated changes potentially affecting capital markets. This indicates both respondents, including Ashima Ghei, are addressing these business queries.

The paragraph discusses the impact of license revenues on GTO's total recurring revenue, which are about 5% and cause some quarterly noise, particularly in capital markets. Despite this, the company expects strong growth in capital markets and low single-digit organic growth in wealth management for the third quarter. Dan Perlin seeks clarification on this variability, questioning its historical impact. He also asks Tim Gokey about how a potentially robust M&A environment could affect the business and any regulatory changes under the new administration. Tim Gokey begins to address how increased capital markets activity would impact Broadridge's financials.

The paragraph discusses the impact of mergers and acquisitions (M&A), IPOs, and regulatory changes on the business environment. It suggests that while M&A and events like shareholder votes can create some activity, they are not significantly impactful. IPOs, on the other hand, can create more positions. The paragraph also highlights the influence of the new administration's priorities, such as taxes and tariffs, which are mostly neutral to the business. However, a deregulatory environment is anticipated, especially in areas like digital assets and potential reforms involving proxy advisory firms. The focus is on tracking these changes for potential opportunities.

The paragraph discusses the company's clarification that it is not a proxy advisory firm, but it does see opportunities related to shareholder engagement and voting platforms. The company is making progress in digitization and anticipates more information as the new SEC Commissioner, possibly Paul Atkins, is approved. The company has a history of working with both political parties and helping clients adapt to changes. The conversation then shifts to a question from Peter Heckmann about the company's event-driven proxy revenue, which is expected to be around $300 million for the year. The response indicates that while revenue is hard to predict due to its volatile nature, it is anticipated to align with long-term averages by 2026. The impact of a postage increase on margins is also inquired about.

The paragraph discusses the impact of postage rate increases on distribution costs, which primarily took effect in July. Ashima Ghei notes that excluding these increases, distribution is experiencing low-single-digit growth as digitization becomes more prevalent in regulatory and customer communications, with digital growth outpacing print. Tim Gokey adds that, despite predictions of negative distribution growth excluding postage, the company's print-to-digital strategy has allowed it to maintain positive growth. This includes helping clients transition to digital communication platforms, which initially boosts print volume before enhancing the digital experience. Ghei also briefly mentions the topic of margins without elaborating.

The paragraph discusses the potential impact of a new administration's deregulatory priorities on client behavior, particularly in the Global Transaction Organization (GTO) segment. Tim Gokey mentions that it's too early to determine the effects, but clients seem relieved about the halt or slowdown of upcoming capital regulations, like Basel III, that would have increased capital requirements and hindered trading activity. Gokey suggests that a deregulatory environment may help rebalance the advantages of being a public versus private company and that these changes will take time to unfold. Puneet Jain acknowledges the response.

In the paragraph, Tim Gokey discusses the company's approach to capital budgeting and allocation for the next fiscal year, focusing on a balance between mergers and acquisitions (M&A) and internal investments. He explains that capital allocation decisions are guided by the company's strong free cash flow, investment grade status, and commitment to shareholder returns through dividends, M&A, and share buybacks. While excited about recent acquisitions like SIS, the market for M&A remains uncertain due to unclear asset pricing, making economic fit important for potential acquisitions.

The paragraph concludes a conference call, with Tim Gokey expressing gratitude to the attendees for their interest in Broadridge. He emphasizes the company's strong quarterly performance, future momentum, and commitment to clients and shareholders. Gokey indicates that the company is open to executing compelling opportunities but is also comfortable with share buybacks if necessary. The operator then ends the conference, inviting participants to disconnect.

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