Broadridge(BR) - 2025 Q4 - Annual Results

Financial Highlights and Outlook This section provides an overview of Broadridge's strong fiscal year 2025 performance, outlines optimistic fiscal year 2026 guidance, and details its balanced capital allocation strategy Fiscal Year 2025 Performance Summary Broadridge reported strong fiscal year 2025 results, characterized by 7% growth in recurring revenues on a constant currency basis and an 11% increase in Adjusted EPS. Despite a 16% decline in closed sales, the company demonstrated solid operational performance and growth across key financial metrics Fiscal Year 2025 Key Financial Results (vs. FY 2024) | Metric | FY 2025 | FY 2024 | Change | | :--- | :--- | :--- | :--- | | Recurring Revenues | $4,508M | $4,223M | +7% | | Total Revenues | $6,889M | $6,507M | +6% | | Operating Income | $1,189M | $1,017M | +17% | | Diluted EPS | $7.10 | $5.86 | +21% | | Adjusted EPS (Non-GAAP) | $8.55 | $7.73 | +11% | | Closed Sales | $288M | $342M | -16% | - The company is executing on its growth strategy focusing on the democratization of governance, innovation in capital markets, and modernization of wealth management[1] Fiscal Year 2026 Guidance The company projects continued growth for fiscal year 2026, with recurring revenue expected to grow 5-7% on a constant currency basis and Adjusted EPS growth forecasted at 8-12%. Closed sales are anticipated to be in the range of $290 million to $330 million Fiscal Year 2026 Financial Guidance | Metric | Guidance | | :--- | :--- | | Recurring Revenue Growth (Constant Currency) | 5 - 7% | | Adjusted Operating Income Margin | 20 – 21% | | Adjusted EPS Growth | 8 - 12% | | Closed Sales | $290 - $330 million | - Broadridge states it is on track to deliver on its three-year top and bottom-line growth objectives[3] Capital Allocation Broadridge demonstrated a balanced capital allocation strategy in fiscal 2025, highlighted by an 11% increase in its annual dividend to $3.90 per share, marking the 19th consecutive annual increase. The company also invested in strategic M&A and repurchased $100 million of its shares - The Board of Directors approved an 11% increase in the annual dividend to $3.90 per share, the 19th consecutive annual increase[2][19] - In fiscal year 2025, the company repurchased $100 million of its shares[2] - The company invested in strategic M&A to strengthen its wealth business in Canada[2] Detailed Financial Results This section provides a comprehensive breakdown of Broadridge's financial performance for the fourth quarter and full fiscal year 2025, detailing revenue and profitability across its key business segments Fourth Quarter Fiscal Year 2025 Results In the fourth quarter of fiscal 2025, total revenues grew 6% to $2,065 million, driven by a 7% increase in recurring revenues. Operating income rose 13% to $499 million, and Diluted EPS increased 16% to $3.16. However, Adjusted Operating income was flat compared to the prior year period Q4 2025 Financial Performance (vs. Q4 2024) | Metric | Q4 2025 | Q4 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $2,065M | $1,944M | +6% | | Recurring Revenues | $1,424M | $1,326M | +7% | | Operating Income | $499M | $441M | +13% | | Diluted EPS | $3.16 | $2.72 | +16% | | Adjusted EPS | $3.55 | $3.50 | +1% | Segment Results (Q4 FY25) In Q4, Investor Communication Solutions (ICS) revenues grew 5%, driven by 5% recurring revenue growth. Global Technology and Operations (GTO) revenues increased 12%, boosted by organic growth and the SIS acquisition. GTO's pre-tax margin declined significantly from 11.3% to 7.3% due to higher expenses and growth investments - Investor Communication Solutions (ICS): Total revenues increased 5% to $1,601 million, with recurring revenues up 5% driven by Net New Business and Internal Growth. Regulatory product line recurring revenue grew 8%[7] - Global Technology and Operations (GTO): Recurring revenues grew 12% to $465 million, with 6 percentage points from organic growth and 5 percentage points from the SIS acquisition. The Wealth and investment management product line saw a 25% revenue increase[11] - Corporate and Other: Loss before income taxes decreased to $53 million from $106 million in the prior year, primarily due to $54 million of lower Restructuring and Other Related Costs[9] Full Fiscal Year 2025 Results For the full fiscal year 2025, total revenues increased 6% to $6,889 million, and recurring revenues grew 7%. Operating income saw a significant 17% increase to $1,189 million, with operating margin expanding to 17.3% from 15.6%. Adjusted Operating income grew 8%, and Diluted EPS rose 21% to $7.10 Full Year 2025 Financial Performance (vs. FY 2024) | Metric | FY 2025 | FY 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $6,889M | $6,507M | +6% | | Recurring Revenues | $4,508M | $4,223M | +7% | | Operating Income | $1,189M | $1,017M | +17% | | Diluted EPS | $7.10 | $5.86 | +21% | | Adjusted EPS | $8.55 | $7.73 | +11% | Segment Results (FY25) For the full fiscal year, ICS revenues grew 5%, with a 6% increase in recurring revenues and pre-tax margins expanding to 20.6%. GTO recurring revenues rose 8%, split evenly between organic growth and the SIS acquisition, with pre-tax margins improving to 11.3% - Investor Communication Solutions (ICS): Total revenues increased 5% to $5,113 million. Recurring revenues grew 6%, driven by Net New Business and Internal Growth. Pre-tax margins increased to 20.6% from 19.6%[16] - Global Technology and Operations (GTO): Recurring revenues grew 8% to $1,776 million, driven by 4 percentage points of organic growth and 4 percentage points from the SIS acquisition. Pre-tax margins increased to 11.3% from 10.5%[16][23] - Corporate and Other: Loss before income taxes decreased to $197 million from $246 million, due to lower restructuring costs, litigation expenses, and net interest expense[17] Corporate Developments This section highlights Broadridge's strategic corporate activities, specifically detailing the proposed acquisition of Acolin Group to expand its European fund distribution capabilities Acolin Acquisition Announcement On July 3, 2025, Broadridge announced the proposed acquisition of Acolin Group, a European provider of cross-border fund distribution and regulatory services. The acquisition, valued at approximately $70 million plus contingent consideration, is expected to close in the first half of fiscal 2026 and will enhance Broadridge's pan-European fund distribution network - Broadridge announced the proposed acquisition of Acolin Group Holdco Limited ("Acolin"), a leading European provider of cross-border fund distribution and regulatory services[18] - The total purchase price is approximately $70 million plus additional contingent consideration[18] - The acquisition is expected to close in the first half of Broadridge's 2026 fiscal year and will be included in the ICS reportable segment[18] Financial Statements This section presents Broadridge's core financial statements, including the consolidated statements of earnings, balance sheets, and cash flows, providing a comprehensive view of the company's financial position and performance Condensed Consolidated Statements of Earnings The statement shows a 6% increase in total revenues for fiscal year 2025, leading to a 17% rise in operating income and a 20% increase in net earnings compared to fiscal year 2024 Fiscal Year 2025 Statement of Earnings Highlights (in millions) | Account | FY 2025 | FY 2024 | | :--- | :--- | :--- | | Revenues | $6,889.1 | $6,506.8 | | Operating income | $1,188.6 | $1,017.1 | | Earnings before income taxes | $1,058.7 | $877.4 | | Net earnings | $839.5 | $698.1 | | Diluted earnings per share | $7.10 | $5.86 | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $8.55 billion from $8.24 billion a year prior. Total liabilities decreased to $5.89 billion from $6.07 billion, while total stockholders' equity grew significantly to $2.66 billion from $2.17 billion Balance Sheet Highlights (in millions, as of June 30) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Total current assets | $1,817.1 | $1,540.9 | | Total assets | $8,545.0 | $8,242.4 | | Total current liabilities | $1,861.2 | $1,421.8 | | Long-term debt | $2,753.0 | $3,355.1 | | Total liabilities | $5,889.9 | $6,074.2 | | Total stockholders' equity | $2,655.1 | $2,168.2 | Condensed Consolidated Statements of Cash Flows For fiscal year 2025, net cash from operating activities was $1.17 billion, an increase from $1.06 billion in the prior year. The company used cash for investing activities ($316.2 million) and financing activities ($600.8 million), which included debt repayments, dividends, and share repurchases. The cash and cash equivalents balance increased by $257.1 million during the year Statement of Cash Flows Highlights (in millions, for Fiscal Year Ended June 30) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Net cash flows from operating activities | $1,171.3 | $1,056.2 | | Net cash flows from investing activities | $(316.2) | $(148.0) | | Net cash flows from financing activities | $(600.8) | $(855.5) | | Net change in Cash and cash equivalents | $257.1 | $52.1 | | Cash and cash equivalents, end of year | $561.5 | $304.4 | Supplemental Information This section provides additional financial details, including segment and product line revenue breakdowns, key operating metrics, reconciliations of non-GAAP financial measures, and important disclosures regarding forward-looking statements and risk factors Segment and Product Line Revenue Detail This section provides a detailed breakdown of revenues by segment (ICS and GTO) and by product line for both the fourth quarter and the full fiscal year. For FY2025, ICS recurring revenues grew 6% to $2.73 billion, while GTO recurring revenues grew 8% to $1.78 billion FY 2025 Recurring Revenues by Product Line (in millions) | Segment / Product Line | FY 2025 Revenue | Change vs. FY24 | | :--- | :--- | :--- | | ICS Recurring | $2,731.8 | +6% | | Regulatory | $1,280.6 | +7% | | Data-driven fund solutions | $459.2 | +6% | | Issuer | $273.2 | +5% | | Customer communications | $718.8 | +5% | | GTO Recurring | $1,776.1 | +8% | | Capital markets | $1,115.3 | +6% | | Wealth and investment management | $660.8 | +10% | Key Operating Metrics Key operating metrics for fiscal year 2025 show a 16% decline in closed sales to $287.9 million. However, position growth was strong, with equity positions growing 16% and mutual fund/ETF positions growing 7%. Internal trade growth remained stable at 13% Select Operating Metrics (Fiscal Year Ended June 30) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Closed sales (in millions) | $287.9 | $341.8 | (16%) | | Equity positions growth | 16% | 6% | N/A | | Mutual fund/ETF positions growth | 7% | 3% | N/A | | Internal Trade Growth | 13% | 13% | N/A | Non-GAAP Financial Measures and Reconciliations The report uses several Non-GAAP measures, such as Adjusted Operating Income, Adjusted EPS, and Free Cash Flow, to provide investors with insight into ongoing operating performance by excluding items like amortization of acquired intangibles, acquisition costs, and restructuring charges. Detailed reconciliations of these Non-GAAP measures to their nearest GAAP equivalents are provided - The company uses Non-GAAP measures including Adjusted Operating income, Adjusted Net earnings, Adjusted EPS, Free cash flow, and Recurring revenue growth constant currency[22] - Management believes these measures help investors understand business performance, provide consistency, and facilitate comparison by excluding items not reflective of underlying operations such as amortization of acquired intangibles, acquisition costs, and restructuring costs[23][25][28] FY 2025 Reconciliation of Operating Income to Adjusted Operating Income (in millions) | Line Item | Amount | | :--- | :--- | | Operating income (GAAP) | $1,188.6 | | Amortization of Acquired Intangibles | $196.6 | | Acquisition and Integration Costs | $18.3 | | Restructuring and Other Related Costs | $7.4 | | Adjusted Operating income (Non-GAAP) | $1,410.9 | Forward-Looking Statements and Risk Factors The report contains forward-looking statements, including the Fiscal Year 2026 Financial Guidance, which are based on current management expectations and are subject to various risks and uncertainties. Key risks include reliance on a small number of clients, potential cybersecurity attacks, market declines, and competition - The press release contains forward-looking statements, particularly in the "Fiscal Year 2026 Financial Guidance" section, which are subject to risks and uncertainties[35] - Key risks identified include: - Reliance on a relatively small number of clients - Material security breaches or cybersecurity attacks - Declines in securities market activity - Failure to keep pace with technological changes - Competitive conditions[38]