The paragraph is from the Broadridge Fiscal Third Quarter 2025 Earnings Conference Call, where the operator welcomes participants to the call, which will be in a listen-only mode. Edings Thibault, Head of Investor Relations, introduces himself and the purpose of the call, noting that the earnings release and presentation slides are available on the Broadridge website. He introduces CEO Tim Gokey and CFO Ashima Ghei. Edings mentions that forward-looking statements and non-GAAP measures will be discussed. Tim Gokey then begins his remarks, stating that Broadridge had a strong third quarter and expects a strong fiscal year 2025. He notes that despite recent market volatility, the company, primarily a U.S.-focused SaaS technology provider, has been modestly impacted, with unusually high market trading volumes.

The paragraph discusses Broadridge's strong performance and resilience amid market volatility. The company has seen benefits from high trading volumes and highlighted its strong scalability, with 94% recurring fee revenues and a 98% revenue retention rate. Broadridge has a $450 million revenue backlog, providing growth visibility for the next 12 to 18 months. Despite potential uncertainties affecting client investments, Broadridge's diverse solutions help clients reduce costs and innovate across economic conditions. Long-term trends in financial services, such as investing democratization and digitization, continue to support Broadridge, which has the expertise and capability to drive innovation. The company expects strong fiscal year 2025 results, aims to meet its 3-year objectives, and remains committed to sustainable growth for shareholders. Recent performance includes 8% recurring revenue growth and 9% adjusted EPS growth.

The paragraph highlights Broadridge's strong performance amidst market uncertainty, emphasizing its growth strategy focused on digitizing investing, simplifying trading, and modernizing wealth management. The company is on track to meet its fiscal '25 growth objectives, with expected steady revenue and earnings growth. In the Governance business, recurring revenues increased by 6% due to new sales and greater investor participation, with significant equity position growth driven by managed accounts. A notable trend is the growing number of smaller investment positions, attributed to direct indexing, which supports the firm's democratization goals by making sophisticated investment strategies more accessible to individual investors.

The paragraph discusses how innovation benefits public companies and funds through the use of fractional positions, which, though not immediately revenue-generating for Broadridge, are expected to contribute to its long-term growth. Fund position growth is healthy at 6%, driven by demand for passive funds. New product innovation, particularly digital solutions and AI-enabled analytics, drives the company's growth, with the AI data product achieving its 13th sale. Capital Markets reported a 10% increase in recurring revenue, as Broadridge simplifies trading and enhances post-trade capabilities during market stress. Notable sales include post-trade solutions to a trading firm with existing U.S. and European relationships.

The paragraph discusses a company's innovations and growth across various asset classes. The Distributed Ledger Repo solution is handling $100 billion in daily trading, and the company has integrated with Fnality for intraday repo transaction settlements. In Wealth and Investment Management, revenue increased by 13% due to the SIS acquisition, with progress in Canadian and U.S. wealth platforms. The U.S. platform has 34 clients and sees strong sales momentum, highlighted by a major deal with a leading U.S. wealth manager. Closed sales reached $174 million year-to-date, excluding Tailored Shareholder Reports, and rose 9%. Entering Q4, the sales pipeline is robust, although economic and tariff uncertainties remain.

In the paragraph, Broadridge reports a longer closing process for Q4 compared to Q3, leading to revised guidance for fiscal '25 closed sales of $240 million to $300 million. Despite this, FY '26 results aren't expected to be impacted due to a backlog of previously closed deals. Broadridge emphasizes its growth strategy, highlighting its efforts in digitization and democratization of investing, cost reduction, and demand for digital solutions. The company's innovations in trading and a next-generation wealth platform are gaining momentum. Financially, Broadridge reports 8% recurring revenue growth and 9% adjusted EPS growth in Q3 and anticipates consistent growth and strong free cash flow in fiscal '25, with its recurring revenue model offering stability during uncertain times. This positions Broadridge to meet its financial objectives for a fifth consecutive three-year cycle.

The paragraph discusses Broadridge's strong financial performance in the third quarter, highlighting an 8% growth in recurring revenue and a 9% increase in adjusted EPS. Despite two headwinds—foreign exchange impacts and the delay of a significant wealth management license renewal—Broadridge successfully managed these challenges, resulting in a 160 basis point impact on revenue growth. The company remains on track for steady growth in fiscal 2025, emphasizing its disciplined expense management and strategic positioning for long-term success.

During the quarter, the company closed a print operation in its customer communications business, incurring a $5 million restructuring charge. Despite this, they have a strong record of proxy positions and a solid recurring revenue backlog, boosting confidence in their annual guidance. The company is on target to meet its free cash flow conversion goals, supporting its capital allocation strategy. Recurring revenues increased by 8%, with 6% from organic growth and 2% from an acquisition, and adjusted operating income grew by 10%. The third quarter saw $71 million in closed sales, contributing to $174 million year-to-date. Recurring revenue for the third quarter grew 8% to $1.2 billion, supported by new sales and internal growth in the ICS and GTO segments. ICS recurring revenues rose by 6% to $740 million, with regulatory revenues also up by 6%, driven by a 15% increase in equity positions. Overall revenue growth was slightly offset by slower international growth.

The paragraph discusses the company's expectations and current performance for various sectors in the upcoming and current quarters. They anticipate mid-teens growth in equity positions and a high single-digit increase in regulatory revenue. Revenues in data-driven fund solutions rose by 8% due to strong demand for data products, while issuer revenue grew by 2%, supported by shareholder engagement solutions. A transition from print to digital boosted customer communications revenue by 5%. Overall, they aim for 6% to 8% ICS recurring revenue growth for the year. The GTO sector's revenue rose 11%, with Capital Markets up by 10% and strong growth in global post-trade capabilities. Wealth and Investment Management revenue went up by 13%, thanks to the SIS acquisition, which compensated for a 3% decline in organic growth. They predict significant wealth management growth in Q4, aided by a license renewal shift. The GTO's annual recurring revenue should align with the 6% to 8% guidance, and the paragraph concludes by mentioning a review of key volume indicators on Slide 9.

Broadridge is experiencing strong growth in investor participation, with a 15% increase in third-quarter equity positions and expected mid-teens growth for the full year. The company has received record data for over 90% of proxies for the fiscal year, boosting confidence in position growth and revenue outlook. Equity revenue positions are forecasted to grow in the low double-digits, while mutual fund and ETF positions grew 6% in Q3, with similar growth expected in Q4. Trade volumes in GTO rose 14%, with continued double-digit growth anticipated. Revenue from Closed sales drives recurring revenue growth by 5 points, offset by 2 points of losses, resulting in a 98% revenue retention rate. Internal growth and acquisitions added 2 points each to organic revenue growth, which reached 6%. However, FX changes, particularly the decline of the Canadian dollar against the U.S. dollar, reduced recurring revenue growth by 90 basis points, marking the largest quarterly FX impact since fiscal '23.

The paragraph discusses financial results, focusing on revenue and margins. Total revenue increased by 5% to $1.8 billion, driven mainly by recurring revenues, while event-driven revenues decreased due to fewer notable proxy contests. Distribution revenues grew slightly, offsetting lower mail volumes. Adjusted operating income margin improved by 100 basis points to 22.4%, aided by higher recurring revenue, despite minor headwinds. The company incurred $11 million in non-GAAP charges mainly related to acquisitions and restructuring. They aim for continued expense discipline and shareholder returns while achieving core margin expansion. Closed sales for the quarter were $71 million, bringing the year-to-date total to $174 million, slightly down from the previous year.

In fiscal year 2024, the company experienced a boost in closed sales due to robust demand for its Tailored Shareholder Reports solutions. Excluding these sales, there was a 9% increase in closed sales for both the quarter and year-to-date. The company's Q3 free cash flow rose to $337 million, an increase from the previous year, due to higher earnings and reduced capital investment. Year-to-date free cash flow was reported at $393 million. For fiscal 2025, they expect a free cash flow conversion of 95% to 105%. Capital allocation included $78 million in capital expenditures and software, $300 million returned to shareholders via dividends, and $193 million for strategic M&A, particularly the acquisition of SIS. The company's financial health allows continued growth investments and share repurchases. They anticipate 6% to 8% recurring revenue growth for fiscal 2025, balanced across their segments, and an AOI margin of around 20%. Adjusted EPS growth is expected to be in the mid-range of 8% to 12%, with closed sales projected between $240 million to $300 million.

The paragraph discusses Broadridge's strong financial performance and outlook. They reported positive third quarter results and are on track to achieve fiscal year goals, including 6% to 8% recurring revenue growth and adjusted EPS growth within their target range. The resilience of their business model, with its consistent, sustainable recurring revenue growth, enables margin expansion and earnings growth while funding investments. During a Q&A session, Dan Perlin from RBC Capital Markets asks about the demand environment, noting some potential hesitancy in client investment. Tim Gokey responds, acknowledging the situation but highlights Broadridge's year-to-date success with 9% growth in Q3, aligning with their annual guidance.

The paragraph discusses recent observations of uncertainty in the market, leading to a lengthening of the company's closing processes. A conversation with a major client's CEO revealed that while efforts to reduce costs and simplify operations are moving ahead, there's a more cautious approach toward new investments and revenue opportunities. Most of the company's work aligns with cost reduction and simplification, aligning with client priorities. Although the closing process is delayed, the company is not losing any deals, and the pipeline remains strong. Nonetheless, they remain cautious about this elongation, but revenues for the next year are secure due to an already locked backlog, and long-term growth is not threatened. The company sees positive momentum in key pipeline areas.

The paragraph discusses the company's strategic focus on areas like omnichannel communications, data analytics, and front and back office simplification to support clients in uncertain environments by enhancing digital transitions, cost savings, and modernization. It highlights strong demand for these services. A follow-up question by Dan Perlin addresses the distinction between equity position growth contributing to revenue versus smaller non-revenue generating positions. Tim Gokey responds by noting a noticeable increase in both revenue-producing and smaller positions, emphasizing robust growth particularly in revenue positions and showing optimism about the long-term growth trend in model-based investing and direct indexing.

The paragraph discusses the potential development of small positions into significant revenue contributors, indicating that these positions are gradually becoming material and could support long-term growth trends in upper single digits. Despite the potential, the speaker does not consider these positions a major source of future growth at this point, but acknowledges their contribution to a robust period. The conversation shifts to a question from Scott Wurtzel regarding sales cycles, asking if elongations are specific to certain product lines or geographies. Tim Gokey responds that there is no evident pattern and mentions they're monitoring the situation closely. Wurtzel then comments on the strong margin expansion observed and notes that the company is maintaining its guidance for the year.

In the paragraph, Ashima Ghei and Tim Gokey discuss their company's approach to planned investments and revenue growth for the fourth quarter. They emphasize that the company operates from a full-year perspective, aiming to deliver earnings at the midpoint of their 8% to 12% guidance. Ashima notes that there will be high levels of investment in Q4, which might impact margins, but the focus remains on full-year performance. Tim highlights the company's commitment to organic growth, investing heavily in areas like omnichannel communications, data analytics, and wealth management. Michael Infante from Morgan Stanley asks about the difference between equity position growth and revenue growth, seeking clarification on revenue growth considering historical trends and easier regulatory comparisons in the third quarter.

In the paragraph, Tim Gokey and Ashima Ghei discuss the company's growth in revenue, particularly focusing on their regulatory and equity businesses. Tim mentions that while they saw expected growth in revenue positions, they also had additional growth in other areas. Ashima elaborates by stating that equity position growth was 15%, but equity revenue position growth was 11%, which contributed significantly to overall revenue growth. She notes that there was also a 6% increase in fund positions and clarifies that 75% to 80% of regulatory revenues are directly impacted by equity and fund positions, while the rest come from other regulatory communications and the international proxy business, which grew slower. Ashima adds that there was no significant seasonality impact affecting the current quarter's results. Michael Infante asks about potential strategies to reduce revenue volatility from license renewals by possibly adopting a subscription model, which Tim has mentioned as a future opportunity.

The paragraph discusses Broadridge's transition from a license-based revenue model to a subscription-based SaaS model, primarily affecting areas where they made acquisitions. The transition process takes time and has caused some quarterly fluctuations in revenue, like a particular wealth-side transaction expected to close later than anticipated. License revenue currently contributes less than 5% of their annual revenue and has minimal impact on their overall revenue growth for the year. An interaction with Puneet Jain from JPMorgan is mentioned, where Jain inquires about the impact of new administration policies and deregulation on Broadridge. Tim Gokey acknowledges the evolving regulatory environment's potential implications for the company.

The paragraph discusses the impact of government policies, particularly the SEC, on financial services, highlighting the positive outlook on issues like digital assets and shareholder engagement. It emphasizes the importance of proper disclosure in driving innovation and investor confidence in digital assets. The company is involved in efforts to help with disclosure and sees it as an opportunity. In shareholder engagement, there's a rising interest in pass-through voting solutions, and they're developing a data-driven voting alternative to proxy advisory firms. Additionally, significant investments are being made in digitization to enhance the investor experience.

The paragraph discusses the impact of regulatory changes on the industry and emphasizes the role of technology in making investments more cost-effective. Puneet Jain asks about the types of sales being delayed and whether they are typically long or short implementation cycles, expressing concern over potential revenue impact if bookings remain weak. Tim Gokey responds that no particular area is significantly affected, suggesting that longer, more complex sales may be impacted more by uncertainty than shorter-term sales. Ashima Ghei adds that even in a worst-case scenario, the potential revenue impact would be less than 1% of their recurring revenue, and most of their sales conversion cycles are between 12 to 24 months.

The paragraph discusses a recent sale of a wealth platform to a client, emphasizing that the core offering is a "wealth operating system" that integrates client-build solutions, company solutions, and third-party solutions. Tim Gokey clarifies that unlike large deals that usually incur significant onboarding costs, this sale involves pre-built technology and minor conversion, suggesting minimal financial impact. Additionally, Gokey highlights that 34 components of the platform are live, with 40 others being onboarded for various clients, indicating strong demand beyond just this sale. Patrick O'Shaughnessy finds the information helpful.

In the article paragraph, Ashima Ghei discusses expected growth trends for equity and fund positions, mentioning low double-digit growth in equity revenue positions and mid-double-digit growth in equity position growth for Q4. They feel optimistic about the full year since 90% of the positions are already recorded, and recent market volatility hasn't impacted them significantly. Looking ahead to FY '26, strong trends are anticipated, though specific numbers haven't been shared yet. Tim Gokey notes seeing incremental data weekly, with no major changes in the trend. Peter Heckmann then asks about potential public-private retail investment vehicles, to which Tim Gokey responds that the fund industry is exploring ways to give retail investors access to private assets by lowering the barriers to becoming a qualified investor.

The paragraph discusses the potential benefits of increasing private asset availability within 40 Act funds and ETFs, emphasizing that professional management can simplify and improve investor access. This approach is seen as a positive development for investors and aligns with opportunities highlighted by Larry Fink, allowing for safer participation in private assets. The conversation shifts to the M&A market, with Tim Gokey noting its current uncertainty. Despite fewer opportunities than anticipated, proprietary deals still offer significant value, indicating room for strategic acquisitions.

The paragraph outlines the company's strategies and principles, emphasizing their status as an investment-grade company. They prioritize internal investments, paying dividends, seeking M&A opportunities, and, if those aren't found, conducting share buybacks. The concluding remarks by Tim Gokey express satisfaction with the strong third-quarter results and optimism about future demand and business growth, despite some caution. He thanks participants and looks forward to the next discussion. The conference concludes with an invitation to disconnect.

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